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February 26, 2021

Uruguayan Government modifies rules applicable to goodwill in corporate restructurings for a second time

The new decree requires ultimate beneficial owners to maintain at least 95% (instead of 5%) of their equity proportions for at least two years to not consider goodwill in corporate restructurings.

In Decree 64/021, Uruguay's Executive Power repealed Decree 21/021(see EY Global Tax Alert, Uruguay modifies when goodwill is not considered in corporate restructurings, dated 11 February 2021), modifying the requirements that taxpayers must meet to not consider goodwill in mergers or spin-offs that are part of a corporate restructuring.

The new decree modifies the section requiring the owners to maintain certain equity proportions to be eligible for the benefits. Under the new Decree, goodwill will not be considered for tax purposes if the ultimate beneficial owners (UBOs) of the companies participating in the deal remain in the structure, maintaining at least 95% of their equity proportions for at least two years (previously, the requirement was 5%).

Like Decree 21/021, the new decree requires the following:

  • The affidavit filed before the Uruguayan Central Bank must include information on the whole chain of ownership, identifying all UBOs.

  • The core business of the predecessor companies must be maintained for least two years from the date of the merger or spin-off agreement.

The decree went into effect on 25 February 2021.


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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