Fiscal residency in Uruguay and investing in farmland

In Uruguay, an individual is deemed a fiscal resident if they meet any of the following criteria:

1. Physical Presence: Spending 183 or more days in Uruguay within a calendar year.
2. Permanent Home: Having a permanent residence in Uruguay, even if present in the country for fewer than 183 days.
3. Economic Activity: Engaging in economic activities within Uruguay, regardless of the duration of their stay.

Taxation for Non-Residents

Non-residents are subject to taxation only on income generated from Uruguayan sources. To prevent double taxation, Uruguay has established tax treaties with several countries.

Defining “Economic Activity”

“Economic activity” includes participation in commercial, industrial, agricultural, or professional ventures. This may involve:

• Self-employment or independent contracting.
• Employment with a company based in Uruguay.
• Regular and continuous activities, regardless of whether they are the individual’s primary source of income.

For example, renting agricultural land in Uruguay on a systematic and continuous basis qualifies as an economic activity. As such, individuals renting out land may be considered fiscal residents, even if they spend little or no time in the country. Rental income from these activities would then be subject to Uruguayan taxation as locally sourced income.

Economic Interests and Fiscal Residency

Investments in Uruguay can also establish fiscal residency if they meet specific conditions, such as:

1. Real Estate Investment: Ownership of property valued at over USD 1,500,000.
2. Business Investments: Direct or indirect holdings in a company valued over USD 5,000,000, linked to nationally significant projects.
3. Real Estate Post-2020: Ownership of property valued above USD 370,000 acquired after July 1, 2020, combined with spending at least 60 days in Uruguay per year.
4. Job-Creating Investments: Investments exceeding USD 1,600,000 made after July 1, 2020, which create at least 15 new full-time jobs with employee status during the year.

Tax Incentives for New Residents

Uruguay offers tax benefits for individuals becoming fiscal residents:

• IRNR (Income Tax for Non-Residents): A 10-year exemption on income earned abroad.
• IRPF (Personal Income Tax): A reduced tax rate on foreign investment returns (from 12% to 7%).

Giving Up Fiscal Residency in the Country of Origin

To benefit from these incentives, individuals must renounce fiscal residency in their country of origin.

If you are interested in pursuing fiscal residency in Uruguay, we can connect you with specialized advisors to guide you through the process.