On 10 August 2026, the Uruguayan Executive Power issued Decree No.188/026 implementing the amendments to the personal income tax (PIT) tax holiday regime made by the 2025–2029 Budget Law. The new requirements apply to foreign-source investment income and capital gains. (For details on the budget law, see EY Global Tax Alert, Uruguayan Parliament approves the National Budget for 2025–2029, dated 10 December 2025).

The Decree has not yet been published in the Official Gazette; it can be accessed here (only in Spanish).

Decree clarifications and requirements

The Decree introduces the following clarifications and requirements for tax holidays for taxpayers who obtain tax residence in Uruguay starting in January 2026. Under the Decree, taxpayers who do not meet the conditions to benefit from the regime in a certain year can still apply the regime in the following years (within an 11-year period) in which the conditions are met.

To qualify for the regime, taxpayers must either invest in urban real estate or in certain investment funds (unless residence is verified through physical presence). An urban real estate investment must be valued at more than 12.5m indexed units (UI) and be acquired on or after 1 January 2026. To measure the UI 12.5m threshold, the real estate investments are valued at their updated tax basis. The tax basis of investments made in Uruguay's departments that do not have coastlines on the Atlantic Ocean or Rio de la Plata is increased by 50%. The Decree also establishes that the Ministry of Economy and Finance will regulate which investment funds will qualify and what the terms and conditions will be.

The Decree clarifies conditions under which the two additional options that are available post the 11-year tax holiday would work. One of the alternatives is a 50% PIT rate (6%), for the five years immediately after the 11-year period has elapsed. To qualify for this option, taxpayers must either invest in urban real estate valued at more than 6.25m UI or in investment funds with the same requirements as the 11-year period.

Another alternative is a fixed annual PIT amount of 1.25m UI for 20 years. To qualify for this option, a taxpayer must make a direct capital contribution to a company of more than 45m UI, which intended to increase the company's productive capacity. The investment value is determined using corporate income tax valuation rules.

The 20-year period begins immediately after the 11-year period has elapsed.

Both options may be exercised at any time after the 11-year period has elapsed, however the five- or 20-year period, as applicable, will not be extended.

Implications

The Decree provides additional guidance on applying the tax holiday regime introduced by the 2025–2029 Budget Law and clarifies several aspects that were previously uncertain. Individuals seeking to benefit from the regime should carefully assess the investment requirements, timing conditions and documentary support needed to qualify and maintain access to the benefit.