The Tax Case Law Report (RJT, by its Spanish acronym) is a monthly publication featuring a curated selection of decisions from the Chilean Courts of Appeal and the Supreme Court that we consider relevant due to their subject matter, legal reasoning, and practical implications. In this first edition, RJT covers three decisions on:
(1) the senior citizen real estate tax relief under Law No. 20,732,
(2) tax loss carryforwards in consecutive audits, and
(3) limits to the SII’s interpretative authority under Circular No. 38/2025 regarding the “VAT advance payment” required from payment service providers.
Court of Appeals of Santiago, January 21, 2026
Case No. 20,732-2024 | Constitutional injunction (recurso de protección) | Senior citizen real estate tax relief | Real estate tax (contribuciones) | Law No. 20,732
Outcome: In favor of the taxpayer
Key holding. Although section 1 of Law No. 20,732 expressly requires compliance with “cumulative requirements” to access the senior citizen real estate tax relief, the Court adopts a purposive interpretation and concludes that the assessed value cap in section 1(4) is not an absolute barrier. The Court distinguishes between essential and non-essential requirements: once the essential requirements are met, the relief applies up to the cap, and any excess is subject to the general regime.
Dispute. A senior citizen applied for the Law No. 20,732 relief to reduce their tax liability. The SII rejected the application on the basis that the property’s assessed value exceeded the cap set out in section 1(4), thus preventing compliance with the statute’s “cumulative” requirements.
Decision. The Court of Appeals upheld the constitutional injunction and ordered: (i) the annulment of the tax assessments and related collection measures, and (ii) a recalculation applying the relief in accordance with the Court’s interpretation. The decision rests on the following considerations:
Non-formalist interpretation. Following the Supreme Court’s approach (Case No. 2,765-2019), the term “cumulative” is not read in a strictly literal manner. The Court relies on the legislative history and the ratio legis of Law No. 20,732: protecting vulnerable senior citizens.
Correct interpretative rule. Sections 1(1)–(3) are treated as essential conditions (age, ownership/title, and residential use). By contrast, section 1(4) (assessed value cap) operates as a quantitative limit. Accordingly, once the essential conditions are met, the relief applies up to the cap and the excess falls under the general real estate tax regime.
Subsequent arbitrariness. Even if the tax collection may appear lawful at first, it becomes arbitrary where there is no reasonable relationship between the tax burden and the taxpayer’s income, rendering the charge manifestly disproportionate and unfair.
Constitutional rights and international duties. A tax burden that compromises basic subsistence may affect the rights to life and property, by exposing the taxpayer to a quasi-expropriatory outcome (forced loss of the property due to inability to pay). The application of the relief must be consistent with protection duties arising from international treaties.
Court of Appeals of Santiago, January 6, 2026
Case No. 305-2025 | Appeal of final judgment in a tax claim | Loss carry-forward | Consecutive audits
Outcome: In favor of the taxpayer
Key holding. In audits involving loss carryforwards, the tax court may not refuse to decide the merits solely because prior administrative acts are being challenged in other claim proceedings. To decide the tax year under review, the court may examine the underlying origin of the items to the extent necessary, even if its conclusions and effects are limited to the disputed period.
Facts. The SII challenged a loss carryforward arising from goodwill and denied the PPUA (provisional monthly payment credit generated by absorbed profits) refund claimed for tax year 2018. The tax court rejected both items without addressing the merits, relying on the existence of prior administrative acts that were already under judicial review in separate proceedings.
Decision. The Court of Appeals reversed the judgment and fully upheld the tax claim, setting aside the SII’s acts. The decision is based on the following considerations:
Duty to decide the merits for the relevant period. The court cannot decline to rule on tax year 2018 merely because prior years’ administrative acts or disputes exist. Tax claim proceedings require judicial review of the challenged act for the specific period. The autonomy of the tax year does not prevent reviewing prior-year background when the nature of the items so requires (e.g., loss carryforwards and PPUA).
Loss carry-forward. The loss was linked to goodwill generated in a 2012 merger. Its origin and use had been addressed in prior judicial decisions favorable to the taxpayer, making it unsustainable to disregard its effects in 2018. In any event, even without relying on those prior outcomes, the technical and accounting evidence supported both the goodwill and the loss; the SII did not substantiate its challenge or raise substantive methodological objections.
PPUA. The denial of the refund was based solely on rejecting the loss carryforward, without independent objections to the existence, amount, or allocation of the PPUA. Once the loss is recognized, the basis for denial falls away and the refund follows.
Court of Appeals of Santiago, January 12, 2026
Case No. 13,695-2025 | Constitutional injunction (recurso de protección) | VAT “advance payment” for payment services | SII Circular No. 38/2025
Outcome: In favor of the taxpayer
Key holding. Circular No. 38/2025 exceeds the SII Director’s interpretative authority by imposing a “VAT advance payment” without an express legal basis, effectively creating a tax withholding obligation by administrative means.
Facts. The petitioner challenged Circular No. 38/2025 through a constitutional injunction, insofar as it requires payment service providers to invoice—besides VAT on their commission—an additional “advance” calculated as a percentage of the net value of the underlying transactions. The petitioner argued that the Director lacks authority to impose a withholding not provided for by law. The SII argued that the measure falls within the VAT change-of-taxpayer/withholding mechanism, in the context of Law No. 21,713 and amendments to section 68 of the Tax Code.
Decision. The Court of Appeals upheld the action and ordered the SII to set aside the section of Circular No. 38/2025 establishing the VAT “advance”/withholding, finding that it was issued in excess of legal authority. The decision rests on the following considerations:
Admissibility. The constitutional injunction is an appropriate avenue to review whether the SII Director acted within the bounds of legality. The dispute is not about defining a substantive right, but about an institutional competence issue.
Limits to interpretative powers. Under the principles of tax legality and legal reserve, administrative interpretation does not allow the Director to expand the scope of the statute or to innovate on essential elements of the tax obligation.
Excess of authority. Section 68(12) of the Tax Code requires verification/accreditation of tax compliance, but does not authorize the imposition of a VAT withholding or “advance payment”. The Circular therefore goes beyond interpretation and effectively creates a withholding burden not established by law.
Insufficient reasoning. The Circular lacks the technical reasoning required to support its approach. In any event, even if properly reasoned, the outcome would be the same: an administrative creation of a tax burden that requires a legal basis.
Constitutional impact. By imposing obligations not provided by law, the measure is deemed unlawful and arbitrary, affecting equality before the law in its dimension prohibiting arbitrary distinctions.
