Expatriate tax ebook - Uruguay

What taxes?

Capital gains tax
Inheritance, estate and gift taxes
Investment income
Local taxes
Real estate taxes
Social security taxes
Stock options
Wealth taxes

Capital gains tax
Any return on capital generated in Uruguay, as well as capital gains generated in the country shall be taxed with IRPF at the 12% general rate.

Moreover, since January 2011, the taxable base of IRPF (income tax applicbale to fiscal residents) was extended considering also as part of the taxable base those capital gains derived from deposits, loans or any kind of collocation or credit, obtained by fiscal residents abroad.

Without prejudice to the foregoing, there are differential rates in connection with certain deposits with finance institutions, the return on capital over negotiable notes under certain conditions, and the profits and dividends distributed by IRAE taxpayers (which may amount to 3%, 5% or 7%).

Indicative but not restrictive, income arising from the results of the holding and sale of public debt securities are exempted.

Inheritance, estate & gift taxes
Since the Estate Tax law was repealed in 1974, no taxes have been levied on inheritances and gifts.

Investment income
Income derived from Uruguayan source and obtained either by fiscal residents or non-residents is taxed by IRPF or IRNR respectively.

Local taxes
Some municipal taxes are worth mentioning: Real Estate Tax and Public Education Contribution, which apply to the owners of real estates located in any of the departments of Uruguay.

Vehicles are taxed according to the value the Municipality in which vehicles are registered may estimate.

Real estate tax - Tax on Real Estate Transactions
This tax is applicable to the transactions of real estates, at a rate of 2% for the seller and 2% for the buyer. The taxable amount is an average of the real value (defined by the “Dirección Nacional de Catastro”) of the real estate of the previous 5 years.

Social security taxes
Both employer and employee must make contributions. The employer is obliged to withhold the employees’ contributions.

I) Employer’s Contributions

There are three kinds of contributions to be paid by employers:

• A contribution intended to finance the state system of social security in general (consisting of pensions, retirement allowances, unemployment benefits, family allowances, maternity benefits, funeral expenses, etc.) at a rate of 7.5%. This rate will apply over the total amount received by the employee, with a maximum taxable amount of approx. US$ 4.118.
• A contribution intended to specifically finance workers’ sickness insurance at a rate of 5%;
• A tax charged on all compensations and benefits in cash or in kind received by workers at a rate of 0.125%.

II) Withholdings to workers

Worker shall also pay the same contributions included under A) and the employer shall be bound to withhold and settle the corresponding amounts.

• General contribution to social security shall be 15% over the total amount received by the employee with a maximum taxable amount of US$ 4.118.
  Specific contribution to sickness insurance shall be 3%, 4,5%, 6% or 8% (depending on ; (i) the employee’s salary, (ii) the children in his custody and (iii) if the spouse is also included under this insurance).
• Contribution to the labor reconversion fund shall be 0.125%.

• In addition to these withholdings, the employer has been appointed as substitute accountable for the Income Tax on Residents described below.

Stock options
If stock options are granted to an individual who works for the organization, and provided the benefit is real, not potential only, they are taxed by IRPF or IRNR depending on the individual’s fiscal residence.

This benefit should be added to the rest of the benefits the individual receives for the calculation of income tax.

Wealth tax
The net worth (or capital) tax is an annual tax calculated on December 31 by individuals, households and undivided estates. The net worth of taxpayers is property, assets and rights economically located, placed or used within the country.

The taxable amount is the difference between taxable assets and deductible liabilities. Assets and rights located, placed or economically used in Uruguay are computed for tax purposes.

As for the liabilities, only debts with Uruguayan banks are deductible. The total deductible liabilities are calculated as the difference between these liabilities and the assets located abroad or exempted assets.

The tax is applied (by scales and progressive rates) on the amount exceeding the non-taxable minimum (NTM). Said minimum is adjusted annually per the cost of living index (IPC). Currently it is approximately equivalent to US$ 122.833 (double for households).

Public Debt instruments (Treasury Bonds, Treasury Bills, etc.) are not computed for the taxable amount.

Likewise not computed are shares or quotas issued by corporations (who pay this tax on the net worth of the issuing company), bonds or debentures, savings bonds and similar items subject to payment of this tax by way of withholding or substitution, and deposits in banking institutions (the deposits in banking institutions are computed solely for the purpose of calculating the fixed value for furniture and fixtures in dwellings).

The tax is applied to the amount exceeding the non-taxable minimum amount (NTM). Rates are applied by progressive scales beginning with the non-taxable minimum in a range from 0.7 % to 1.8 %.
Up to 1 NTM 0.7%

• From 1 NTM to 2 NTM 1.00%
• From 2 NTM to 4 NTM 1.20%
• From 4 NTM to 6 NTM 1.70%
• More than 6 NTM 1.80%

 Information about Uruguay: