Uruguay’s new tax residency requirements

Uruguay’s new government wants to attract immigration. Their first move, on tax residency, is aimed at neighboring Argentines but could benefit you too.
By Karen A Higgs
Last updated on August 18, 2020

Uruguay’s government wants to attract new residents. Their first move aims at neighboring Argentines but could benefit you too.

The new Uruguayan government, which came to power on March 1, announced that it wants to encourage immigration to the country. A figure of 300,000 new immigrants has been mentioned.

The first concrete measure the government took in this sense has been to relax the requirements to obtain fiscal residence. The underlying premise for this is that Uruguay’s tax regime is more favorable than that of other countries. Therefore, foreigners will want to obtain that status. And this in turn will encourage investment in the country.

Fiscal residence is often confused with permanent residence status

So, what’s the difference:

  • Fiscal residence is a tax law concept, by which the Tax Office of a country decides if a person/company is subject to a country’s tax laws.
  • Permanent residence is an immigration law concept, by which the Immigration Office decides if a person can stay in a country indefinitely.

More measures are expected on the tax side to further encourage investors. It would be logical that measures also be taken to encourage permanent residence.

So what are the main changes to Uruguay’s fiscal residency?

Decree 163/20 maintains the basic criteria for obtaining fiscal residency in any country, i.e. by being physically present here for 183 days of the fiscal year—which in Uruguay is the calendar year.

However, “temporary absences” of up to 30 days are not counted as an absence. So, the absolute minimum is less than 183 days. Since the decree refers to “temporary absences” in the plural, there can be more than one absence of up to 30 days in any year, reducing the period quite considerably.

Another basis on which someone can obtain fiscal residence is by owning real estate valued at around 380,000 USD together with the obligation to be physically present in the country for at least 60 days each calendar year.

For business investors, another possibility is to invest USD 1.6 million in a company, subject to also hiring at least 15 new full-time employees.

The final basis is to show that a person has their center of economic or family activity in Uruguay. The requirements for such remain unchanged.

What to take into account regarding the changes?

Just getting a certificate of fiscal residence in Uruguay does not automatically mean that a person is not still also fiscally resident in another country.

The Decree aims principally at Argentine nationals who are looking for ways to escape the clutches of the Argentine Tax Office (AFIP). But whilst it will be easier to get the fiscal residency certificate here in Uruguay, this is only half the battle won. The Argentine tax authorities will not make it easy for their nationals to reduce or eliminate their tax obligations in that country. Especially with the current pandemic and recession.

Future measures: Increase in the tax holiday for new residents

The government has announced a new law to increase the “tax holiday” for new residents from five years to ten years. This exemption applies to income tax (“IRPF”) which would otherwise be due on income from foreign monetary instruments e.g. interest on bank accounts or share dividends.

If you would like to explore if you can start Uruguay residency proceedings through a foreign consulate, we recommend you contact Teuten Associates.

Further reading

Mark Teuten is a British lawyer based in Montevideo since the 1990s. He has law degrees from both the UK and Uruguay. He can help you with your residency applications, setting up a registered company and other legal matters. Guru’Guay has recommended him to our readers who have praised his trustworthiness, clarity, prompt communication even over great distances and careful advice regarding courses of action.

This article is for information purposes only. Please consult with a lawyer as to your particular circumstances.

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5 Responses

  1. Bonjour,
    Une petite question : les gains en capitaux sur les cryptomonnaies sont-ils imposables? Si oui, à quel taux ? Merci d’avance pour votre réponse.

  2. Qual é a alíquota de imposto de renda que um brasileiro que passe a trabalhar em Montevideo para empresa Uruguaia pagara? Há algum incentivo para esse caso?

    1. Olá eduardo, se você está trabalhando para uma empresa uruguaia no Uruguai, você é responsável pelos mesmos impostos que qualquer outro residente. Desculpe a má notícia! Saludos, Karen

  3. Since US citizens owe taxes wherever they live (albeit with the possibility of the FEIE that this *may* not impact though it might with the Bonafide Residency Test), I perceived this as a way to *gain residency* with less of the usual process. Is that perception wrong, right or uncertain?

    1. Bill, the changes referred to in the article are for fiscal residence not for permanent residence. As you note for US citizens you still have on-going obligations on world-wide income.
      The requirements for permanent resident status are at present unchanged.

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