Law 19.904, enacted in September 2020, establishes that non-resident individuals who obtain tax residency in Uruguay as of fiscal year 2020 may choose to be taxed on income from movable capital generated abroad (bonds, shares, etc.) in the following ways:
- Pay Non-Resident Income Tax (IRNR) during the fiscal year in which the change of residence is verified and for the following 10 fiscal years, meaning this income is not taxed in Uruguay. Before the enactment of Law 19.904, this benefit was limited to 5 years.
- Pay Individual Income Tax (IRPF) at a rate of 7 % for an indefinite period.
This is a significant advantage, since tax residents in Uruguay who cannot use these options are taxed at a 12 % rate on this income.
Subsequently, Law 19.937, enacted in December 2020, establishes that persons who opted to pay IRNR before fiscal year 2020 may extend this option for up to 10 years from the year in which they obtained their residence, provided they can prove that they have purchased real estate for a value of more than IU 3,500,000 (approximately USD 400,000) as from the date of its enactment.
In May 2021, Decree 141/021, which regulates Law 19.937, set out the conditions and mechanisms for the implementation of this benefit, as follows:
- The investments under Law 19.937 must be made as of January 22, 2021.
- Individuals must register an effective presence in the country for at least 60 days per year.
- The maximum term of the benefit will be 10 fiscal years; i.e., those that have been applied previously must be deducted.
- To exercise the option, an annual tax return must be filed with the National Tax Authority (DGI), and the required conditions must be accredited before it.
The modifications introduced seek to encourage investment in Uruguay during the pandemic context and to position the country as an attractive destination for foreigners. The applicability of these benefits cannot be assessed in isolation but must be considered within each individual’s fiscal context.
