Phone: WA: +54 9 3814 45-9254
Set Up a Company in Uruguay and Enjoy Tax-Free Benefits
Uruguay has quietly become one of the most attractive tax residency destinations in the world, offering stability, safety, and two unique tax incentives for newcomers: an 11-year tax holiday and a permanent 7% flat tax option on certain foreign-sourced income.
If you’re considering relocating or obtaining tax residency in Uruguay, here’s what you need to know about the country’s tax laws, requirements, and the benefits
Why Uruguay Attracts Global Residents
Often referred to as the “Switzerland of Latin America,” Uruguay offers a combination of political stability, legal transparency, and European-style living in cities such as Montevideo and Punta del Este.
The country’s semi-territorial tax system means that most foreign-sourced income remains untaxed. With its clear path to residency and citizenship, Uruguay stands out as a secure and predictable jurisdiction for international investors, digital nomads, and retirees.
International Trading Companies in Uruguay
According to Resolution No. 51/997 of Uruguay’s General Tax Directorate (DGI), companies that buy and sell goods or services abroad, without those goods entering Uruguay, can benefit from a special tax regime. Only 3% of the profit margin (the difference between the purchase and sale prices) is considered taxable in Uruguay and is taxed at the standard 25% corporate rate, resulting in an effective tax rate of approximately 0.75% on profits. Dividends are then taxed at 7%, but only on the net taxable income. This setup enables Uruguayan trading companies to conduct global operations with minimal local taxes.
Export- Import Company Between Argentina and Uruguay
Imagine you own agricultural land in Argentina, where your products are produced, but your export-import company is based in Uruguay, and you live in Uruguay as a permanent resident.
Your Uruguayan company buys the goods from your Argentine farms for $100,000 and sells them abroad for $1,000,000 (to the US, for example).
The profit margin is $900,000.
Under Resolution No. 51/997, only 3% of that profit ($27,000) is considered taxable in Uruguay.
In other words, considering that the corporate tax rate is 25% in Uruguay, you pay $6,750 in taxes, which equals about 0.75% of your total profit.
However, as a resident, you still have to pay foreign dividend tax, which is 7%. However, this is only applicable to the small taxable portion, keeping your overall tax burden close to 1%.
As a result, you earn high export profits from Argentina while benefiting from Uruguay’s low-tax, transparent, and stable system, an ideal setup for international agricultural trade. Let’s talk about 7% dividend tax below.
Let’s now look at the 7% dividend tax, which applies after corporate profits are distributed.
In Uruguay, as a newcomer, you have two options:
1. 11-Year Tax Holiday – pay 0% on foreign passive income for 11 years.
2. 7% Lifetime Flat Tax – pay a permanent 7% flat rate on eligible foreign income.
Option 1 - The 11-Year Tax Holiday in Uruguay
Under Law No. 19,904, individuals who become Uruguayan tax residents after January 1, 2020, are eligible for an 11-year exemption on foreign-sourced passive financial income, including dividends, interest, and other capital gains.
This means that for the year you first qualify as a tax resident plus the following ten years, Uruguay will not tax this category of income from abroad.
After 11 years, regular tax rates apply (generally 12% on such income).
Option 2 - The 7% Lifetime Flat Tax as Uruguay Resident
As an alternative, newcomers may elect to apply a 7% lifetime flat tax on foreign-sourced financial income instead of the temporary 11-year exemption.
This rate remains indefinite, offering a permanent low-tax environment for long-term residents who wish to establish Uruguay as their base of operations.
After the election, the 7% replaces the normal 12% rate, as confirmed under Article 37-T7 of Title 7 (IRPF), updated and approved by Decree No. 101/024 (Article 1).
Become a Uruguay Tax Resident to Access the 11-Year Tax-Free Regime
To access either benefit, you must first become a tax resident of Uruguay. The country recognizes several paths to tax residency; you need only meet one of the following conditions:
1. Physical Presence: Spend at least 183 days in Uruguay during a calendar year.
2. Family Ties: Your spouse or dependent children live in Uruguay.
3. Real Estate Investment: Purchase property valued at least 3.5 million Indexed Units (UI) (approx. USD $370 000) and spend 60 days per year in Uruguay.
4. Business Investment: Invest at least 15 million UI (approx. USD $1.7 million) in a local company creating 15 jobs.
5. Economic Center of Life: Demonstrate that your main economic interests are in Uruguay.
Once you meet one of these criteria and obtain a tax residency certificate from the Dirección General Impositiva (DGI), your tax holiday begins automatically unless you opt for the 7% rate.
Why This Matters for Immigration-Focused Clients
For individuals seeking residency or citizenship through relocation, Uruguay offers both a high quality of life and predictable taxation.
When combined with straightforward immigration routes, such as temporary residence through investment, employment, or family ties, this tax policy strengthens Uruguay’s position as one of the safest and most transparent entry points to South America.
Summary
| Option | Tax Benefit | Duration | Ideal For |
| 11-Year Tax Holiday | 0% on foreign passive income | 11 years | Investors or retirees planning a medium-term stay |
| 7% Lifetime Flat Rate | 7% on foreign passive income | Unlimited | Long-term residents or families settling permanently |
Final Thoughts
Uruguay’s combination of political neutrality, strong institutions, and favorable tax laws makes it a compelling choice for global citizens seeking a secure, low-tax jurisdiction with first-world infrastructure and a European lifestyle.
If you’re considering relocating to or investing in Uruguay, consulting a local tax and immigration professional is crucial to structuring your residency and ensuring proper compliance.