Twelve Months at Half Price

From December 1, donations to children, spouse, grandchildren and other forced heirs pay half the tax, once only. How much can really be donated depends on a sentence in the law that Chile's tax authority (SII) has yet to interpret.

In Chile, advancing an inheritance during one's lifetime costs almost the same as waiting for the succession to open. For twelve months that changes. Law 21.850, published in the Official Gazette on October 17, 2026, cuts in half the tax on donations made by public deed within the year that begins on December 1, 2026. Donations that qualify are also released from court approval ("insinuación"), the court procedure that until now every significant donation required.

More than the 50% figure, what decides whether a family takes advantage of the window is who can receive, how much can be donated and in what order things must be done.

Who can receive the donations

The reduction favors only the donor's potential forced heirs and those potentially entitled to the "cuarta de mejoras" (the share a donor may freely allocate among descendants, spouse or civil union partner and ascendants), in the proportion the donor freely determines. The forced heirs are the children, ascendants, spouse and civil union partner. The "cuarta de mejoras" also admits descendants in general, so a grandparent can donate to grandchildren even while their parents are alive.

Donations to other people do not get the reduction, unless the donor has no forced heirs or "cuarta de mejoras" beneficiaries at the time of donating, which must be stated in the donor's sworn statement. The spouse can also receive with the reduction, because the spouse is a forced heir, but the law adds a special rule for that case. Under the seventh paragraph of the first transitional article, a donation to the spouse under the benefit "tendrá el carácter de irrevocable" ("will be irrevocable") and is taxed in accordance with the first paragraph, which is the one that grants the reduction. The law thus departs from article 1137 of the Civil Code, under which donations between spouses can always be revoked.

How much can be donated, one half or one third?

The law sets an express cap in the fifth paragraph of the first transitional article of Law 21.850, stating that the total donated with the reduction cannot exceed 50% of the donor's estate, calculated as the donor's assets, valued under articles 46 and 46 bis of Law 16.271, minus documented liabilities.

The problem is in the next paragraph of that same provision. The donor's sworn statement must prove, among other things, "el hecho de contar con bienes cuyo valor sea al menos equivalente al doble del monto de lo donado" ("the fact of holding assets whose value is at least equivalent to double the amount donated"). The law does not say whether those assets are measured before or after donating, and the difference is large. If the donor must hold double before the donation, counting what is donated, the limit remains one half. If the donor must keep double after donating, the most that can be donated is one third of the donor's assets. Until the SII publishes its instructions, anyone who wants to donate close to half of their estate takes a risk that someone donating a third does not.

In September, when the bill was still awaiting promulgation, we warned in an earlier analysis that this requirement could reduce the effective limit to one third of the estate. The published text left unchanged the two sentences we analyzed then. The warning stands. Until the SII rules on it, one third is the prudent limit.

First the tax, then the signature

As for the procedure, the order changes. The notary gives the recipients an unauthorized copy of the deed, so that they can declare and pay the tax with the SII. Only when the notary is shown, by SII certificate, that the sworn statement was filed and the tax paid, can the notary authorize the deed, and the certificate is incorporated into the notarial protocol together with it.

The tax is paid before the donation exists. The registrations and other records needed to transfer the assets can be done afterwards, but the deed must be signed within the window set by the law.

How to pay without selling

The recipients can finance the tax with loans from the companies whose shares or interests are donated, or from related companies, without the taxation of article 21 of the Income Tax Law, provided that certain conditions of form, currency and term are met. The mechanism is designed for the family company. Whoever donates a property in their own name, outside a company, cannot use it. We will explain it in detail in the second piece of this series.

What changes and what does not

For the credit under article 23 of Law 16.271 and for calculating future inheritances or donations by the same donor, the full tax is considered paid, as if there had been no reduction. We can reasonably interpret that the benefit is not lost when the donor dies.

Donations made before the law's publication are not added to the new one to calculate its tax, and the new one is taxed alone on the progressive scale, because the law leaves the first and final paragraphs of article 23 without application. They are still added to the inheritance, because the second paragraph of that article was not excluded.

The State, however, reserved two safeguards. If the recipient sells the asset within three years of the deed, its tax cost is the lower of the donor's cost and the cost that would apply under the general rules, without prejudice to the SII's powers under the general anti-avoidance rule. In addition, the SII can review the value of the assets and the truthfulness of the statements for three years from payment of the tax.

What we do not know yet

The law orders the SII to issue its instructions within 30 calendar days of publication, that is, by November 16, 2026 at the latest. Until then three questions remain open. How is the double requirement measured? Does the expression "por una sola vez" ("once only") require gathering all donations into a single act, or does it allow several deeds within the window? What happens to the release from court approval if years later the SII concludes that the donation did not meet the requirements? The third is not minor, because a donation without court approval that exceeds the limit of article 1.401 of the Civil Code is void as to the excess. As the rule is recent, there is as yet no case law on it.

What to do before signing

For those who want to take advantage of the window, the order of work is well known. First the estate has to be valued under articles 46 and 46 bis of Law 16.271 and the liabilities documented. Then it is advisable to choose the recipients, set the proportions within the forced heirs' shares and the "cuarta de mejoras", and check whether the companies' bylaws require the consent of other partners or restrict the transfer of shares or interests. After that, it must be resolved where the tax will come from, since it is paid before the deed is authorized. Finally, the sworn statement, the filing with the SII and the deed are coordinated with the notary's office.

The window lasts twelve months, but a good donation is prepared in weeks. Paying half the tax and discovering three years later that the reduction did not apply costs more than having paid the full tax.

Law 21.850 Series on Donations

The background to this series is "The Twelve-Month Window", of September 6, 2026, which analyzed the bill before its promulgation.

• Twelve Months at Half Price. Who can receive, how much can be donated and in what order, according to the published law.
• How to Pay the Tax Without Selling the Company. Financing through loans from the family company. Week of November 9.
• One Half or One Third? The SII's instructions, the step-by-step at the notary's office and the risks after signing. When the SII publishes its resolutions, by November 16 at the latest.