Taxes

Taxes in Uruguay

Uruguay operates a semi-territorial tax system that is particularly favorable for expats with foreign-source income. Major changes took effect January 1, 2026, with the Tax Holiday 2.0 regime.

Tax Residency Rules

You become a Uruguayan tax resident if:

• You spend 183+ days in Uruguay in a calendar year
• Your "center of vital interests" is in Uruguay
• You meet investment-based residency thresholds

Territorial Tax Principle

Key Rule: Uruguay primarily taxes income from Uruguayan sources only. Foreign-source employment income is not taxed. Foreign-source passive income has special treatment under the new 2026 rules.

Income Tax Rates (IRPF)

Employment Income (progressive):

Foreign Capital Income (from 2026): 12% IRPF rate (may be reduced to 8% with withholding)

Tax Holiday 2.0 (January 2026)

For new residents from 2026:

• Up to 10 years of exemption on foreign-source capital income
• Additional 5 years at half rate (~6%)
• Total: up to 15 years of preferential treatment

Eligibility Requirements:

• Must not have been a Uruguayan tax resident in the 2 preceding years
• Physical presence option: 183+ days/year, no additional investment required
• Investment option: $2 million in Uruguayan real estate OR $100,000/year in government innovation fund
• Only one application allowed per person

For residents established before 2026:

• Previous tax holiday regime still applies if already elected
• Existing exemptions grandfathered

Other Key Taxes

For Digital Nomads

Under 183 days: Not a tax resident — no Uruguayan tax obligations

Digital Nomad Permit holders: Foreign-earned income not taxed by Uruguay

Over 183 days: Tax resident but territorial system still protects most foreign income

For US Expats

• Uruguay has no tax treaty with the United States
• Use Foreign Tax Credit (FTC) to offset double taxation
• FBAR and FATCA reporting still required
• Territorial system means less Uruguayan tax to worry about
• Consult professional familiar with both systems

Double Tax Treaties

Uruguay has 39 Double Taxation Agreements with countries including:

• Argentina, Brazil, Mexico
• UK, Germany, Switzerland, Spain
• India and others

Tax Planning Tips

1. The territorial system is your biggest advantage — structure income from foreign sources
2. Tax Holiday 2.0 provides up to 15 years of preferential treatment on foreign capital
3. Digital Nomad Permit avoids triggering tax residency if under 183 days
4. No inheritance tax makes Uruguay attractive for estate planning
5. Consult a Uruguayan tax advisor before establishing residency