Tax residence is the link of an individual (natural person) with Uruguay as a result of certain conditions such as length of stay in the country; family or core of vital interests; volume of income; investments in real estate; productive investments, among others, which imply that a person must become a taxpayer in the country.
Unlike legal residence, it is not of a permanent nature, but is verified year by year. In addition, both types of residences may and may not coincide in one person.
How is the tax residence accredited?
The tax residence of an individual may be accredited according to any of the following criteria:
1. Staying more than 183 days during the calendar year in Uruguayan territory.
This must be accredited through the Certificate of Arrival issued by the National Migration Directorate and other documents deemed pertinent.
2. Settling the main core or base of activities in the national territory.
This may be accredited through a Notarial or Accounting Certificate of total income, to which the taxpayer’s declaration (with notarized certification of signature) must be attached, stating that:
The applicant has no income other than that referred to in the certification.
In case there is income earned in other countries, indicate that such income is less than the income generated in our country. This comparison must be made for each country.
It should be clarified that the income generated in our country is not exclusively capital income.
The aforementioned information must refer to the year or years for which the Certificate(s) is/are requested.
3. For economic interests
The interested person must indicate if he/she has investments in real estate or in companies with a promoted investment project, which meet any of the following conditions:
In real estate, for an amount greater than 15,000,000 indexed units (UI - approximately USD 1,622,000), valued in accordance with the Personal Wealth Tax (IRPF) rules, and updated according to the variation of the Indexed Unit.
Direct or indirect, in a company for an amount greater than 45,000,000 UI (approx. USD 4,866,000), with activities or projects declared of national interest (Law No. 16,906). The valuation of the company must be made according to the Corporate Income Tax (IRAE) rules.
In 2020, two additional grounds are added that are not applicable if the taxpayer proves tax residence in another country:
In real estate, the amount must exceed 3,500,000 UI (approx. USD 378,000) provided that it is carried out as from July 1, 2020 (ratified by Decree 174/020) and also effective physical presence in Uruguayan territory during the calendar year of at least 60 days must be registered.
Directly or indirectly having a shareholding in a company for an amount exceeding 15,000,000 UI (approx. USD 1,600,000), made as from July 1, 2020, and which generates, at least, 15 direct jobs under full-time employment contract, during the calendar year. New jobs are those generated as of July 1, 2020, provided that they are not related to a reduction of jobs in related entities.
Once the tax residence in Uruguay is obtained, the new resident is covered by the tax regime for residents in Uruguay with a temporary advantage over the others, which is called tax holiday: for the year in which he/she becomes a tax resident, and for the following 10 years, he/she does not pay IRPF at the rate of 7% on personal income (basically interest and dividends) generated abroad.
4. Settling the main core of vital interests in the national territory.
It may be accredited through any documentation deemed relevant, such as the enrollment of a child or children in an educational institution, proof of medical coverage, proof of membership in sports clubs, etc.
If residence is to be proved by means of the presumption of spouse and minor children, it will be sufficient to submit the Residence Certificate of the members of the group and prove the marital status and filiation of children by means of the corresponding birth certificates.
How to obtain the Tax Residence Certificate?
In order to obtain the Tax Residence Certificate, the interested person must prove his/her tax residence in the country for the period for which he/she is requesting the certificate, in accordance with the regulations in force.The individual who requires a Tax Residence Certificate in Uruguay shall appear before the Tax Authority (DGI) in person with the documentation proving his/her above-mentioned tax residence and Form 5202 - Tax Residence Certificate Application completed in 2 copies. If you need help, you can refer to the instructions here.
Montevideo: Av. Daniel Fernández Crespo 1534. Administration Division - Front Desk - 8th Floor.
Rest of the country: at any DGI office.
Check the requirements for visas, residences according to stay purposes, and legal citizenship.