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Flexibility of fiscal residence in Uruguay

By Dr. Gabriel Pittaluga Rossi, Dr. Jorge González Cisneros - 24/07/2020

In recent days, the Uruguayan Executive Branch published a Decree that establishes certain guidelines that facilitate and make more flexible for foreigner to obtain the fiscal residence in Uruguay. It is worth clarifying that a bill is also being drafted in this regard and will be sent to Parliament shortly.

The Decree states that Uruguay is an open-door country in which a policy of stimulating investment is promoted so that all foreigners who wish to choose Uruguay as a destination for their personal and economic projects can settle in our country.

Therefore, through the new regulation, two new grounds are added to the fifth paragraph of Article 5 Bis of Decree No. 148/007, which is where the mechanisms by which it will be considered that a person establishes the basis of their economic interests In Uruguay.

The new grounds are as follows:

c) in real estate, for a value greater than 3,500,000 IU (three million five hundred thousand Indexed Units equivalent to approximately USD 380.000) provided that it is carried out as of July 1, 2020 and evidences an effective physical presence in Uruguayan territory during the calendar year of , at least 60 (sixty) days according to the provisions of the first paragraph of this article. If no new acquisitions are made, the updated tax cost of each property valued in accordance with the provisions of article 26 of this Decree will be considered.

d) direct or indirect, in a company with a value greater than 15,000,000 IU (fifteen million Indexed Units equivalent to approximately USD 1.630.000), provided that it is carried out as of July 1, 2020 and generates at least 15 (fifteen) new direct dependency jobs, full time, during the calendar year. For such purposes, the accumulated investment will be computed from the indicated date until the end of the corresponding calendar year. In the case of investments made in kind, and with regard to their valuation, rules that regulate the Income Tax of Economic Activities will be applied. New jobs will be understood as those generated as of July 1, 2020, as long as they are not related to a decrease in jobs in related entities.

Continuing with this line of incentives, the President of the Republic will send to the Parliament in the next few days a bill that extends the exemption from income tax for foreigners who have their fiscal residence in Uruguay. This new project increases the term of those who pay the Non-Resident Income Tax (IRNR) from 5 to 10 years, as well as the possibility of choosing to pay instead of the IRNR, the Personal Income Tax (Personal Income Tax) at a fixed rate of 7%.

We certainly view these incentives in a very positive way, hoping that this will significantly increase the arrival of foreign companies and capital to our country.

By Dr. Gabriel Pittaluga Rossi, Dr. Jorge González Cisneros - 24/07/2020
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Pittaluga Abogados

Pittaluga Abogados, has initiated its professional practice 20 years ago, as an Intellectual Property Law Firm.

After some years providing a specialized and top level service for foreign clients, many of them among the world premier companies, Pittaluga Abogados obtained a recognized international prestige in said field, which convert it into one of the leaders Intellectual Property Law Firms in Uruguay.

Thus, today in P&A we take pride in emphasizing that our goal has always been and will continue being, to keep a personal relationship with our clients, considering at all times the priorities of our clients as our own, with the belief that each one of them is unique and irreplaceable.