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11 February 2021

Uruguay modifies when goodwill is not considered in corporate restructurings

In Decree No. 21/021, Uruguay’s Executive Power modifies the requirements taxpayers must meet to not consider goodwill in mergers or spin-offs that are part of a corporate restructuring.

The decree modified the requirements companies must meet to not consider goodwill for tax purposes in corporate restructurings. Under the decree, goodwill will not be considered if:

  1. The ultimate beneficial owners (UBOs) of the companies participating in the deal remain in the structure, maintaining at least 5% of their equity proportions, and the UBOs are not modified for at least two years from the date of the merger or spin-off agreement.
  1. The affidavit filed before the Uruguayan Central Bank includes information on the whole chain of ownership, identifying all the UBOs.
  1. The core business of the predecessor companies is maintained for at least two years from the date of the merger or spin-off agreement.

The decree went into effect 22 January 2021.

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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

Document ID: 2021-5180

 
 

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