Uruguay Personal Income Tax

Under the personal income tax law, effective from 1 July 2007, individuals are subject to income tax in Uruguay.

Resident individuals are subject to tax on their Uruguayan-source income. They are also subject to tax on certain foreign-source income, such as capital gains and work income, if certain condi­tions are met. Income subject to the tax is divided into the catego­ries of capital gains (Category I) and labor income (Category II).

The basic rate of personal income tax on capital gains is 12%.

Tax on labor income applies to income derived from dependent or independent work. A specified amount of income is not sub­ject to tax. The tax is imposed at progressive rates ranging from 10% to 30%.

Income from pension funds is subject to the Tax of Assistance to Social Security. This tax is similar to the personal income tax.

Nonresident individuals are subject to income tax on their Uruguayan-source income at a rate of 12%. They are also subject to tax on their income from technical services performed abroad if certain conditions are met.

In addition, a 4% (2% for the seller and 2% for the buyer) trans­fer tax is imposed on sales of real estate.

Other taxes

Net worth tax. In general, individuals owning assets in Uruguay must pay tax on their net worth at year-end at progressive rates ranging from 0.7% to 1%. However, for nonresident individuals who are not subject to nonresidents’ income tax, the rates vary from 0.7% to 1.5%. A tax-free allowance of UYU3,340,000 may be deducted.

Inheritance and gift taxes. Transfers of real estate by gift or inheritance are subject to the 4% transfer tax, except for inheri­tances from direct line of consanguinity, which is subject to a 3% transfer tax.

Social security

Contributions. Self-employed individuals pay social security taxes on notional amounts of income rather than on actual earn­ings. The amounts are established by law.

Contributions are paid by employers and employees at the rates set forth in the following table.

Type Employer (%) Employee (%) Self employed (%)
Pension fund 7.5(a) 15(a) 22.5
Medical care 5 3 to 8 8
Tax on salaries (b) 0.125 0.125 0.25

a) This rate applies to the portion of income that does not exceed approximately UYU131,430.

b) This is a tax on salaries that is paid to the social security body (BPS).

Totalization agreements. To provide relief from double social security taxes and to assure benefit coverage, Uruguay has entered into totalization agreements, which usually apply for a maximum period of one year, with the following jurisdictions.

Argentina                    Ecuador                           Netherlands

Austria                        El Salvador                      Paraguay

Belgium                      France                             Peru

Bolivia                        Germany                         Portugal (c)

Brazil                          Greece                             Spain

Canada                        Israel                               Switzerland

Chile                           Italy                                 United States (b)

Colombia                    Luxembourg                    Venezuela (d)

Costa Rica (a)

a) This treaty has not yet been approved by Costa Rica.

b) This agreement applies only to pensions. A totalization agreement is being negotiated.

c) This treaty is in the process of renegotiation and is not fully applicable.

d) This treaty is in force, but some dispositions were not regulated.

Tax filing and payment procedures

Married persons have the option to be taxed jointly or separately for purposes of the personal income tax and the net worth tax.

Tax treaties

Uruguay has entered into double tax treaties with the following jurisdictions:

  • Argentina (entered into force and effective since February 2013)
  • Ecuador (entered into force in November 2012 and effective since January 2013)
  • Finland (entered into force in February 2013 and effective since January 2014)
  • Germany (renegotiated and effective since 2012)
  • Hungary (effective since January 1994; obsolete in certain aspects)
  • India (entered into force in June 2013 and effective since January 2014)
  • Korea (South) (entered into force in January 2013 and effective since January 2014)
  • Liechtenstein (entered into force in September 2012 and effec­tive since January 2013)
  • Malta (entered into force in November 2012 and effective since January 2013)
  • Mexico (entered into force in December 2010 and effective since January 2011)
  • Portugal (entered into force and effective since September 2012)
  • Romania (entered into force in October 2014 and effective since January 2015)
  • Spain (entered into force in April 2011 and effective since January 2012)
  • Switzerland (effective since January 2012)

Temporary visas

Most foreign nationals must obtain valid entry visas to enter Uruguay. However, foreign nationals of certain jurisdictions do not need entry visas to enter Uruguay if they stay for less than three months, or in some cases, if they stay for less than one month. These jurisdictions include the following.

Andorra                      Greece                             Panama

Argentina                    Grenada                           Paraguay

Armenia                      Guatemala                       Peru

Australia                     Guyana                            Poland

Austria                        Honduras                        Portugal

Bahamas                     Hong Kong                     Romania

Barbados                    SAR                                Russian

Belgium                      Hungary                          Federation

Belize                          Iceland                             St. Kitts and

Bolivia                        Ireland                             Nevis

Brazil                          Israel                               St. Vincent and

Bulgaria                      Italy                                 the Grenadines

Canada                        Jamaica                            San Marino

Chile                           Japan                               Serbia

Colombia                    Korea (South)                  Seychelles

Costa Rica                  Latvia                              Singapore

Croatia                        Liechtenstein                   Slovak Republic

Cyprus                        Lithuania                         Slovenia

Czech Republic           Luxembourg                    South Africa

Denmark                     Macau                             Spain

Dominican                  Malaysia                          Sweden

Republic                     Malta                               Switzerland

Ecuador                      Mexico                            Trinidad and

El Salvador                 Monaco                           Tobago

Estonia                        Netherlands                     Turkey

Finland                       New Zealand                   Venezuela

France                         Nicaragua                        United Kingdom

Georgia                       Norway                           United States

Germany

Foreign nationals may enter Uruguay under temporary or perma­nent visas.

Different types of temporary visas are available for an individual to stay in Uruguay. An additional visa may be required to enter the country.

Temporary visas are available to the following temporary resi­dent individuals:

  • Migrant workers
  • Scientists, researchers and academics
  • Professional, technical and skilled personnel
  • Students, trainees and interns
  • Businesspersons, entrepreneurs, directors, managers and con­sultants
  • Journalists
  • Sports persons
  • Artists
  • Religious individuals

Temporary visas are available to the following nonresident indi­viduals:

  • Tourists (foreigners entering the country for recreation, leisure or rest)
  • Individuals invited by public or private entities because of their profession or art
  • Businesspersons
  • Members of public, artistic or cultural performances
  • Members of international transport crews
  • Passengers in transit
  • Individuals in local border traffic
  • Members of crews of fishing vessels
  • Members of crews performing transshipments in the country
  • Individuals who come for medical treatment
  • Athletes
  • Journalists and other professionals in the media
  • All persons not included in the preceding items who are expressly authorized by the National Directorate of Immigration

Work permits

A foreign national may work in Uruguay under a permanent visa, or under one of the temporary visas described above, for a period lasting the length of the employment contract. If the period is less than 180 days, a provisory identity sheet of the identity card should be requested.

An applicant may work in Uruguay while his or her work permit application and other papers are being processed.

No limitations are imposed on foreign nationals wishing to start businesses or head subsidiaries in Uruguay.

Permanent residence visas

Permanent visas are issued to foreign nationals who intend to establish permanent residence in Uruguay.

To obtain a permanent visa, an application must be filed either in the foreign national’s home country or in Uruguay, accompanied by the following documents:

  • Passport or equivalent document
  • Health certificate
  • Proof of financial means
  • Criminal records
  • Identity card or document
  • Birth certificate
  • Uruguayan address certificate

After all documents are submitted, the approximate time for obtaining a visa is three to six months.

Family and personal considerations

Family members. The working spouse of a work permit holder is not automatically authorized to work in Uruguay; a separate appli­cation must be filed at the same time as that of the expatriate.

Driver’s permits. A foreign national may drive legally in Uruguay with his or her home country driver’s license only while he or she is applying for a local driver’s license.

To obtain a local driver’s license in Uruguay, an applicant must pass a written exam on specific Uruguayan traffic rules, as well as a physical exam.

Uruguay does not have driver’s license reciprocity with other countries.