In short
- U.S. citizens and green card holders who own 10% or more of a Chilean company, control it, or serve as an officer or director of one usually file Form 5471 every year.
- A Chilean SpA, Ltda or EIRL is treated as a corporation for U.S. purposes by default when all owners have limited liability. A Sociedad Anónima is always a corporation.
- The penalty for a missing form starts at $10,000 per company per year, even when no U.S. tax is due, and the IRS can keep the whole return open until the form is filed.
- Profits may be taxed in the U.S. before they are paid out. Chile's general 27% corporate rate usually allows the high-tax exclusion; the 12.5% Pro Pyme rate usually does not.
Who files Form 5471
Form 5471 is an information return about a foreign corporation. It is attached to your Form 1040 and is due on the same date, including extensions. Filing it does not by itself mean you owe tax, but it is required whether or not you do.
The IRS sorts filers into categories. For people with a company in Chile, these are the common ones:
- You control the company (Category 4). You own more than 50% of the vote or value, directly or through family and related entities. A one-person SpA owned by a U.S. citizen is the classic case.
- You are a U.S. shareholder of a controlled foreign corporation (Category 5). You own at least 10%, and U.S. shareholders together own more than 50%.
- You are an officer or director (Category 2) of a Chilean company in which a U.S. person has acquired 10% or more. Being named gerente or director counts, even without shares.
- You bought or sold your way across 10% (Category 3) during the year, including when the company was formed.
Ownership through your spouse, children, parents or another company can count as yours. Couples who each own 50% of an SpA are often both filers.
How the IRS sees a SpA, Ltda, S.A. or EIRL
The U.S. does not use Chilean labels. It sorts every foreign entity into a corporation, a partnership or a "disregarded entity" (treated as part of its owner).
| Chilean entity | Default U.S. treatment | Can it change? |
|---|---|---|
| Sociedad Anónima (S.A.) | Corporation | No. It is on the IRS list of entities that are always corporations. |
| Sociedad por Acciones (SpA) | Corporation, when all shareholders have limited liability | Yes, with Form 8832: disregarded if one owner, partnership if several. |
| Sociedad de Responsabilidad Limitada (Ltda) | Corporation, when all partners have limited liability | Yes, with Form 8832. |
| Empresa Individual de Responsabilidad Limitada (EIRL) | Corporation | Yes, with Form 8832, to a disregarded entity. |
An election changes the form you file: Form 8858 for a disregarded entity, Form 8865 for a partnership. It also changes how the profits are taxed, sometimes for the better. Elections have deadlines and lasting effects, so they are worth modeling before you sign.
What the form reports
Form 5471 asks for the company's balance sheet and income statement translated to U.S. rules and dollars, its shareholders, transactions between you and the company (salary, loans, rent), and the earnings and profits pools that track what has already been taxed in the U.S.
In practice, the starting point is the company's Chilean accounting: the balance and the figures your contador uses for Formulario 22. We work from those, so it helps when both advisors talk to each other early in the year.
When the profits are taxed in the U.S.
If the company is a controlled foreign corporation, part of its profit can be taxed on your U.S. return in the year it is earned, even if it stays in Chile:
- Subpart F income: mainly passive income such as interest, dividends and some rents, and certain sales and services income involving related parties.
- Net CFC tested income (NCTI): the new name, from 2026, for what was called GILTI. It captures most active business income above a small threshold.
Chile's corporate tax matters here. Both regimes can be excluded under the high-tax exception when the Chilean tax on that income is more than 90% of the U.S. corporate rate, which is above 18.9%.
- General regime (27%): usually clears the threshold, so active profits are often not taxed in the U.S. until they are distributed. Chile's 2026 reform lowers this rate step by step to 23% by 2029, which is still above 18.9%.
- Pro Pyme regime (12.5% for 2025 and 2026): usually below the threshold, so profits can be taxed in the U.S. each year. A section 962 election, which lets an individual be taxed like a U.S. corporation on these amounts, can reduce the cost and is often worth modeling.
The right answer depends on your salary from the company, its dividend policy and your Chilean personal taxes. It is one of the main things we review in the first meeting.
Penalties, and why late is still better than never
The penalty for not filing a complete Form 5471 on time is $10,000 per company, per year. If the IRS sends a notice and the form is still missing 90 days later, it adds $10,000 for each further 30 days, up to $50,000 more. Missing forms can also reduce foreign tax credits.
A missing Form 5471 also keeps the statute of limitations open on the whole return for that year, not only on the form.
If you have owned a Chilean company for years without filing, there are structured ways back in. Taxpayers who reported all their income can often use the IRS delinquent international information return procedures, and the Streamlined procedures cover people who also missed returns. The right path depends on the facts, so avoid filing old forms in a rush.
What to have ready
- The company's escritura and current shareholder list, with dates of any changes.
- Financial statements and the Formulario 22 for the year, from your contador.
- A list of payments between you and the company: salary, dividends or retiros, loans, rent.
- Any Form 8832 election the company made, and prior Forms 5471 if you filed them.
Please do not send RUTs, account numbers or documents through a public form. We set up a secure channel once we agree to work together.
General information, not individual U.S. or Chilean tax advice. Rules, thresholds and deadlines change; confirm them for your situation. Chile US Tax is an independent practice, not a government office.