Below please find a brief summary of several important new legal and tax developments that may be relevant to you. If you have any questions or would like to discuss how any of these changes may affect your planning or compliance obligations, please do not hesitate to contact us.
I. United States–Chile Income Tax Treaty Enters Into Force
On December 19, 2023, the U.S. Treasury Department announced the entry into force of the United States–Chile Income Tax Treaty (the “Treaty”), a significant development for individuals and entities with cross-border investments and business between the U.S. and Chile.
Effective Dates:
- For withholding taxes, the Treaty applies to amounts paid or credited on or after February 1, 2024.
- For all other taxes, the Treaty applies for taxable periods beginning on or after January 1, 2024.
Dividends:
- General withholding tax limited to 15%.
- 5% rate applies if the beneficial owner is a company holding at least 10% of the voting stock of the paying company.
- Exemption for pension funds on dividends received.
Interest:
- Withholding rate limited to 15% for the first five years, and 10% thereafter.
- A reduced 4% rate applies for certain qualified entities such as banks and insurance companies.
Royalties:
- 2% withholding for royalties involving industrial, commercial, or scientific equipment.
- 10% withholding for royalties involving copyrights, patents, trademarks, and other intangible assets.
Important Limitations: Unlike some recent U.S. tax treaties, this Treaty does not include a full exemption from withholding tax on certain parent–subsidiary dividends, interest, or royalties.
II. Gift Tax Reporting Obligations for Nonresident Aliens (NRAs)
If you are a nonresident alien (NRA) and have made certain gifts in 2024, you may be required to file Form 709-NA, even if no tax is due.
Filing is required if you made gifts of U.S.-situated real estate or tangible personal property exceeding:
- $18,000 per recipient in 2024, or
- $185,000 to a spouse who is not a U.S. citizen.
Tip: The obligation to file arises based on the total value of gifts made to each recipient during the year — not just individual gifts exceeding the exclusion amount.
III. Florida Repeals State Sales Tax on Commercial Rent (Effective October 1, 2025)
A long-awaited change is coming to Florida’s tax law:
- Effective October 1, 2025, businesses leasing commercial real estate in Florida will no longer be required to pay sales tax on rent.
- This change was enacted by the Florida Legislature via House Bill 7031 and is awaiting the Governor’s signature.
Applies to:
- Office space
- Retail space
- Industrial properties
Still taxable:
- Self-storage units
- Boat slips
- Commercial parking
- Short-term rentals (e.g., Airbnb-type accommodations)
Reminder: Sales tax continues to apply to all rent for occupancy through September 30, 2025, even if payment is made later.
If any of these developments may affect your personal, investment, or business interests, we recommend a prompt review to assess your compliance obligations or potential planning opportunities.
