Tax residence

Tax residence is the relationship of a natural person with Uruguay resulting from conditions such as the time spent in the country, family or center of vital interests, income volume, investment in real estate, productive investments, among others. This implies that a person must assume the status of taxpayer in the country.

Unlike legal residence, tax residence is not permanent in nature, but is checked year by year. Both types of residence may or may not match in the same person.

How is tax residence established?

The tax residence of a natural person may be established according to one of the following criteria:

1. Stay for more than 183 days during the calendar year in Uruguayan territory.
   It must be accredited through the Certificate of Arrival issued by the National Directorate of Migration and other relevant documentation.
2. Location of the principal base of activities in Uruguay.
   The taxpayer’s declaration (with a notarised certificate of signature) may be supported by a notarised certificate or an accounting officer’s report of total income, stating that:
   • The applicant has no income other than that referred to in the attestation.
   • If there is revenue generated in other countries, it must be less than that generated in Uruguay (comparison made country by country).
   • The income generated in Uruguay is not exclusively capital income.
   • The information must relate to the year(s) for which the certificate is requested.
3. Economic interests.
   A person may establish tax residence if they have investments in immovable property or in undertakings with an investment project promoted, meeting any of the following conditions:
   • In real estate, with a value greater than 15,000,000 IU (approx. USD 1,622,000), valued under IRPF rules and updated by the variation of the Indexed Unit.
   • Direct or indirect participation in a company with a value greater than 45,000,000 IU (approx. USD 4,866,000) with activities or projects declared of national interest (Law 16,906).
   Since 2020, two additional grounds apply (unless the taxpayer proves tax residence in another country):
   • In real estate, with a value exceeding 3,500,000 IU (approx. USD 378,000), acquired from 01.07.20, with at least 60 days of physical presence in Uruguay during the calendar year.
   • Direct or indirect participation in a company with a value greater than 15,000,000 IU (approx. USD 1,622,000), acquired from 01.07.20, and generating at least 15 new full-time jobs during the calendar year (jobs must be new, not replacing reduced staff in related entities).
   Once tax residency is obtained, the person is included in Uruguay’s resident tax regime with a temporary advantage called a tax holiday: for the year in which they become a tax resident and for the following 10 years, no PIT is levied at the 7% rate on income from movable property (interest and dividends) generated abroad.
4. Center of vital interests in Uruguay.
   This can be proven through documentation such as:
   • Registration of children in an educational institution.
   • Proof of medical coverage.
   • Membership in sports clubs.
   If residence is to be proven through spouse and minor children, it is sufficient to present their residence certificates and proof of marital status and filiation.

How to obtain the Tax Residence Certificate?

To obtain a Tax Residence Certificate, the person must prove their tax residence in the country for the relevant period, according to current legislation.

The applicant must appear in person at the General Directorate of Taxation (DGI) with:

• Documentation proving tax residence as mentioned above.
• Form 5202 – Application for Tax Residence Certificate, completed in duplicate.