ComplianceLegalJuly 13, 2020

Uruguay introduces new tax residency requirements

Uruguay – President Luis Lacalle Pou – in order to stimulate foreign investment – announced the approval of Decree 163/20 which makes the requirements for obtaining tax residency in Uruguay more flexible. Only natural persons who meet the new eligibility requirements based on specific economic factors qualify under this decree. Decree 163/20 outlines the following key conditions to obtain tax residency in Uruguay:

  • Presence in the Uruguayan territory for a minimum of 60 days in a calendar year.
  • Investment in properties for a value greater than UI 3,500,000 (approximately US$370,000) made as of 1 July 2020.
  • Direct or indirect participation in a company with a value greater than UI 15,000,000 (approximately US$1,585,000) made as of 1 July 2020, and that generates at least 15 new full-time jobs from 1 July 2020.

There are a few important elements to consider when applying for tax residency in Uruguay:

  • All eligible tax residents must adhere to the Uruguayan tax regime.
  • The real estate investment criteria apply unless the taxpayer proves his tax residency in another country.
  • International agreements are taken into account to avoid double taxation.
  • The full-time employment generated must be “new” and does not imply a decrease in jobs in related companies.
  • Obtaining exclusively pure capital income, even when all assets are located in the Republic, does not qualify a person for tax residency.
  • Income generated must correspond to activities carried out in Uruguay.
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