Chile has introduced a temporary gift tax incentive through Law no. 21,850 “For National Reconstruction and Economic and Social Development”, published in the Official Gazette on 17 October 2026.
The new incentive is designed to encourage the transfer of wealth during an individual’s lifetime. The measure includes a one-off 50% reduction in gift tax which represents a substantial reduction compared with standard rates, currently ranging from 1% to 25% subject to certain exemptions available only to close family members.
Additionally, gifts qualifying for this new tax reduction will be exempt from the standard judicial authorisation procedure (insinuación judicial). Instead, the gift must be executed by means of a simple public deed before a notary, subject to compliance with the applicable tax filing and payment requirements.
The incentive will be available for certain family transfers, including transfers to the individual’s forced heirs (legitimarios) and potential beneficiaries of the cuarta de mejoras such as children, descendants, ascendants and a surviving spouse. Both are categories of family members recognised under Chilean succession law. The measure is intended to facilitate succession planning and accelerate the transfer of assets to the next generation.
A simple example shows the potential benefits.
A father wishes to transfer US$5 million to his daughter in January 2027. As his daughter and therefore a forced heir, this gift will qualify for the temporary incentive, subject to the relevant conditions.
Using the current gift-tax bands and the five annual tax units (UTA) exemption applicable to gifts to children, the standard gift tax on a transfer of US$5 million would be approximately US$1.1 million (22.2% effective tax rate). Under the temporary 50% reduction, this would fall to approximately US$550,000 (11.1% effective tax rate), producing a significant tax saving on the transaction.
The calculation is illustrative because the applicable UTA and exchange rates can change.
The qualifying gift would also be exempt from the usual insinuación judicial process in Chile, replacing the prior judicial authorisation requirement with the simpler public-deed process with a notary.
Implications for Intergenerational Wealth Planning
Private wealth is expanding in Chile. The number of US-dollar millionaires grew by 3.9% in 2025, adding around 2,600 new millionaires in a single year, compared with global millionaire growth of 1.5%*.
For affluent families, this new incentive could encourage earlier transfers from older family members to children and other qualifying heirs. This could increase the amount of capital available for long-term investment and wealth planning. The regime is subject to specific conditions, including limits on the value transferred and requirements to preserve a substantial portion of the donor’s estate.
This measure will only be available for one year from 1 December 2026, subject to the gift and the required declaration being formalised within that period.
The law also includes measures to encourage investment and economic growth. These include a preferential tax regime for the repatriation and disclosure of foreign assets (taxed at 10% or 7%, valid for one year from 1 January 2027), alongside changes to corporate taxation and temporary waivers of penalties in certain circumstances, among other measures.
Why It Matters?
Although the reform does not directly affect life insurance products, it is likely to prompt intergenerational wealth transfers and succession planning discussions among high-net-worth families in Chile. This could create wider opportunities to consider how transferred wealth is structured and invested over the longer term, including the potential role of private placement life insurance for appropriate Chilean resident families.