Uruguay Tax Residency: Pay Zero Taxes on Foreign Income

Table of Contents

Punta del Este beach boardwalk in Uruguay, a popular destination for tax residency due to its favorable fiscal policies and lifestyle

Are you a global entrepreneur, remote worker, or investor tired of watching a large chunk of your income disappear into the hands of the taxman? You’re not alone. 

 

 

In today’s mobile, digital world, more individuals and businesses are taking control of their financial future by relocating to tax-friendly countries that offer both stability and freedom.

 

If you’re looking for a smart, legal way to reduce your tax burden while staying 100% compliant, Uruguay might be exactly what you need.

 

This small South American nation is gaining recognition as a reliable and reputable legal tax haven, especially for those seeking a safe, stable base with low taxes and strong financial privacy.

 

With its territorial tax system for those planning to move to the country, with some nuances, Uruguay only taxes income generated within its borders. That means if you’re earning money abroad—from remote work, international investments, or a global business—that income can be entirely tax-free in Uruguay.

Tax Residency in Uruguay

To become a tax resident in Uruguay, you must meet one of the following criteria:

  • Spend more than 183 days in 12 months. You can be away for up to 30 days during that time.

  • Establish an economic or vital interest in the country (like relocating your business or enrolling children in Uruguayan schools).

Alternatively, tax residency can be obtained through targeted investments without spending any single day in the country:

 

  1. Invest USD 544,000 in property or business combined with just 60 days of presence within a calendar year.

  2. Create 15 full-time local jobs through a minimum of USD 2.33 million investment.

  3. Invest USD 7 million in priority sectors for instant tax residency.

Stay Duration and Obligations

For families or individuals without substantial investments, Uruguay requires 9-10 months of physical presence during the first year of residency. After obtaining permanent residency, a visit once every 365 days is sufficient to maintain your status.

Taxation in Uruguay

For families or individuals without substantial investments, Uruguay requires 9-10 months of physical presence during the first year of residency. After obtaining permanent residency, a visit once every 365 days is sufficient to maintain your status.

Personal Income Tax in Uruguay

The real advantage of becoming a tax resident in Uruguay lies in the country’s flexible and investor-friendly tax framework. Once you establish your fiscal residency, Uruguay allows you to choose between two tax options—both offering significantly lower tax burdens compared to most high-tax jurisdictions:

 

a) 11-Year Tax Holiday on Foreign Passive Income

 

This is the most popular option for new residents. For your first 11 years as a tax resident, Uruguay applies a territorial tax regime even on passive income such as dividends and interest. 

 

That means any income you generate outside of Uruguay from investments, offshore companies, or foreign bank accounts can be completely tax-free for over a decade. After this period, you would be subject to the standard 12% flat tax on such income.

 

b) Permanent 7% Flat Tax on Foreign Passive Income

 

If you’re looking for a long-term low-tax solution, Uruguay offers an alternative: you can opt to pay a permanent 7% flat tax on foreign-sourced dividends and interest income from the start of your residency. This option allows you to lock in a lower rate than the standard 12%—for life—while maintaining full legal compliance and access to Uruguay’s stable financial system.

 

These flexible options make Uruguay a strategic base for high-net-worth individuals, remote professionals, and global investors who want to legally reduce their taxes while benefiting from a secure, business-friendly environment.

 

Finally, In Uruguay, cryptocurrencies are only taxed if the income is Uruguayan-sourced or linked to local business activity. Foreign-held crypto assets are generally not taxed under the territorial system.

No Exit Tax, No Inheritance Tax, and low Wealth Tax

Uruguay is one of the few countries that does not impose exit taxes, inheritance taxes, or gift/donation taxes. 

 

This creates a long-term strategic advantage for individuals and families looking to preserve wealth across generations without government interference.

 

Uruguay levies a 0.1% flat wealth tax on residents for assets located within the country, while non-residents may pay up to 1.5% depending on the asset type.

 

This tax environment is especially appealing to expats, retirees, and international entrepreneurs who want to ensure their capital remains intact for the long haul.

Corporate Tax in Uruguay

Uruguay levies a flat 25% corporate tax rate, but only on income sourced within the country. 

 

If your business earns revenue abroad, that income is not subject to taxation in Uruguay. 

 

This makes Uruguay an attractive base for international businesses looking to legally minimize their global tax exposure.

Tax-Free Companies in Uruguay

Uruguay’s corporate tax structure is what makes it a regional tax haven. Companies in specific zones or sectors enjoy significant tax advantages, with the most notable being Free Trade Zones (FTZ).

Setting Up in Uruguay’s Free Trade Zones

Uruguay has 11 Free Trade Zones (FTZs) where businesses can operate completely tax-free, except for social security contributions for employees. 

 

These areas, strategically located near ports, cities, and financial hubs, provide a business-friendly environment for logistics, IT services, trading companies, and manufacturing.

 

Key Benefits

 

  • 0% Corporate Income Tax

  • No Dividends Taxation

  • Full VAT Exemptions

  • Easy and simple setup Processes

Requirements: The only significant requirement to qualify is to:

 

  • Establish operations within a designated FTZ area.

  • Employ at least one local staff member.

The above tax benefits only apply to income generated from activities within the Free Trade Zone serving foreign markets. Domestic operations within Uruguay are typically restricted or taxed differently.

Simplified Stock Companies (SAS) for Startups

Uruguay’s Simplified Stock Company (SAS) allows quick and easy incorporation, digital registration, and flexible ownership. It’s ideal for small and growing businesses.

 

Small businesses that qualify for the Literal E regime (regardless of legal structure) may be taxed on gross income at simplified rates ranging from 3% to 15%, provided their annual revenue does not exceed approximately USD 550,000.

Double Tax Treaties and Anti-Avoidance Measures

Double Tax Treaties

Uruguay has developed a robust network of Double Tax Treaties (DTTs) to help individuals and businesses avoid paying tax on the same income in two jurisdictions. These agreements are a key component of Uruguay’s international tax competitiveness and enhance its appeal for foreign investors and global entrepreneurs.


As of 2025, Uruguay has active DTTs with countries such as Spain, Germany, Switzerland, Brazil, the UAE, and others. These treaties typically reduce withholding taxes on dividends, interest, and royalties, depending on the terms agreed with each country.


For international investors and business owners, Uruguay’s treaty network provides:


• Reduced or zero dividend withholding taxes
• Lower rates on interest and royalty payments
• Greater legal certainty and tax transparency


This makes Uruguay a strategically sound jurisdiction for global tax planning, especially for those seeking to minimize international withholding taxes through treaty-based structuring.

Anti-Avoidance Measures

While Uruguay does not have a general anti-avoidance rule (GAAR), tax authorities apply economic substance principles in line with OECD guidelines to discourage artificial structures.

Transfer Pricing Rules

Uruguay applies OECD-based transfer pricing rules to related-party transactions, requiring companies to price such transactions at arm’s length. Detailed documentation is mandatory for large transactions and must be submitted to the tax authority upon request.

No CFC Rules

As of 2025, Uruguay does not apply Controlled Foreign Company (CFC) rules. However, other tax mechanisms help reduce the risk of income deferral through offshore entities.

How to Obtain Uruguayan Citizenship and Passport

Uruguay offers a clear, stable, and constitutionally protected path to citizenship, making it a smart long-term option for global citizens looking to diversify. 

 

Unlike many countries that impose language tests, cultural integration exams, or dual citizenship restrictions, Uruguay takes a more pragmatic approach rooted in physical presence and social integration.

 

To qualify for Uruguayan citizenship, you must first become a permanent resident. From there, you can apply for citizenship after five years of residence, or just three years if you’re living in Uruguay with your family (spouse and/or children). Your family members do not need to be Uruguayan citizens themselves — what matters is that you are residing together in the country and demonstrating genuine social and family ties. This includes things like enrolling children in school, sharing a home, and participating in local community life. You must also spend at least six months per year physically in Uruguay to maintain eligibility.

 

Once naturalized, you’ll receive the Uruguayan passport, which offers visa-free or visa-on-arrival access to over 150 countries, including the EU Schengen Area, UK, and most of Latin America

 

While it’s not a Tier 1 passport, it’s a strong travel document backed by a politically neutral, economically stable country with a great international reputation. 

 

For expats, digital nomads, and investors seeking a second citizenship with low bureaucracy, no renunciation requirements, and real substance, Uruguay offers one of the most attractive options in the Western Hemisphere.

Pros and Cons of Tax Residency in Uruguay

The following table highlights the pros and cons of tax residence in Uruguay:

Pros Cons
Favorable tax regime: Up to 11 years of tax-free foreign income without Inheritance or Exit Taxes and low Wealth Tax for infividuals.
High cost of living: Cities like Montevideo are relatively expensive.
Free Trade Zones: 0% taxes for qualifying companies.
Variable climate: Cold and damp winters in some regions.
Tax benefits for small businesses: Flexible tax rates (3%-15%).
Limited air connectivity: Few direct international flights outside South America
Stable political and economic environment: Strong democracy and legal protections.
Bureaucracy: Administrative processes can be slow and frustrating.
High quality of life: Low crime rates and relaxed environment.
Language barrier: Spanish is dominant; English is less common outside major cities.

Final Thoughts: Is Uruguay the Right Move for You?

If you’re a global entrepreneur, remote professional, investor, or retiree looking to legally reduce your taxes while enjoying a stable, safe, and opportunity-rich country, Uruguay checks all the right boxes for global entrepreneurs and investors, offering many of the same core benefits found in regional competitors like Paraguay, Costa Rica, Panama, and the Dominican Republic—such as territorial taxation, easy residency, and low-tax structuring.

 

What sets Uruguay apart is its unmatched combination of political stability, legal predictability, and international credibility, making it a long-term strategy for those who want both freedom and compliance without the shady loopholes or unstable environments found in many so-called “tax havens.”

 

Unlike other jurisdictions that attract attention for the wrong reasons, Uruguay stands out for the right ones:

 

  • A respected legal system

  • OECD-aligned compliance

  • Strong investor protections

  • And the kind of quiet political stability that global citizens value

Whether you want to protect your capital, grow a global business, or simply build a life with more freedom and less tax, Uruguay offers the structure, tools, and credibility to make it happen—legally and sustainably.

How Can We Help You?

It may be difficult for both individuals and businesses to deal with Uruguay’s residency rules, tax system, business structures, and legal obligations. At TaxMove, our experts help you at every step, from choosing the right tax residency path to setting up your business in Free Trade Zones or as a Simplified Stock Company.

 

We ensure your paperwork is complete, your filings are accurate, and your plans are fully compliant with Uruguayan tax laws. We also help reduce the risk of any fines or penalties by guiding you through VAT exemptions, corporate taxes, and anti-avoidance measures such as transfer pricing rules. Our team makes sure there are no errors in your applications or tax filings.

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What are the tax residency requirements in Uruguay?

To become a tax resident in Uruguay, you must meet at least one of the following conditions:

 

  • Spend more than 183 days in the country during a 12-month period (up to 30 days abroad are allowed).

  • Establish a center of economic or vital interests in Uruguay (e.g. relocate a business, enroll children in local schools).

  • Qualify through investment-based residencies, such as:

    • $544,000 USD in real estate or business + 60 days of presence annually

    • $7 million USD in strategic sectors (no physical presence required)

    • Create 15 full-time local jobs via a $2.3 million USD investment

Does Uruguay have a territorial tax system?

Yes, but with important limitations. Uruguay applies a territorial tax system, meaning it generally does not tax foreign-sourced income—but this benefit does not automatically apply to everyone.

 

The territorial treatment of foreign passive income (such as dividends and interest) is primarily available to new tax residents who qualify under Uruguay’s special regimes. These individuals can choose between:

 

  • An 11-year tax holiday, during which foreign dividends and interest are exempt from taxation, or

  • A permanent 7% flat tax on that same income, instead of the standard 12% rate.

Are Cryptocurrencies taxed in Uruguay?

Cryptocurrencies are generally not taxed in Uruguay if the gains are generated abroad. However, if trading or mining activities take place within the country, the income may be subject to local taxation.

What is the corporate income tax rate in Uruguay?

Uruguay applies a flat corporate income tax rate of 25%, known locally as IRAE. However, this tax only applies to income generated within Uruguay.

 

If your company operates internationally and earns revenue from clients or investments outside Uruguay, that foreign-sourced income is not subject to corporate tax under Uruguay’s territorial tax principles.

 

Additionally, companies must pay a net wealth tax (IP) of 1.5% annually on assets located within Uruguay. Foreign-held assets are excluded.

Are Free Zone companies in Uruguay tax-free?

Yes. Companies operating from Uruguay’s Free Trade Zones pay 0% corporate tax, 0% VAT, and no dividend tax, as long as they serve foreign markets and operate physically within the zone.

 

They must employ at least one local worker and pay social security. FTZs are ideal for export-oriented businesses like IT, logistics, and manufacturing.

How to get a Uruguayan passport?

To get a Uruguayan passport, you must first become a naturalized citizen. This requires 3 years of legal residency if you live in Uruguay with your family, or 5 years if you’re single.

 

You must also spend at least 6 months per year in the country and demonstrate social and residential ties. Once you’re granted citizenship, you can apply for a passport through Uruguay’s civil registry.

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Transfer Pricing

TaxMove provides comprehensive transfer pricing services designed to meet the diverse needs of multinational corporations.

We conduct detailed functional, risk, and economic analyses to establish fair transfer pricing policies, ensuring that all intercompany transactions align with the arm’s length principle.

By leveraging our extensive experience and cutting-edge analytical tools, we assist your firm in mitigating risks, optimizing tax positions, and achieving strategic financial objectives.

Our transfer pricing services encompass the full spectrum of documentation, planning, and dispute resolution. We prepare robust transfer pricing documentation that meets the requirements of tax authorities worldwide, helping you avoid penalties and audits. Our planning services are aimed at optimizing your global tax strategy, considering both current operations and future growth.

Citizenship and Visa Application Assistance

Navigating the citizenship and visa application processes can be complex and time-consuming. 

At TaxMove, our global network provides comprehensive support to help you and your team secure the necessary citizenship and visas for business travel, relocation, and long-term stays.

Our expertise ensures a hassle-free experience, allowing you to focus on your business goals.

Entity Incorporation

Whether you’re looking to establish a new business entity or restructure an existing one, we offer end-to-end support for entity incorporation through our global network. 

Our services include selecting the optimal jurisdiction, handling all necessary paperwork, and ensuring smooth setup and operation.

VAT Advice and Compliance Services

We provide comprehensive VAT advisory services tailored to meet the needs of businesses across various sectors.

Our expertise extends to assisting those operating dropshipping businesses and selling through Amazon FBA, ensuring you remain compliant with VAT regulations in multiple jurisdictions.

We offer personalized guidance to optimize VAT processes, manage cross-border transactions, and minimize liabilities.

We also offer comprehensive VAT compliance services across more than 20 countries, ensuring that your business remains fully compliant with local tax regulations, no matter where you operate. We manage the entire process, from VAT registration to ongoing compliance, allowing you to focus on your core business activities.

Additionally, we take care of your registration in the OSS (One Stop Shop), simplifying your VAT obligations for cross-border sales within the EU

With our tailored solutions, you can confidently expand your global presence, knowing that your VAT obligations are in expert hands.

Application for Special Tax Regimes

We assist individuals in various jurisdictions with the application for special tax regimes designed to optimize their tax obligations. This includes the Spanish Beckham Law, Cyprus and Malta Non-Dom special tax regime among others.  

Our experts navigate the complexities of different tax regimes to ensure our clients benefit from favorable tax treatment while remaining compliant with local regulations.

Tax Residency Change Assistance

Considering a change in tax residency? We are here to help. 

Our team will guide you through the process, providing expert advice and assistance to ensure a smooth transition to your new tax “home.”

International Estate and Gift Tax Planning

Protecting your wealth and assets for future generations requires careful planning.

Our international estate and gift tax planning services help you minimize tax liabilities and ensure a smooth transfer of wealth to your beneficiaries.

International Tax Planning and Structuring Services

Our team of experts specializes in delivering customized tax advice to individuals and businesses.

We excel in crafting tax strategies that not only optimize financial outcomes but also ensure strict compliance with international regulations.

Our strategic guidance is aimed at minimizing tax liabilities and maximizing efficiency for our clients.

Whether you plan to expand your business into a new jurisdiction or just reduce your tax burden, TaxMove is here to support you every step of the way

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