RECOVERY OF FUNDS FOR FOREIGNERS
Contributor in Chile
Advantages:
- The worker will not have the obligation to bury the amount withdrawn in the social security of the country of origin or other, being able to freely dispose of the funds.
Disadvantages:
- The withdrawal of the funds will be subject to the taxation indicated in article 42 N° 1, of the Income Tax Law, being considered as a normal remuneration on the date of its return. According to Article 74 N° 1 of the same law, the AFP shall be obliged to withhold the Single Second Category Tax affecting the withdrawal, according to the scale of rates indicated in Article 43 N° 1.
- The funds in the worker’s individual account in the respective AFP are subject to variability (profit or loss), which depends on a combination of economic, financial, regulatory and policy factors that affect the performance of the investments and the management of the pension funds.
EXEMPTION FROM CONTRIBUTION
Advantages:
- If the employer has a subsidiary in the country where the worker indicated that he/she is affiliated to the social security, he/she can pay the social security contributions in such institution.
- The employer may pay the amounts of social security contributions to the employee’s paycheck, and the latter is obliged to pay the amounts to the corresponding institution.
- The worker may have access to coverage for work-related accidents and occupational diseases as indicated in Law 16,744, and to unemployment insurance, since the employer is obliged to pay them.
Disadvantages:
In case the worker does not comply with the requirements set forth in Article 1 of Law 18,156, the employer may be subject to financial penalties that may be enforced by the supervisors of the Labor Directorate.
The worker has certain restrictions for not contributing to the health system, namely:
a. The medical benefits must be provided in the worker’s country of origin, unless he/she contracts an ISAPRE.
b. Medical leave and work incapacity subsidy. Since you do not pay contributions to the health system, you will be able to access medical leave, but not the work incapacity subsidy (extending, for example, to the postnatal period).
The non-payment of contributions could generate arguments in favor of the worker in an eventual labor litigation.
For more information contact
Bárbara Román
broman@gmail.com
