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August 8, 2022

Uruguay’s Tax Authority clarifies tax treatment of profit repatriations paid by a permanent establishment under double tax treaty

  • The Uruguayan Tax Authority (Dirección General Impositiva, DGI) has confirmed that profit repatriations received by the head office from its permanent establishment (PE) in Uruguay are not subject to nonresident income tax (NRIT).

In Consultation No. 6490, Uruguay’s DGI concluded Article 7 (Business Profits) of the Uruguay-Belgium double tax treaty applies to profit repatriations from a PE to its head office. The DGI explained that Article 10 (Dividends) refers to dividends paid from a resident of a contracting state to a resident of the other contracting state, which is not the case with profit repatriations from a PE to its head office.

Under Article 7 (Business Profits), Uruguay may tax the profits of a nonresident when the profits are derived in Uruguay and the following conditions are met:

  • The nonresident carries on business in Uruguay through a PE situated therein.
  • The profits are attributable to the PE.

The DGI determined the second condition was not met and Uruguay could not impose the NRIT on the profit repatriations paid by the PE to its head office.

Consultation No. 6490  was published on the DGI’s website on 13 July 2022.


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

EY Uruguay, Montevideo

Ernst & Young LLP (United States), Latin American Business Center, New York

Ernst & Young Abogados, Latin America Business Center, Madrid

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific


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