Tax Residence in Uruguay – Flexibility

We are pleased to write to you, in order to inform about recent developments regarding the processing of Tax Residence and Legal Residence in Uruguay, which may be of interest to you. On June 11, 2020, the Executive branch of government issued Decree No. 163/020, which made the requirements demanded of foreign persons interested in obtaining Fiscal Residence in Uruguay more flexible, as a stimulus policy to “promote foreign investment” and invoking among its Considerations, that Uruguay is a country with “open doors, with a migration policy that provides a framework of public, legal and economic security for all foreigners who wish to settle”. It also offers as a guarantee “its institutional stability, an area of economic and social freedom and a land with unique natural resources”.

The aforementioned Decree adds literals “c” and “d” to the fifth paragraph of the Article 5 Bis of Decree No. 148/007 (on Income Tax and Tax Residence), incorporating two new grounds to prove that the foreigner “resides the basis of their economic interests” in Uruguay and therefore apply to the Tax Residence regime. The two recently incorporated grounds, in general terms, foresee the following:

– Make, as of 07/01/2020, an investment in real estate of more than USD 378,000 approx. and also stay physically in Uruguay for at least 60 days. The Decree provides for that in the case of no new acquisitions, the updated fiscal cost of each property will be considered in accordance with the provisions of article 26 of Decree 148/007, which sets the valuation criteria for determining income generated in property disposals.

– Make, as of 07/01/2020, a direct or indirect investment in a business in Uruguay of more than USD 1,620,700 (approximately), and generate at least 15 new full-time jobs during the calendar year.

The two situations expressed, as well as others provided for by the regulations, apply as long as the foreigner shall not prove being a Tax Resident in another country. This determines that the interested party in obtaining the Uruguayan Tax Residence must first verify if he/she is a tax resident in another country and, in such case, be acknowledged on what the causes or merit of loss or “cancellation” of the Tax Residence in such country may be. In addition to the aforementioned flexibility, we remind you that there are special procedures for the benefit of: (i) foreigners who are nationals of States Members of MERCOSUR and/or (ii) foreigners who are relatives of Uruguayans nationals; -any of whom may easily obtain the Uruguayan Legal Residence, carrying out the corresponding procedure before the Ministry of Foreign Affaires.