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March 17, 2021

Uruguayan tax authorities rule on which investments in real estate property are valid for foreign individual to obtain tax residency

A foreign individual may establish tax residency in Uruguay by investing in real estate through a promise of sale. A foreign individual may be able to establish tax residency by investing through an entity, provided certain requirements are met.

The Uruguayan tax authorities addressed (Consultation No. 6338) which real estate investments made by a foreign individual are valid for establishing tax residency in Uruguay.


To obtain tax residency status in Uruguay, a person must comply with at least one of the criteria established by law. One of the criteria consists of investing in real estate property in the country.

The individual plans to acquire one or more apartments in buildings under construction for more than 15 million Indexed Units (approximately US$1.69 million). The individual proposes two methods for making the acquisitions and has asked the tax authorities for guidance as to which method would qualify for tax residency.

Under the first method, the individual would enter into a promise of sale (without delivery of the apartments), which would include a partial price or the full price of the apartments. Once the construction is completed, the individual would enter into the final purchase-sale agreement.

The second method consists of signing an adhesion contract as part of a trust agreement and committing to contributing the funds in the individual’s capacity as settlor. Once the construction is completed, some units will be assigned to the individual and the final property sale agreement will be signed.


Regarding the first method, the tax authorities agreed with the individual that the first method should be considered a valid investment (even though the investment is made in property under construction and by signing a promise of sale). Therefore, it is a basis for the individual to obtain tax residence in Uruguay.

The tax authorities concluded that the second method, however, is not valid for establishing tax residence because the investment is in an entity, not real estate. The tax authorities determined the second method could help the individual establish tax residence if the individual invested “15 million Indexed Units on an entity [that]…generates at least 15 jobs.”

Consultation No. 6338 is binding on the taxpayer who requested it, but other taxpayers in a similar situation may follow the guidance provided in the consultation. The consultation was issued on 25 January 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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