Tag Archives: Uruguay

Uruguay to attract foreign residents with tax exemption

More than a year after introducing tax laws that made certain foreign-source income taxable to all residents of Uruguay, the Uruguayan Government decided to provide a tax exemption for all foreign residents in order to keep the existing foreigners in Uruguay and encourage their continued future immigration into the country.

 The new exemption, enacted in May 2012, provides foreign tax residents (non-Uruguayan citizens who spend more than 183 days per year inside Uruguay) a five-year tax-free window during which they will not be liable for income tax on any foreign source income. Foreign tax residents retain their non-resident tax status for five-years. After the five years expire, foreign tax residents must pay a 12% income tax on foreign interest and dividend income like all other Uruguayan residents; however, all other types of foreign income will still be tax-free, including capital gains, pensions, rents, etc.

In order to ensure that foreign tax residents are not taxed twice on their foreign income, Uruguay has also agreed to forgo taxes on foreign interest or dividends if that income is already taxed by another country. Uruguay will thus provide a full tax credit for any foreign taxes paid. This added incentive is significant because many foreign residents moving to Uruguay are already paying significant taxes in their home country. This is particularly true for citizens of the United States, who pay taxes on their world-wide income.

The news certainly calmed many foreigners still living in Uruguay, many of whom were very upset and frighten by the government’s decision to enact a world-wide tax on interest and dividend income. Some of the foreigners had already left Uruguay and opted for friendlier tax jurisdictions like Chile, Paraguay, Panama, Colombia, Mexico, Central America or the Caribbean. More important many more foreigners was considering to exit Uruguay unless this tax exemption was introduced rather quickly.

This new exemption will entice some of those foreign residents to return to Uruguay. The new tax exemption will certainly encourage prospective foreign residents to consider Uruguay again.

Evidence of Uruguay’s great past (Uruguay was a very rich country in the beginning of the twentieth century with higher average pensions and salaries than that of Italy and France as late as in the 1950’s) can be found in the old city / down town Montevideo with its great architecture. The long term decline of the country since then has made it affordable. Average salaries and pensions are now considerably lower than that of Italy and France giving the country a low cost level compared to Europe. The depression in the last decade was the worse recorded in the history of the country and created an historical opportunity for investment in Montevideo with its architectural treasures.

With great nature, good climate, beautiful beaches, colonial architecture, rich in agriculture commodities and fresh water resources, as well as a renaissance of the old city center /  down town Montevideo, many foreigners are looking at Uruguay as an interesting country. The government’s latest tax exemption shows prospective foreign residents that Uruguay is serious about attracting them to the country.


Uruguay – Offshore Corporate Vehicle

The main feature of an Uruguay Offshore Corporate Vehicle:

Reputable jurisdiction

Foreign income and assets of Uruguayan corporate vehicles are not taxed. Dividends are not taxed


– Shares may be bearer type (anonymity)

– Bearer shares may be transferred by simple delivery

– Company only requires one director and one shareholder

– Directors and shareholders may be non Uruguayan

– Presence of directors and shareholders is not required in Uruguay

– Purpose may be all-encompassing all types of business activity

– No minimum capital required – no maximum capital limit

– Shareholder’s liability is limited to the paid in capital

– Any person or company may incorporate or acquire an Uruguayan Offshore Corporate Vehicle

Solid banking system with secrecy laws

Free inflow and outflow of capital in any currency.

Few obligations:

Prepare financials statements once a year

Hold a shareholder meeting once a year. However, it may do so by proxies.

File tax forms once a year and pay the annual tax of USD 400

The physical presence in Uruguay of any of the corporations shareholders are not necessary.

Please contact us if you want to establish a trust and or corporate structure in Uruguay.


What is a trust – Set up a trust in Uruguay

What is a Trust?

It is a legal transaction that involves the transfer of property or rights of the estate of a person or entity to form an autonomous patrimony entrusted to an administrator to manage it or to exercise the rights in compliance with certain instructions in favor of one or more beneficiaries.In compliance with the prescribed term or condition, such property or rights are restored to whom the property or rights conveyed or transferred to a third party.

How are called the different parties involved in the establishment of a trust?
The person who conveys the property or rights of the business object to the instructions on how to proceed with it, is called the trustor or settlor.The person who receives such property or right (trust assets) in order to comply with the provisions of the deed or deed of trust, this is called TRUST. The trustee or beneficiary is the person who receives the benefits of the property or rights managed by the Trust. The Trustor (the person who conveys the property or rights) may also be the beneficiary.The property business objects out of the assets of the Trustor (who conveys the goods) and constitute the trust property passing to form an independent involvement heritage assets of the Trust and excluded from the guarantee of the creditors of this. Both the Trustor and the Beneficiary may exercise their rights to ensure compliance with the trust according to script it gives rise.


Use of an Uruguay based Trust ?
Applications for this new instrument are different: one of the most anticipated in Uruguay is as facilitator of the credit instrument. Those who need to obtain a loan can establish a trust which by its nature separates certain assets of the estate of the person to constitute a separate estate, free of any affectation. The trust is a more efficient means of assurance in the field of business, giving greater legal certainty for investors. Compared to the real rights of mortgage or pledge, (traditional security instruments used in Uruguay) in the Trust property has been transferred to the Trustee who will administer the Trust in accordance with the instructions provided by the Trustor. Upon fulfilling the condition or term of affection that heritage will be returned to Trustor or Beneficiary shall be transmitted in compliance with the agreement without court action.Contact us if you want to set up a trust in Uruguay, or need advise regarding the use of trusts.

Why you need a private foundation – L’Oreal heiress Liliane Bettencourt’s fortune dispute

If you establish a private foundation, and are careful with how you use Swiss bank accounts, you would avoid repeating Liliane Bettencourt’s problems.

The story of L’Oreal heiress Liliane Bettencourt fortune have it all to provoke a scandal ; A L’Oreal heiress gives EUR 1.3 billion to a friend, causing an investigation, here hiding of secret funds in Switzerland, and here attempt to move the money to Singapore and Uruguay, as well as a jealous daughter and more…….  Read the story here.

If you understand French you can listen to the secrets tapes here.

The lesson from Liliane Bettencourt’s case is be careful with how you use Swiss banks and get distance to your fortune by using foundations and trust’s in selected jurisdictions.

Contact us if you need assistance to establish a private foundation or advise regarding the use of Swiss bank and other international banking centers.