On 13 December 2023, Chile became the first country in the Latin American region to conclude with the European Union EU an Advanced Framework Agreement and an Interim Trade Agreement to strengthen political cooperation and foster trade and investment, such as the 2030 Agenda, climate action, state modernisation, sustainable development and gender equality, on behalf of the Spanish Presidency of the European Council. These agreements will create new economic opportunities for both sides and promoting the values of human rights, sustainable trade and gender equality.

The new Agreements will be submitted to the European Parliament and ratified by all EU Member States. The Interim Trade Agreement allows for an early entry into force of the modernised trade rules. The Interim Trade Agreement will come into force when Chile’s Congress concludes its ratification procedure. It will expire automatically once the Advanced Framework Agreement enters into force.

The agreements facilitate cooperation between the EU and Chile on the de-risking of supply chains and the securing sustainable supply of critical raw materials, which includes support for projects such as the development of critical raw materials value chains for lithium and copper and the production of green hydrogen in Chile, addressing climate change and the goal of achieving a net-zero economy.

On the other hand, Chile and Brazil upgraded their Double taxation agreement (DTA) as per OECD BEPS standards on behalf of the Protocol that introduces significant amendments in relation with existing cross-border transactions between residents in such jurisdictions.

The Chilean Senate has approved the protocol. This Protocol will enter into force as of January 1st of the year following, 30 days after the exchange of the ratification instruments. The Protocol to the DTA include, among others, the OECD BEPS standards; the updated permanent establishment definitions; the 10%/15% withholding tax rates for intercompany royalties and other passive income payments; the Multilateral Agreement Procedure rules; some restrictions in entitlement to benefits and a general anti-avoidance provision.