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Uruguay Uruguay's advantages: Citizenship, Taxes, Offshore Companies and Banking
Juan Federico Fischer 
Uruguay’s Key Investment Advantages
Uruguay offers many advantages to the foreign or offshore resident, thus its reputation as “the Switzerland of South America”. Money Transfers
Funds can enter Uruguay freely, that is, without any withholding taxes or government fees affecting transfers of money into the country. Funds can exit the country, free of any taxes, at any point. There are no waiting periods or permits to transfer money back out of the country. One does not face currency risk, since funds in the country can (and usually do) stay in foreign currency (U.S. dollars and Euros being the main choices). Over three quarters of the funds that Uruguayan banks hold are in dollars.
Property & Assets
One needn’t be a citizen, a resident, nor be physically present in Uruguay, in order to own property in the country, or have investments or funds in a bank account in the country.
Assets in Uruguay can be owned by any type of foreign body, with no disadvantage. It’s common to see real estate owned by Panama, BVI or Delaware LLCs.
Obtaining Uruguayan Citizenship
Obtaining Uruguayan citizenship a simple process. It starts with filing for residency (which is fully granted, on average, after one year).
Residency is easy to obtain and the key requirements are three: one’s birth certificate (stamped by the Uruguayan consulate in the country of birth), a clean police record and proof that one can support oneself throughout the residency process (the “income requirement”).
To prove that one has a clean police record, he or she must present a police certificate from the country of origin and from those countries where one resided in the past five years (in the case of U.S. citizens, the U.S. record is requested in Uruguay, at the local Interpol office).
The income requirement is fulfilled by proving that the interested party has yearly income of at least US$6,000. This can be proved in a number of ways: a pension, a mutual fund, lease income from an asset inside or outside Uruguay, dividends of any nature, or a wage, to name some common examples. Uruguay’s immigration authorities scrutinize this requirement thoroughly, so the key is to prove it correctly, leaving no doubt to the authenticity and permanent or semi-permanent nature of the income source.
It’s important to notice that Uruguay does not require that you own property or have investments in the country, in order to obtain residency. On the other hand, owning property does not eliminate the income requirement.
One first enters Uruguay as a tourist. Then, after gathering the necessary documents and obtaining a fixed appointment date, one files the request at the immigration authority (“DNM”). From the moment a person applies for residency, he or she may stay in Uruguay indefinitely, and even request a national identification, which allows one to travel passport-less to Argentina, Brazil, Chile and Paraguay. One may also, from day one, bring one’s household goods into the country, duty free. It should be note that household goods do not include a car.
After five years of having filed for residency (three in the case of families) one can apply for citizenship. This is done at Uruguay’s “Electoral Court”, and the requirement is that one have Uruguayan residency, and to have had a permanent connection with the country and no absence for more than six straight months, for three/five years (this is proved with documents and witnesses). The citizenship application process is quick, and usually citizenship is granted within three months of one’s request.
Uruguay allows multiple citizenship, and the key benefit of citizenship is a Uruguayan passport is that it allows for visa-free travel to all of Latin America and several European countries.
Taxes in Uruguay
For foreign citizens, and for Uruguayan citizens with offshore income, taxes are a neutral issue.
Recent changes in Uruguay’s tax code, in July 2007, introduced personal income tax for individuals, but did not change Uruguay’s main tax rule: foreign income is never taxed (nor does it have to be reported). Uruguay will continue taxing only income generated inside Uruguay and some assets located inside the country. Thus, for citizens and foreign nationals alike, any type of income obtained from a foreign source, or assets abroad, will remain untouched by the Uruguayan tax collector. A U.S. pension, dividends or capital gains on stock in a Japanese company, interest from a CD in a European bank or real estate in Australia: they all remain untaxed.
Banking
Banking in Uruguay is easy. Non residents can open a bank account usually in a day. The requirements are an ID, the signature of the interested party, a proof of address (not necessarily in Uruguay) and in some cases a bank reference letter and a local introduction.
Banking in Uruguay is protected by one of the world’s tightest banking secrecy regulations (Law 15,322, which dates back to 1982). Under this law, banks cannot share information with any party, including the government of Uruguay (and much less foreign entities). The only exceptions are two: a) If a Family Court from Uruguay requests it in an alimony process; and b) If a Uruguayan Criminal Court requests it, backed by sufficient evidence of a crime. The criterion is effectively applied, since banking secrecy is a crucial competitive advantage of Uruguay’s banking system.
Uruguay’s Offshore Vehicles
Uruguay maintains a reputation as an efficient and trustworthy offshore jurisdiction, mainly through two instruments: offshore companies and free-zone companies.
Uruguay’s offshore vehicle is the standard Sociedad Anonima (SA) which is untaxed on its offshore income and offshore assets. The only tax that a Uruguayan SA pays when used solely for offshore purposes is a flat tax, ICOSA, which amounts to the equivalent of approximately US$ 390 per year.
The SA is a stock corporation, and it is simple to manage and run. It may have one or many owners (shareholders), of any origin, one or many officers (of any origin), and its shares may be nominative or bearer-type. There are no public records or requirements to disclose or register the shareholders of the company, even in the case of nominative-share companies.
SAs are easy and inexpensive to incorporate, and usually investors purchase a readily incorporated (but not-yet-activated) SA, which can be made available and used instantaneously.
Its sole obligations are to: - Have at least one officer or director, who has to register with the tax authorities and the Public Commerce Registry
- File tax forms twice a year
- Close its corporate books once a year
- Pay the taxes that apply to the company.
Additionally, Uruguay has free zones, from which any activity conducted with overseas parties is untaxed. To operate in a free zone, one must have a contract with the relevant free zone operator, and a special type of SA which can only conduct activity from a free zone.
This informative article was provided by Juan Federico Fischer of LVM Attorneys Montevideo. LVM is a full service law firm in Uruguay, with a specialized department dedicated to relocation: assisting with residency, purchasing property, banking and tax matters. For more details see their website: www.lvm.com.uy
Fischer & Schickendantz Lawyers
Rincón 487, Piso 4
Montevideo 11000, Uruguay
Tel: (+598) 2 915-7468 ext. 130 Cell: (+598) 99 925-106
Fax: (+598) 2 916-1352
www.uruguayinvest.com
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