from | to | Tax rate

UYU 475.440 | UYU 679.200 | 10%

UYU 679.200 | UYU 1.018.800 | 15%

UYU 1.018.800 | UYU 2.037.600 | 24 %

UYU 2.037.600 | UYU 3,396,000 | 25%

UYU 3,396,000 | UYU 5.094,000 | 27%

UYU 5.094,000 | UYU 7.810.800 | 31%

over UYU 7.810.800 | 36%

Uruguay is one of the smallest but also the most prosperous states in South America. Although it is economically dominated by agriculture, especially cattle breeding, more and more innovative industries are entering the country and increasing economic growth. That this is necessary is also due to the fact that Uruguay is economically intertwined with its neighbours Argentina and Brazil. If the economy wobbles there, this also has an impact on Uruguay. That is why Uruguay has reformed its tax law in the past and created various incentives to attract foreign investors. So let’s look at how to pay taxes in Uruguay today.

1st Taxation in Uruguay – Introduction

Once Argentina was considered one of the richest countries in the world. In fact, the name Argentina means “the silver.” But the days when milk and honey still flowed in this South American state are long gone. In the recent past, a small neighbour has proven to be industrious economically. For example, Uruguay is now regarded by experts as the “Switzerland of South America”. Certainly, as the second smallest country on the continent and a very small population of about three million inhabitants, one may at first glance recognize certain parallels. But in Uruguay you will definitely miss the alpine character of the real Switzerland. In this respect, Uruguay, with its flat topography and coastline, resembles the Netherlands rather than Switzerland.

For us tax consultants, however, the question is much more what it looks like in the field of taxes in Uruguay. That is why we are looking into this issue.

General information about Uruguay

2.1. Geographical location of Uruguay

Uruguay, the only country completely south of the Tropic of Capricorn, is located in the southern hemisphere in a wedge between its two big brothers Argentina and Brazil. There is no common border with Paraguay in the West. Instead, the Uruguay River forms the state border with Argentina. This continues in the south, beyond the confluence with the Paraná, in the Río del la Plata, a wide, almost 300 km long, shallow funnel.

Unlike Paraguay and Bolivia, Uruguay thus has direct access to the sea and thus to world trade. Because in the east of the country, the Atlantic Ocean borders the coastal region and attracts in the south equatorial summer season many local and from neighboring countries tourists to the beaches and the refreshing water.

The rest of the country, on the other hand, is an extensive flatland with low hills and a lot of agriculture, which in the past declined bit by bit of pampa land. The largest economic power, on the other hand, unfolds Montevideo, capital and population center of Uruguay. In addition, Montevideo is the most important logistics centre for the transhipment of imports and especially of Uruguay’s exports. Because a large part of the agricultural products are shipped in the port of Montevideo.

2.2 History of Uruguay

Which brings us to the history of the country. Little is known about the time before the arrival of the first Europeans. And what was worth mentioning for the history books afterwards is certainly not a glorious page. Even around the first Spanish settlements on the territory of today’s Uruguay, conflicts with Portugal flared up. Similarly, the oppression, persecution and annihilation of the indigenous population is viewed critically today.

But also the power struggles within increased with time. It is therefore all the more understandable that Uruguay, or more precisely the Eastern Republic of Uruguay, as the country's real name is, has for a long time tried in vain in the subsequent process of decolonization to set itself apart from its large neighbours to the north and south. In fact, it was the intervention and mediation by British diplomats that led Argentina and Brazil to recognize Uruguay as an independent state in 1828. But the situation, which was determined by both external forces and internal rivalries, remained uneasy for many decades, to say the least.

Nevertheless, immigration from Europe took place in the course of the 19th century. century on. This also gave the economy a boost. In particular, agricultural exports increased significantly, so that prosperity also slowly increased. This led to the first half of the 20th century. This led to far-reaching reforms and social upheavals that also benefited the small country’s economy. Since then, Uruguay has also been called the Switzerland of South America.

But economic crises came and went, plagued the country, presented it with immense challenges. For example, Argentina's economic crisis led to the beginning of the 21st century. Due to its important economic links with Argentina, Uruguay also entered the vortex of developments in the neighbouring country. It was similar in relations with Brazil. The corona pandemic also played a decisive role recently. And yet Uruguay had always managed to recover at least partially.

Taxes in Uruguay: general provisions of tax law

3.1. Uruguay levies taxes according to the territoriality principle

For a long time, Uruguay followed the territoriality principle in taxation. Although this is still the case after a tax reform in 2007, derogations have now also been introduced into Uruguay's tax law. Since it is necessary to distinguish between domestic and foreign taxpayers, we must also deal with residency in more detail.

3.2 Tax liability in Uruguay

This is how you are tax resident in Uruguay if you meet one of the following criteria: