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February 11, 2021

Uruguay modifies “tax holiday” regime

In the last few months of 2020, Uruguay modified the “tax holiday” regime, which provides a temporary income tax exemption to new tax residents for income from foreign investments. Law No. 19,904 (September 2020) allows new tax residents to choose between:

  •  Not being subject to income tax on yields of foreign capital for the year in which they became tax residents and the following 10 years (previously it was 5 years)

  •  Being subject to a 7% rate forever on yields of foreign capital

Once the election is made, it will apply from 2020 and thereafter.

Law No. 19,937 (December 2020) extended the “10-year period” option to tax residents who benefited from the regime before 2020. To qualify for the 10-year period, individuals must meet the following conditions:

  • Prove they acquired property for a value exceeding 3.5 million Indexed Units (approx. US$400,000) as from 22 January 2021

  • Be in Uruguay for at least 60 days during the calendar year


For additional information with respect to this Alert, please contact the following:

Ernst & Young Uruguay, Montevideo
Ernst & Young LLP (United States), Latin American Business Center, New York
Ernst & Young Abogados, Latin American Business Center, Madrid
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Tax Co., Latin America Tax Desk, Japan & Asia Pacific

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