OBLIGATORY PENSION PAYMENTS FOR INDEPENDENT/FREELANCE WORKERS ACCORDING TO THE SII
For independent/freelance workers in Chile: As of the year 2012, with the pension reform, freelance workers are obligated to pay pension payments as well as occupational accident and work-related illness insurance, with the possibility of exempting from said obligation for tax years 2013, 2014 and 2015. As of January 2015, the obligation to make said payments will not allow an exception and all freelance workers must make payments for pensions and work accidents. If freelance workers do not make monthly pension and insurance payments, they must make the payments on an annual basis, through the income tax declaration of the following tax year. The obligation to make health insurance payments (through an Isapre or FONASA) starts in 2018.
The following people are required to make the pension and insurance payments:
Receive payment/fees for independent activities; or
Receive income by way of boletas de honorarios; or
Receive income by way of Boletas de Prestación de Servicios de Terceros; or
Receive income by way of Participaciones de Sociedad de Profesionales.
Those who are NOT required to pay the pension and insurance payments are those who:
1. Are affiliated with institutions of the old Chilean Social Security System: Capredena, Dipreca and IPS.
2. Women who are 50 years old or older and men who are 55 years old or older, as of January 1, 2012.
3. Those who have expressed their option not to make the payments (no cotizar) on the SII website.
4. Pensioners for old age, early retirement or total disability.
5. Those who have been making the required monthly payments as dependents for the maximum monthly taxable limit (72,3 UF, approximately $1.780.000(CLP)).
6. Those who make an annual income less than $281.250(CLP) (annual taxable income less than the minimum monthly income, currently $225.000(CLP)).
Fulfilling this obligation will allow independent workers to access the same benefits as dependent workers with an employment contract, which includes: Old-age pension, disability and survivors' pension, Occupational safety (insurance for work-related accidents and occupational diseases), health (The 7% contribution for health allows the independent worker to access the health system under the modality of free choice, either in FONASA, or in an ISAPRE), and other pension benefits such as the right to Family Allowance, right to join a Compensation Fund and finally there are Tax benefits such as Voluntary Pension Saving (APV), Reduction of pension contributions as an effective expense of gross income.
How much should the independent worker pay?: The percentage to be paid is as follows:
AFP: 10% for the Pension Fund administered by the AFP. If the independent worker has never joined an AFP, they must then join the AFP that has won the tender for new members (currently, AFP Planvital).
Health: 7% for health (ISAPRE or FONASA): With which this is the last year to be able to waive this obligation and this waiver is made through the sworn statement on the SII website.
Important Considerations: • To qualify for medical benefits, you must have paid at least 6 continuous or discontinuous payments/contributions in the last 12 months prior to the date on which the benefits are requested. • The amount of the commission charged by the AFP will depend on the AFP to which the individual is affiliated or will be affiliated in the future. • If workers at a fee do not pay their pension contributions on a monthly basis, they must pay the contributions on an annual basis, through the income statement/declaration of the following tax year • The correct order to do things is to first enter the taxpayer session on the SII website, go to the boletas de honorarios tab, choose the sworn statements/declaraciones juradas option and then make the sworn statement by checking the option to quit for this period/renuncia a cotizar por este periodo. Once that is done, the taxpayer will be able to send the respective tax return as of April 1, 2018, and whose tax refund, if applicable, will be received in the taxpayer's bank account as of the first week of May 2018