Our tax regulations establish that individuals are considered tax residents in the country as long as they meet at least one of the following two conditions:
- They remain in Uruguay for more than 183 days during the calendar year.
- Their center of vital or economic interests is located within the national territory
Regarding point 2, a person is deemed to have their center of activities in Uruguay when they generate a greater volume of income in Uruguay than in any other country.
Likewise, a person is presumed to have their vital interests in the country when their spouse and minor children reside in Uruguay.
As of Decree 330/2016, a person is considered to have rooted their economic interests in the national territory when they make an investment in either of the following ways:
- In real estate, valued in accordance with the rules of Individual Income Tax (IRPF), for an amount exceeding 15,000,000 indexed units (UI) (approximately USD 1,700,000).
- Directly or indirectly in a company, for an amount exceeding 45,000,000 UI (approx. USD 5,100,000), with activities or projects declared of national interest (Law 16.906). The valuation of the company must follow the rules of the Tax on Income from Economic Activities (IRAE).
Subsequently, in 2020, Decree 163/020 introduced two additional grounds of economic interests in Uruguay:
- Owning an investment in real estate valued at more than 3,500,000 UI (approx. USD 400,000), provided it is made as of July 1, 2020 (ratified by Decree 174/020), and provided there is an effective physical presence in Uruguayan territory of at least 60 days during the calendar year. The cost of the property must be updated according to UI variation.
- Directly or indirectly owning a stake in a company valued at more than 15,000,000 UI (approx. USD 1,700,000), made as of July 1, 2020, which generates at least 15 direct full-time dependent employment positions during the calendar year. New employment positions are those generated as of July 1, 2020, provided they do not stem from workforce reductions in related entities.
These four economic-interest grounds do not apply if the taxpayer proves tax residence in another country.
Article 5° Ter establishes that foreign legal entities and other entities not incorporated under national laws that establish their domicile in Uruguay shall be deemed residents in the national territory as from the completion of the formal procedures required by applicable legal and regulatory provisions.
