The tax administration (SII) issued the Ruling (Oficio) No. 3,397 of 14 December 2007 clarifying the concept of permanent establishment (PE) and the taxation of payments made by a Chilean company to its Spanish parent for services rendered by four employees who will work in Chile. The main issues are summarized below.
Under Art. 5 Para. 3(b) of the Chile-Spain tax treaty, a PE may also be created if an enterprise supplies services through its employees for a pe…