I learned something interesting when I was in Santiago, Chile recently, that goes against a post I had written on what do with foreign currency when ending an international trip. Don’t pay your hotel bill with Chilean Pesos…
In that post, I had suggested to pay your hotel bill with your leftover cash, that way you don’t have to worry about covering it when you get home. As you leave your hotel room in Paris for the airport, for example, give the front desk clerk any remaining Euros you happen to have and ask them to apply it to the bill. You’ll get rid of your foreign currency “for free.”
However, there’s an exception I recently encountered, and it’s Chile. In Chile, there’s a value added tax (VAT) of about 20%, known as an IVA. This tax is included in the price of goods you pay, but if you’re at a hotel and you pay with a foreign credit card or use foreign cash (aka, US Dollars), you don’t have to pay the IVA tax. It’s worth noting that you’ll pay this tax outside the hotel.
In order for this to work, your hotel must:
- Be registered with the tax office of Chile (SII)
- Must take a copy of your passport with the white immigration card when you enter Chile.
- You must not be staying for longer than 60 days.
Most branded hotels will meet these requirements, as will most leisure travelers.
After galavanting around the city for a few days, I had accumulated about $30 US dollars worth of Chilean Pesos. Not much, but I didn’t plan on returning within the immediate future, so planned on giving these to the desk as I checked out to have them added onto my bill. I was surprised when the friendly agent in the Grand Club told me it wasn’t smart to give her the cash, as it would cause the entire bill (not just the portion I’d be paying with cash) to be taxable. Oh, boy! Luckily, as I said, it was only about $30 USD worth, so it wasn’t a ton, but I was glad I was advised not to pay my bill with it. Instead, I gave it as a tip to the friendly folks who worked in the lounge – they were working hard constantly refilling drinks, etc.
So, when in Chile, DON’T try and pay your hotel bill with the local currency! Oddly enough, pay for it in US Dollars and you’ll save yourself a ton of money.
Do you know of any other countries where you need to pay tax when paying with the local currency?
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