Statutory rate without a valid treaty claim: 30%.
Status and notes
- The U.S.-Chile treaty entered into force on December 19, 2023. Its withholding provisions apply to amounts paid or credited on or after February 1, 2024, and the other provisions from January 1, 2024.
Rates on investment and other income
Treaty in effect generally from Jan. 1, 2024. Protocols in effect from: none listed. IRS country code CI.
| Income | 1042-S code | Treaty rate | Article |
|---|---|---|---|
| Interest paid by U.S. obligors, general | 01 | 10%z | 11 (1)-(10) |
| Dividends paid by U.S. corporations, general | 06 | 15% | 10 (2) |
| Dividends qualifying for the direct dividend rate | 07 | 15%z | 10 (2) |
| Royalties: industrial, commercial or scientific equipment | 10 | 2% | 12(1)-(6) |
| Royalties: know-how and other industrial royalties | 10 | 10% | 12(1)-(6) |
| Royalties: patents | 10 | 10% | 12(1)-(6) |
| Royalties: motion picture and television copyrights | 11 | 10% | 12(1)-(6) |
| Royalties: copyrights (including software, unless the treaty says otherwise) | 12 | 10% | 12(1)-(6) |
| Pensions and annuities | 15 | 0% (exempt) | 15(1)-(3) |
| U.S. Social Security benefits (applies to 85% of the payment) | 15 | 0% (exempt) | 15(1)-(3) |
"n/a" means the payment type is not covered by the royalty article: equipment leasing is business profits (no withholding without a permanent establishment) or other income. Superscript letters are the IRS's own conditions, listed at the end of this page.
Pay for personal services performed in the United States
Each row is an exemption the treaty gives, with the limits the IRS lists. All conditions in a row must be met; if any is not, the pay is withheld on at 30% (contractors) or under the wage rules (employees). Services performed entirely outside the United States are foreign-source and need no treaty claim.
| Code | Purpose | Maximum presence in U.S. | Required employer or payer | Maximum amount | Article |
|---|---|---|---|---|---|
| 17 | Independent personal services | 183 days | Any U.S. or foreign resident | No limit | 14 |
| 18 | Dependent personal services | 183 days | Any U.S. or foreign resident | No limit | 15 |
| 18 | Director Fees | No limit | Any U.S. or foreign resident | No Limit | 17 |
| 42 | Artists and sportsmen | No limit | Any U.S. resident | $5,000 | 17 |
| 20 | Apprentice or business trainee | 2 years | Any U.S. or foreign resident | No Limit | 20 |
| 20 | Students | No limit | Any U.S. or foreign resident | No Limit | 20 |
How the payee claims these rates
- Individuals claim a reduced rate on interest, dividends, royalties or pensions in Part II of Form W-8BEN: treaty country, article, rate and any conditions. Most claims need a U.S. TIN or a foreign TIN on the form.
- Entities claim in Part III of Form W-8BEN-E, which also asks which limitation-on-benefits test the entity meets (this treaty has no limitation-on-benefits article).
- Pay for services performed in the United States by an individual is exempted on Form 8233, not the W-8BEN, one form per tax year and per payer.
- The payer reports the payment on Form 1042-S with the income code shown above and chapter 3 exemption code 04 (exempt or reduced withholding under a tax treaty). From 2026 an exemption code is required whenever less than 30% is withheld.
The rate in a table is the most the United States may withhold under the treaty, not an entitlement. The payee has to be a resident of Chile under the treaty, the beneficial owner of the income, and (for entities) meet the limitation-on-benefits article, and the payer has to hold a valid certificate before the payment. The IRS tables are a summary: check the article itself when the amount is material.
Questions payers ask
What is the U.S. withholding rate on dividends paid to a resident of Chile?
15% on dividends generally and 15% on dividends qualifying for the direct dividend rate, under Article 10 (2), if the shareholder documents the claim on a W-8BEN or W-8BEN-E. Without a valid claim the rate is 30%.
What is the U.S. withholding rate on royalties paid to a resident of Chile?
10% on copyright and software royalties (income code 12), 10% on patent royalties and 10% on film and television royalties, under Article 12(1)-(6).
What is the U.S. withholding rate on interest paid to a resident of Chile?
10% under Article 11 (1)-(10), before considering the Code's own exemptions for portfolio interest and bank deposit interest. See the note on this treaty at the top of the page.
Is a contractor from Chile working in the United States exempt from U.S. withholding?
Under Article 14, pay for independent personal services is exempt if the contractor is present in the United States for no more than 183 days, subject to the conditions in the article. An individual claims the exemption on Form 8233; without it, withhold 30%.
Do we withhold on a contractor from Chile who works only outside the United States?
No. Pay for services performed entirely outside the United States is foreign-source income: no withholding and no Form 1042-S. Keep the contractor's W-8BEN or W-8BEN-E on file.
The IRS notes behind the figures
Notes to the rates (IRS Table 1)
- z An exemption from tax or a reduced rate of tax may apply to interest that is paid to the government of a Contracting State or a political subdivision or local authority thereof. An exemption or reduced rate may also apply to certain other types of interest, including interest paid to certain banks or other financial institutions, interest derived on loans guaranteed or insured by the government of a Contracting State, and interest arising in connection with commercial credit for goods or services. Please refer to the interest article of the relevant treaty for specific information. Income Tax Treaties
Transcribed from the IRS Tax Treaty Tables. Treaty texts and technical explanations: United States income tax treaties, A to Z.
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