Update on the tax law situation in Uruguay

Last year the government of Uruguay made changes in its basic tax law. At the time especially concerned were foreigners who were considering applying for residence and eventual citizenship under the country’s liberal immigration laws.

The rumor was that foreign residents living in the country would be taxed on their offshore income for the first time.

The new law did impose a 12% tax on income from interest, bank deposits, stocks, bonds and other investments held offshore by Uruguayans. These taxes reportedly did not apply to foreign residents living in Uruguay.

The new law did exempt offshore income of foreigners who moved to the country, and those already living there.

The just-issued tax rules establish that foreigners who move to Uruguay and those already living there, will pay no taxes on any type of income generated abroad, at least for the first five years.

At the end of the five years, a 12% tax will be levied on dividends and interest earned outside the country. But importantly, to avoid double taxation, any person who pays income tax to another country on this interest and dividend income, will not be taxed again by Uruguay.

Bob Bauman / Juan F. Fisher