Taxes and Tax Schemes in Uruguay | What You Need to Know in 2025

Uruguay, a progressive South American nation known for its stable economy and high quality of life, operates a territorial tax system that particularly appeals to international residents and investors. Located between Brazil and Argentina, Uruguay combines a business-friendly environment with strong privacy laws and a simplified tax structure, making it increasingly attractive for foreign professionals and businesses.

Uruguay's economy, driven by sectors like agriculture, technology, and services, has shown remarkable stability in a region often characterized by economic volatility. The country's tax system balances the need for revenue with maintaining attractiveness for foreign investment. Recent reforms have focused on modernizing tax administration and enhancing digital services for taxpayers.

The expat community in Uruguay is growing, with many professionals and retirees drawn to its high standard of living, political stability, and favorable tax regime. The tax system, while straightforward, offers various benefits and exemptions that can significantly impact an expat's financial planning.

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Uruguayan Income Tax

Uruguay employs a progressive income tax system (IRPF - Impuesto a las Rentas de las Personas Físicas) with rates ranging from 0% to 36%. For residents, employment income is taxed at the following rates (as of 2025):

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Social security contributions are additionally required, typically around 18.5% for employees and 7.5% for employers.

If you want to have a better understanding of the taxes you should pay on personal income in Uruguay, you can use the personal tax calculator in the Taxation section of the Uruguay page.

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Uruguayan Tax on Overseas Income

Uruguay operates on a territorial basis of taxation, which is particularly beneficial for international residents. The system recognizes:

• Residents: Taxed only on Uruguayan-source income and certain foreign income
• Non-residents: Taxed only on Uruguayan-source income

A key advantage is that most foreign-source income is not taxed, making Uruguay particularly attractive for those with international income streams.

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Uruguayan Tax on Investments

Investment income in Uruguay receives favorable treatment under tax law:

• Capital Gains: Generally taxed at 12%
• Dividends: 7% tax rate for residents
• Interest Income: 12% standard rate, with exemptions for certain government bonds
• Rental Income: Taxed at progressive rates with deductions available

The system includes various exemptions for government securities and certain foreign investments.

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Uruguayan Corporate Taxation

Corporate taxation in Uruguay is straightforward:

• Corporate Income Tax (IRAE): 25% flat rate
• Non-residents' Income Tax (IRNR): 12% on most types of income
• Value Added Tax (VAT): 22% standard rate, 10% reduced rate

The system includes special regimes for free trade zones and investment promotion projects.

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Special Tax Regimes

Uruguay offers several special tax arrangements beneficial to international residents:

Tax Free Zones: Companies operating in free trade zones enjoy full tax exemption on income and dividends.

Investment Promotion Law: Tax benefits for qualifying investment projects, including tax credits and VAT exemptions.

Residency Through Investment: Fast-track residency options with tax benefits for significant investors.

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Regional Comparison

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Tax Planning for Uruguay

Effective tax planning in Uruguay requires attention to several key areas:

Residency Planning: Strategic planning of tax residency status can optimize treatment of international income.

Investment Structuring: Utilizing free trade zones and investment promotion benefits.

Property Investment: Careful structuring of real estate investments to optimize tax treatment.