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Taxes in Uruguay: Which should I pay?
An overview of taxes in Uruguay: How individuals and businesses are taxed and the benefits of this tax system.
The tax system in Uruguay is popular for its simplicity, stability, and numerous tax benefits, aimed at attracting both businesses and self-employed individuals. This structure is favoured by investors, innovators, and digital nomads who want to live for a while or run their business in Uruguay.
At Holafly, in addition to providing you with the best connection now with our monthly global internet plans, we’ve prepared this blog to introduce you to the taxes in Uruguay applicable in 2025 and the tax privileges that are often discussed to boost your projects while enjoying the quality of life in this South American country.
How do taxes work in Uruguay?
The Uruguayan tax system is based on the principle of territoriality, primarily taxing income derived from Uruguayan sources. The General Directorate of Taxation (DGI) is the body responsible for collecting and administering taxes. Compared to other countries in the region, such as Brazil, where tax procedures are bureaucratic and numerous, Uruguay offers a simpler system and has made advances in the digitalisation of tax processes. This allows taxpayers to register, file, pay, and claim taxes electronically, simplifying the tax process.
Tax declaration and payment deadlines vary depending on the type of tax. For example, direct taxes such as the Income Tax on Economic Activities (IRAE), the Income Tax on Individuals (IRPF), and the Wealth Tax (IP) are calculated and paid annually, although they require monthly or quarterly advance payments.
Taxes in Uruguay for Individuals
Whether you’re a digital nomad in Uruguay, a freelancer, retiree, or entrepreneur, individuals are subject to various taxes, both direct and indirect. Below are the main taxes that affect these individuals, including their rates and practical examples for better understanding.
1. Personal Income Tax (IRPF)
The IRPF is an annual, personal, and direct tax on income from Uruguayan sources earned by resident individuals. A person is considered a resident if they spend more than 183 days in a calendar year in the country or have the main base of their activities or interests in Uruguay. It is divided into two categories:
A. Work income: Includes salaries, fees, and other remuneration. The rates are progressive, applied as follows:
| Annual income range in BPC | IRPF Rate |
| Up to 7 BPC | Exempt |
| 7 to 10 BPC | 10% |
| 10 to 15 BPC | 15% |
| 15 to 30 BPC | 24% |
| 30 to 50 BPC | 25% |
| 50 to 75 BPC | 27% |
| 75 to 115 BPC | 31% |
| More than 115 BPC | 36% |
Note: The Base of Benefits and Contributions (BPC) is a reference unit used in Uruguay to calculate taxes, income, and various social benefits. For 2025, the BPC is set at $ 165.50 (€142.80).
Example: If a person has an annual income of $30,120 (€26,040), the calculation of the IRPF would be done by applying the progressive rates to the BPC ranges.
- We convert the annual income into BPC: $1,200,000 ÷ $6,576 ≈ 182.45 BPC
Now apply the 2025 ranges:
- Up to 7 BPC (exempt): 7 × $6,576 = $46,032 → $46,032 x 0% = $0
- 7 to 10 BPC (10%): 3 BPC = 3 × $6,576 = $19,728 → $19,728 x 10% = $1,972.8
- 10 to 15 BPC (15%): 5 BPC ≈ 5 × $6,576 ≈ $32,880 → $32,880 x 15% = $4,932
- 15 to 30 BPC (24%): 15 BPC ≈ 15 × $6,576 ≈ $98,640 → $98,640 x 24% = $23,673.6
- 30 to 50 BPC (25%): 20 BPC ≈ 20 × $6,576 ≈ $131,520 → $131,520 x 25% = $32,880
- 50 to 75 BPC (27%): 25 BPC ≈ 25 × $6,576 ≈ $164,400 → $164,400 x 27% = $44,388
- 75 to 115 BPC (31%): 40 BPC ≈ 40 × $6,576 ≈ $263,040 → $263,040 x 31% = $81,542.4
- From 115 to 182.45 BPC (36%): 67.45 BPC ≈ 67.45 × $6,576 ≈ $443,760 → $443,760 x 36% = $159,753.6
Total IRPF (Personal Income Tax) to be paid: $0 + $1,972.8 + $4,932 + $23,673.6 + $32,880 + $44,388 + $81,542.4 + $159,753.6 = $349,142.4
B. Capital income: Includes interest, dividends, and rents. The rates vary depending on the type of income:
- Interest on deposits in financial institutions: 7 %.
- Dividends and earnings: 7 %.
- Real estate rentals: 12 %.
If a person earns income from rentals of $2,560 (€2,350) in a year, the IRPF would be: $2,560 (€2,350) x 12% = $307 (€282).
Deductions and exemptions:
The IRPF allows for certain deductions, such as social security contributions, medical expenses, and family burdens, among others, which reduce the taxable base.
2. Wealth Tax (IP)
This annual tax levies a charge on the net wealth of individuals as of December 31 each year. The rates are progressive and apply to the amount exceeding the non‑taxable minimum, which for 2025 is approximately $159.50 (€138.60) for individuals and $319.00 (€277.20) for family units.
| Net wealth range in euros and dollars | IP Rate |
| Up to 4,000,000 | 0% |
| 4,000,001 – 6,000,000 | 0.7% |
| 6,000,001 – 8,000,000 | 1.0% |
| More than 8,000,000 | 1.5% |
If a person has a net wealth of $159,090.91 (€145,833.33), the calculation of the IP would be:
- First range (up to 4,000,000): exempt.
- Second range (4,000,001 – 6,000,000): $50,200,00 (€43,400) × 0.7% = $351,40 (€301,80).
- Third range (6,000,001 – 7,000,000): $25,100,00 (€21,500) × 1.0% = $251,00 (€217,50).
- Total IP to pay: $352.02 + $251.45 = $603.47 (€303.80 + €217.00 = €520.80)
3. Value Added Tax (VAT)
IVA is an indirect tax that applies to the sale of goods and the provision of services in Uruguay. The current rates are:
- Standard rate: 22%
- Minimum rate: 10%, applicable to certain products and services such as basic food and medicines.
4. Social Security Assistance Tax (IASS)
The Social Security Assistance Tax (IASS) in Uruguay is an annual, personal, and direct tax on income from pensions, retirements, and other passive income from Uruguayan sources, regardless of whether they are contributory or not, and paid by both public and private institutions. The following rates and values apply:
| Annual computable income | IASS Rate |
| Up to 6 BPC | 6% |
| More than 6 and up to 41 BPC | 24% |
| More than 41 BPC | 30% |
Note: The Base of Benefits and Contributions (BPC) is a reference unit used in Uruguay to calculate taxes, income, and various social benefits. For 2025, the BPC is set at $ 165.50 (€142.80).
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Taxes in Uruguay for Businesses
If you’re a business or planning to set one up in Uruguay, it’s crucial to ensure compliance with your tax obligations. In this section, you’ll learn in-depth about the tax system for businesses and the potential exemptions available to optimise operating costs and maximise business profitability.
1. Business Income Tax (IRAE)
Resident legal entities in Uruguay must pay the IRAE on income derived from Uruguayan sources, such as:
- Commercial, industrial, and service activities.
- Agricultural activities.
- Financial and insurance activities.
- Real estate activities.
The IRAE is calculated by applying a 25% rate on the net income obtained during the fiscal year. Net income is determined by subtracting the costs and expenses required to earn such income, including amortisations and provisions permitted by current regulations.
That is, if a company earns a net annual income of $22,727.27 (€20,833.33), the IRAE to pay would be:
- $1,000,000 × 25% = $6,286.15 (€1,000,000 × 25% = €5,425.00)
Exemptions and Benefits:
- Promoted sectors: Companies making investments in promoted sectors can access tax benefits, including IRAE exemptions.
- Industrial parks: Companies that set up in industrial parks can benefit from tax exemptions and benefits.
- Agricultural activities: Income from agricultural exploitation may be exempt from IRAE, depending on the activity and current regulations.
2. Wealth Tax (IP)
This tax imposes a charge on the net assets of companies as of December 31 each year. The general rate is 1.5% on the value of net assets.
For example, if a company has net assets of $113,636.36 (€104,166.67), the IP to pay would be:
- $75,000 × 1.5% = $1,885.84 (€75,000 × 1.5% = €1,627.50)
3. Value Added Tax (VAT)
IVA is an indirect tax that applies to the sale of goods and the provision of services. The current rates are:
- Standard rate: 22%
- Minimum rate: 10%, applies to certain goods and services such as basic food products and tourism services.
- Exemptions: Certain goods and services are exempt from VAT, such as exports and activities related to education or health.
4. Tax on Shareholder Control of Companies (ICOSA)
This annual tax applies to public limited companies and limited partnerships by shares, with a fixed rate that is updated periodically. For 2025, ICOSA is approximately $607.30 (€558.42). This means that a public limited company will need to pay $629.82 (€580.50) annually for ICOSA.
5. Social Security Employer Contributions
Companies in Uruguay must contribute to the Social Security Fund (BPS) for each employee they hire. This contribution equals 7.5% of the employee’s gross salary, although the rate may vary depending on the company’s type of activity or specific conditions. It is an obligation that helps fund the country’s social security system. If a company pays a total of $11,363.64 (€10,416.67) in salaries in a month, the employer contributions would be:
- $12,573.85 × 7.5% = $943.04 (€10.847,50 x 7,5%=€813.56.)
In Summary…
| Tax | What do they tax? | Fee |
| Business Income Tax (IRAE) | Net income from Uruguayan sources derived from any type of economic activity. | 25 %. |
| Value Added Tax (VAT) | Domestic circulation of goods and provision of services within Uruguay, as well as imports of goods. | – Standard rate: 22 % – Minimum rate: 10% (applicable to certain products and services). -Exports: 0% rate (with a tax credit refund). |
| Personal Income Tax (IRPF) | Income obtained by individuals residing in Uruguay, distinguishing between capital income and labor income. | – Capital income: 7% – 12%. – Labor income: Progressive rates up to 36%. |
| Non-Residents Income Tax (IRNR) | Income from Uruguayan sources obtained by non-resident individuals and companies. | – General: 7% – 12% (depending on the type of income). -Low or zero-tax countries: 25%. -Dividends: 7 %. |
| Wealth Tax (IP) | Assets in the country, valued according to tax rules, at the end of the fiscal year. | – Corporations: 1,5 % – Financial entities: 2.8%. Resident individuals: Progressive rates between 0.6% and 0.9%. Non-resident individuals: progressive rates between 0.7% and 1.5%. Non-taxable minimum: Approximately $130,000 (doubles for family units). |
| Specific Internal Tax (IMESI) | The first sale made by producers and importers of certain products such as cigarettes, alcoholic beverages, soft drinks, cosmetics, etc. | Variable rates depending on the product, set by the Executive Branch within parameters established by the law. |
| Property Transfers Tax (ITP) | Transfer of real estate and certain rights within the country, applicable in cases of sales, exchanges, donations, inheritance, etc. | – Seller: 2 % – Buyer: 2 % – Heirs and legatees: 3 %. |
Benefits of Paying Taxes in Uruguay
Uruguay has favourable tax regimes, investment incentives, and free trade zones aimed at promoting new business creation, fostering innovation, facilitating migration, and attracting international talent who wish to expand their horizons in South America. Let’s explore some of the tax benefits available:
| Tax benefit | Description |
| Investment Promotion Regime | Tax exemptions for companies that make new productive investments, including exemptions from taxes like IRE and Wealth Tax for 5 to 10 years. |
| Free Trade Zones | Tax benefits such as exemptions from VAT, Income Tax, and Wealth Tax, especially for export, logistics, and tech companies. |
| Tax Residency Regime | Exemption from taxes on foreign income for 5 years for foreigners. |
| Start-up Investment Regime | Tax exemptions for emerging tech start-ups, encouraging reinvestment and growth. |
| Property Tax Exemption | Exemption from certain property taxes for new residents and tax benefits for investors in real estate in the country. |
| Exempted Income Regime for Immigrants | Tax incentives for immigrant entrepreneurs, with a favourable tax regime on foreign earnings. |
| Non-Habitual Residence Regime | Allows foreign income to be untaxed for 5 years. This is an attractive incentive for those wishing to move to Uruguay and keep their foreign income intact. |
| R&D Tax Credits | Companies investing in research and development (R&D) can access tax credits to reduce their tax burden. |
Frequently Asked Questions about Taxes in Uruguay
Businesses must pay the Corporate Income Tax (IRE), VAT on sales, and the Wealth Tax. Depending on the activity, they may be subject to other taxes.
VAT is exempt on exports of goods and services, allowing businesses to be more competitive and recover VAT paid on local purchases for export production.
Foreigners can benefit from the non-habitual tax residence, which exempts them from IRPF on foreign income for the first 5 years, and they also have incentives to create businesses.
Companies can benefit from an exemption from the IRE (Wealth Tax) for up to 10 years, depending on the investment and employment generated in new productive projects.
The Wealth Tax is levied on the assets of companies and resident individuals, with exemptions for those whose assets fall below a set threshold.
Companies investing in research and development (R&D) can access tax credits to reduce their tax burden.
Tax residents in Uruguay must pay taxes on their worldwide income, but income earned outside the country may be exempt during the first 5 years under the non-habitual tax residency regime.
