Juan Troccoli has set up operations within Uruguay for a number of major worldwide clients as partner at Andersen, one of Uruguay’s largest tax and legal firms.
In this interview, Karen A Higgs, founder of Guru’Guay, scratches the surface of Juan’s knowledge of the legal side of starting up a business in Uruguay. Juan covers the basics of the types of company—including a new ‘simplified’ corporation—, set-up times, costs and requirements. They also touch on what you need to know when hiring staff.
This article is based on the interview and has been edited for brevity and clarity.
What types of company can be set up in Uruguay?
The most simple structure that someone can register as a sole proprietorship or trader here in Uruguay is called a ‘unipersonal’. There is no separation between the personal capital or assets of that individual and the assets and capital used for the business.
When you want to separate your personal assets or your personal net worth, from the commercial assets and net worth, you set up an entity, and there you have three options.
The ‘sociedad anonima’ (SA), which is similar to a corporation in the USA.
The ‘sociedad de responsabilidad limitada’ (SRL), which is very much like a Limited Liability Company or LLC.
And the third one is a simplified company or ‘sociedad por acciones simplificada’ (SAS) which is relatively new and came into being in 2019 in a law to promote entrepreneurship. It’s a combination of both of the above. It’s similar to a corporation from a legal perspective but whose operations are much simpler—more like that of an LLC.
How long does it take to set up a company in Uruguay?
You can have a sole proprietorship ready and operating in 48 hours.
A corporation can be set up from scratch in 45 days. The complete process takes 45 days but the company exists and you can start trading from day one. If you want to set up faster, most law firms in Uruguay will have shelf companies available which you can acquire and activate in three days.
An SRL or SAS takes two weeks to incorporate. Again, you can start operating from the first day.
What are the costs involved?
A sole proprietorship, if you get a law firm to set it up for you—including lawyer and notary fees, stamps and certifications—costs about five hundred dollars. An SRL and an SAS cost around $1,800 more or less and an SA about $4,500 to set up.
If somebody wanted to set up a sole trader themselves, what is involved?
You can go directly to the tax office (called the Dirección General Impositiva or DGI), which is our IRS, and register showing proof of an address in Uruguay. A utilities bill in your name is good enough. Otherwise you’ll need a notary to certify your address which will cost around fifty or sixty dollars. With that proof, you can request the relevant forms to complete, and within 24 hours you are already registered as an unipersonal.
So, with your utilities bill and patience to deal with any red tape that arises, you can do it in a day and at virtually no cost.
What does a company need to do once it’s established here? What are the requirements that it needs to fulfill?
There are different requirements. From an accounting and financial perspective, in Uruguay we utilise the IFRS rules which are international standards accounting principles. So, the company needs to present annual financial statements.It’s not mandatory to have audited financial statements.
If the company has employees in Uruguay, you need to do payroll. The regulation of taxes on payroll, taxes on income and on salaries is pretty specific so accounting assistance is essential.
Regarding the corporate side, you must hold a meeting of the Board of Directors at least once a year, and an annual shareholder meeting to approve financial statements and renew or appoint new authorities for the following fiscal year.
One important thing is that Uruguay law allows the directors and shareholders to be represented by simple proxy. So, they do not need to go to Uruguay for meetings and can instead authorise someone in Uruguay to represent them.
What kind of regulations are helpful to know when hiring staff?
When you hire an employee, you need to register them at the social security agency, known as the BPS or Banco de Prevision Social. The BPS checks your company’s date of incorporation and that it’s registered with the DGI and paying taxes. Whenever you take on new staff, you need to register them with the BPS. Every month you file a return which shows your employees, the wages they receive, and the taxes you are paying on their behalf, and those you are withholding for them.
It’s expensive to have employees in Uruguay, would you say, compared to other countries?
Its somewhere in the middle. Taxation payable by companies on salaries is high—around 12% payroll tax, plus the state withholds 20-24% of salary taxes on the employee.
When you hire an employee, you can agree to a 90-day trial period. However, and this is something to be aware of, that trial is only valid when the employee signs a labour agreement with a clause stipulating the trial period at the time of hiring. If there’s no written agreement, the relationship is considered stable from the outset—meaning, there is no trial period, and you cannot dismiss the employee within the 90 days without paying compensation.
You can hire and fire very easily in Uruguay, but workers have the right to compensation, which is per year or part of the year worked, of approximately one month’s salary with a limit of six. So for example, if someone worked for your company for ten years and you dismiss them, they are owed six monthly salaries as compensation.