Legal And Tax Residency in Uruguay

WHY URUGUAY?

Uruguay, a small South American country of European heritage, has been known for decades as a beacon of stability and safety.

The country has the highest GDP per capita in Latin America; a broad middle-class, modern infrastructure and solid institutions. Foreign and local investors receive equal treatment, private property is strongly respected and there are no restrictions on the movement of capital in and out of the country.

Transparency International has consistently rated Uruguay as the least corrupt country in Latin America throughout the years. The Economist Intelligence Unit rates Uruguay as the most democratic country in the continent. And the World Justice Project rates the country at the top of the list in terms of rule of law.


Uruguay’s advantages can be summarized in:

  • A solid and predictable legal system.
  • Political and economic stability.
  • Social stability, thanks to the existence of a middle class, relatively low levels of poverty and the lowest ratio of income disparity in Latin America.
  • Low rates of corruption.
  • An open economy, with free flow of capital (inward and outward) and free convertibility of currency.
  • Equal treatment to local and foreign investors, guaranteed by law.
  • A solid banking system.
  • Generous tax incentives to investment projects, large and small.
  • A dozen free trade zones, from which hundreds of global companies operate with offshore customers, tax-free.
  • An open policy towards new permanent residents.
  • An attractive tax residency system.

Legal Residency and Tax Residency in Uruguay

Uruguay has a stated policy of welcoming foreign nationals who wish to live in the country. There is no immigration quota, and it is not required that the applicant invest in the country. As long as the applicant meets some simple requirements permanent legal resident status is always granted. In addition, Uruguay has a favorable tax residency system: new tax residents have a ten- year tax holiday, and afterwards are only taxed on two types of overseas income: dividends and interest, at 12%. And, to avoid double-taxation, Uruguay credits any tax paid anywhere on that income.


Citizenship and Second Passport in Uruguay

Uruguay allows multiple citizenships. And the country’s passport is a very reputable one. So, if, after residency, one also wishes to obtain Uruguayan citizenship (and a second passport), the applicant needs to wait three years (if married), or five years (if single). This period starts to run from the moment one first arrived in Uruguay to file for residency, and the person needs to spend six months out of each of those 3/5 years in the country to obtain citizenship.



Permanent Legal Residency in Uruguay

Uruguay has a straightforward Legal Resident program. There is no immigration quota, and it is not required that the applicant invest in the country. As long as the applicant meets some simple requirements permanent legal resident status is always granted.

The permanent legal resident application is filed before the Immigration Authority (DNM, or NMO, in English), and the the required documents are:

A. Birth Certificate: For those who don’t keep their birth certificate, there is a useful online service to obtain it: vitalcheck.com (this service is only available in the US).

B. Marriage certificate: This is optional. The advantage of filing a marriage certificate is that it enables only one of the spouses to have to prove an income source (see “d”, below).

C. Police record: To prove that one has a clean police record, he or she must obtain a police certificate from the country of birth, from the country which issued the applicant’s passport (if different from the country of birth) and from those countries where he/she resided. If you used different names after the age of 18, you need to obtain police records with ALL your different names/alias. US citizens may request the police record in Uruguay (at the local Interpol office), or request it from the FBI in the US and bring it to Uruguay, duly apostilled.

The police record cannot be more than six months old on the date you file it with Uruguay’s immigration authority.

D. Proof of Income: Income: The Proof of Income (PoI) requirement is fulfilled by proving that you have a steady stream of income to support yourself (and your family, if applicable). The amount of income you declare has to be consistent with your lifestyle. The PoI may be proven in a number of ways: a pension, dividends, rental income, or a work contract with a company in Uruguay, among others.

Note: Note: We review the source of income with you, to ensure that it is acceptable for immigration purposes. A simple bank statement will not suffice as PoI, since it does not prove a steady stream of income. Thus, the prior verification that the documents you submit are correct is of great importance. In addition, you have to prove that the income is actually received in Uruguay, so it’s convenient to open a bank account in the country, which is easy, and can be done in a day, at some banks. If you do not have an account in Uruguay, it is important to be in the country two days before the residency filing date, to allow for time to open an account. In Chapter 5, below, we specify what is required to open a bank account.

The Proof of Income document cannot be more than six months old on the date you file it with Uruguay’s immigration authority.

E. Medical check-up: check-up: A brief and simple medical checkup is required, from one of several authorized private clinics in Uruguay. This exam is fast, and it is not a screening test.

Documents “a”, “b”, “c” and “d” need to be Apostilled in your home country (if your country is part of the Apostille Treaty: the United States, for example, is part of it). An Apostille is a simple stamp, which you obtain locally, at a state office. If your documents come from a country that is NOT part of the Apostille Treaty (e.g. Canada), the documents need to be stamped at the competent Uruguayan consulate (the consulate in the country where the document was issued).

We suggest that you scan and send us the documents by email before traveling to Uruguay, so we can verify that they are correctly worded, dated and stamped.

Once you are ready to travel, we’ll set up an appointment with the immigration authority, to file your documents. If you come from the US, Canada, Europe, Australia, New Zealand, South Africa, Japan or Latin America, you don´t need a visa. Simply enter as a tourist.

After you file your application at the NMO, your file will go through several stages. We´ll monitor the process, and provide answers to the NMO on routine questions they sometimes have on your Proof of Income (PoI). The NMO may request an update on the PoI halfway through the process, to make sure that you still have means to support yourself.

Permanent Resident status is usually granted within six to eight months. In the meantime, you will be a “Temporary Resident”, with a Uruguayan National Identification Card (“cédula de identidad”) from the beginning, and as such, you may stay in the country indefinitely (or come and go), and even bring your household goods import tax free.

Our firm’s bilingual associates will work side by side with you along the way and make sure that you are assisted in every step:

  • We´ll secure your NMO appointment date and escort you on the application date.
  • We’ll help you identify the competent authority to apostille your documents (or, alternatively, contact the competent Uruguayan consulate, if applicable).
  • We’ll determine which is the best source of income to use, and will help you draft the supporting documents so they have the correct wording that the NMO requires.
  • Our notaries will produce the sworn certificates that the NMO requires for your proof of income and your address, based on the documents you send us.
  • We´ll have your documents translated by our in-house certified translators; and then stamped at the Foreign Ministry in Montevideo.
  • We’ll register your birth certificate (and marriage certificate, if applicable) at the National Registry so you can have your “cédula” issued.
  • We’ll escort you to the Interpol appointment to get your police record (for U.S. citizens), and we’ll book and escort you to your medical check-up in Uruguay.
  • We’ll connect you with experienced movers and work with them to make sure your belongings arrive properly.
  • One of our qualified associates will be present with you at the filing, and at the interview (to translate and assist you).
  • As your application moves within the NMO, we´ll submit the updates that are usually requested during the process, on your proof of income, and closely monitor your file.
  • We´ll assist you in obtaining your first temporary national ID (“cedula”).
  • We´ll assist you in renewing your temporary national ID a year later if necessary.
  • At the end of the process, we will assist you in obtaining your definitive cédula.

To get started, send us an email to info@andersentaxlegal.uy and we’ll send you a more detailed explanation as well as a quote according to the number of applicants within your family.


Temporary Residency & Work Permits

Besides Permanent Legal Residency, Uruguay offers Temporary Residency, and simple Work Permits, an option usually chosen by employees moving into the country to work for a company’s branch in the country for a limited period of time, or for a specific short-term project.
The requirements for Temporary Residency are simpler than those for Permanent Residency:

A. Birth Certificate: For those who don’t keep their birth certificate, there is a useful online service to obtain it: vitalcheck.com (this service is only available in the US).

B. Police record: To prove that one has a clean police record, he or she must obtain a police certificate from the country of birth, from the country which issued the applicant’s passport (if different from the country of birth) and from those countries where he/she resided. If you used different names after the age of 18, you need to obtain police records with ALL your different names/alias.

C. Proof of Income – Work Contract: Contract: The Proof of Income (PoI) requirement is fulfilled by providing the work contract from the employer.

D. Medical check-up: A brief and simple medical checkup is required, from one of several authorized private clinics in Uruguay. This exam is fast, and it is not a screening test.


Expedited Legal Residency for South Americans

Since October 2015, citizens from neighboring South American countries have an expedited way to obtain Permanent Legal Residency in Uruguay.
The process is conducted at a different government entity: The Ministry of Foreign Affairs.
The only requirements are:

A. Birth Certificate: 

B. Police record: record: To prove that one has a clean police record, he or she must obtain a police certificate from the country of birth, from the country which issued the applicant’s passport (if different from the country of birth) and from those countries where he/she resided. If you used different names after the age of 18, you need to obtain police records with ALL your different names/alias.

C. Vaccination card. 

The Permanent Resident permit is granted within two to four months of filing the documents for review.


Uruguayan Citizenship and Second Passport

The citizenship application is filed before Uruguay’s “Electoral Court” (EC), and usually within six months citizenship is granted and, as a result, a full passport is issued.
The requirements are straightforward, and they seek proof of the applicant’s connection to the country over the three or five years:

A. Proof of Age and Nationality:One proves this with a birth certificate. An official copy of the one yused for the residency procedure is valid.

B. Proof of Entrance into the Country:This is a certificate that the National Migration Office (NMO) issues, stating that you are a Uruguayan Permanent Resident.

C. Proof of Residence and social insertion:You must prove that you have resided in Uruguay and that you are part of the community you live in. To achieve this, you should be able to show some of the following documents (this list shows some common examples):

  • Document from the Social Security Administration (BPS) related to any business activity or to employees you have in the country.
  • Medical Records: two certificates prepared by two different doctors and/or dentists stating dates when you visited them, in country.
  • Evidence of a job or pension in Uruguay.
  • Bank statements showing visits or withdrawals inside the country.
  • Deeds proving the ownership of a property in Uruguay.
  • Rental agreements.

D. Proof of Identity:You must present two witnesses who can attest to who you are (the two witnesses must be Uruguayan citizens, at least 25 years old and they must have known you for more than 3/5 years). The witnesses cannot be relatives, employees or employers.

E. Proof of economic support: You can use the proof of income used for the residency application or assets that you use to support yourself.

When assisting you, we’ll work side by side with you along the way and make sure that you are supported in every step:

  • We’ll escort you to your visit to the Electoral Court and ensure that you file your case properly.
  • We’ll obtain a copy of your birth certificate from the Civil Registry.
  • We’ll obtain your entry certificate at the National Migration Office.
  • We’ll help you decide the best way to prove your residency and social insertion and prepare the documents for the application.
  • We’ll make an appointment for you to obtain the Uruguayan passport and escort you to pick it up.

Tax Residency in Uruguay

Uruguay has an attractive Tax Residency system, with the country’s new administration having recently approved new paths to obtain tax resident status, and announcing legislation to double the current tax holiday period granted to new tax residents, to ten years.

Uruguay has historically granted local and foreign investors equal treatment, and has implemented generous tax incentive schemes for companies investing in the country. It has an open immigration policy, and the country favors the relocation of individuals and companies to Uruguay through various policies.

The two new paths to tax residency are the following:

  • Making a real estate investment of USD 380,000* or more, from July 1st, 2020 onwards, plus spending at least 60 days in the country during the calendar year.
  • Making an investment -directly or indirectly- in any company, of at least USD 1,650,000*, plus generating 15 new jobs. The investment must be made from July 1st, 2020 onwards.
  • The preexisting alternative paths to tax residency remain in place. They are:

  • Spending at least 183 days in Uruguay during the calendar year (given the way that short-term absences are accounted for, one can meet the requirement by spending 140 to 150 days in the country).
  • Making a real estate investment of USD 1.650.000* or more, without the need to spend time in the country.
  • Making an investment -directly or indirectly- in any company, of at least USD 4,950,000*, as long as the company’s investments have been declared of ‘national interest’ under an Investment Promotion Law which grants tax breaks to new investments (Act 16,906).
  • Generating higher income in Uruguay than in any other country (the comparison is made vis-à-vis other countries where the person generates income). To qualify, the income generated in Uruguay cannot passive capital investments (i.e. real estate which generates rental income).
  • When the person’s ‘vital interests’ are located in Uruguay.

* The amounts are set in adjustable units; the U.S. dollar figures are approximations, but do not vary significantly over time.

Benefits of obtaining Uruguayan Tax Residency

During the first six years of tax resident status (the year in which the person obtained the status, plus an additional five), Uruguay grants a tax holiday: no foreign income is taxed. From the seventh year onwards, Uruguay will tax only two types of foreign income: interest and dividends, at a 12% rate. And to avoid double taxation, the country automatically credits any taxes paid overseas over those dividends and interest.

Any other type of foreign income (lease income or capital gains, for example) is not taxed in Uruguay. And the country does not levy any asset or property tax on foreign assets.


Additional Upcoming Changes

In addition, Uruguay’s new administration has sent a bill to parliament (set for approval, shortly) extending the tax holiday period to ten years (versus the current five years). Or, alternatively to having a ten-year tax holiday, one may choose to be taxed at 7% (on foreign interest and dividends) when one acquires tax residency. Those who are already tax residents and are under the current five-year tax holiday period may choose among both options, subtracting the elapsed time.

Andersen is the Uruguayan member firm of Andersen Global®, an international association of member firms comprised of tax and legal professionals worldwide.