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Uruguay Raises Tax Holiday Threshold to US$2 Million, Taxes Foreign Income at 12% · IMI Podcasts

• 0:00
  SPEAKER_00: Uruguay has offered foreign residents a tax holiday since 2020, acquire tax residency, and pay nothing on foreign sourced income for 11 years.
• 0:08
  SPEAKER_00: Under the previous center right government, qualifying was relatively easy.
• 0:13
  SPEAKER_00: A real estate purchase of approximately 590,000 US dollars and 60 days of annual presence were enough.
• 0:22
  SPEAKER_00: Lay 20,446, Uruguay's national budget for 2025 to 2029, rewrote those terms as of January 1st, 2026.
• 0:33
  SPEAKER_00: The minimum real estate investment has jumped to approximately 2 million US dollars.
• 0:38
  SPEAKER_00: Most categories of foreign sourced income are now taxed at 12% for residents who do not hold the holiday.
• 0:45
  SPEAKER_00: And the 60-day presence route to the holiday is gone.
• 0:49
  SPEAKER_00: President Yamandu Orsi's Frente Amplio government, which took office in March 2025, needed revenue for expanded public spending and founded here.
• 1:00
  SPEAKER_00: Francisco Litve, CEO of CETI, says the government put forth policies that required increased spending, and to cover that, they decided to raise taxes.
• 1:12
  SPEAKER_00: Foreign sourced income from movable and real estate capital held through nonresident entities, along with capital gains on such assets, now falls within the scope of Uruguay's impuesto a la renta de las personas físicas, referred to as ERPF, at 12%.
• 1:31
  SPEAKER_00: Uruguay had already taxed foreign dividends and interest at 12% for residents outside the holiday since 2011, but foreign capital gains and rental income from nonresident entities were untaxed.
• 1:43
  SPEAKER_00: That exemption is now gone.
• 1:45
  SPEAKER_00: A new tax transparency regime allocates income from nonresident companies directly to their Uruguayan individual shareholders for IRPF purposes.
• 1:55
  SPEAKER_00: The structure that had shielded offshore holdings from domestic taxation is closed.
• 2:00
  SPEAKER_00: One partial offset, negative results from foreign capital gains can now be offset against other foreign gains and movable capital income.
• 2:09
  SPEAKER_00: Derivative financial instruments remain excluded from the holiday as before.
• 2:14
  SPEAKER_00: New tax residents from January 1st, 2026 can still elect the holiday, but qualifying demands more.
• 2:20
  SPEAKER_00: Three paths.
• 2:22
  SPEAKER_00: Physical presence exceeding 183 days annually, no investment required.
• 2:28
  SPEAKER_00: Real estate investment above 12.5 million unidades indexadas, approximately 2 million US dollars, or invest 100,000 US dollars per year into the newly created National Innovation Fund for 11 consecutive years.
• 2:45
  SPEAKER_00: A 2.4 million US dollar local business investment grants tax residency through a fourth path, but does not automatically confer the holiday.
• 2:54
  SPEAKER_00: Applicants must not have been Uruguayan tax residents in the two preceding fiscal years, nor can they have previously used the holiday.
• 3:03
  SPEAKER_00: Qualifying residents receive a full exemption on foreign sourced capital income for the year of acquisition plus 10 calendar years, 11 years total.
• 3:12
  SPEAKER_00: After that, a five-year transition at 6%, half the 12% IRPF rate applies.
• 3:19
  SPEAKER_00: Lump sum annual payments in the range of$200,000 to$300,000 are also available for higher income profiles, though final figures await regulatory implementation.
• 3:31
  SPEAKER_00: The permanent 7% flat rate on foreign income, available under the prior regime, is being phased out for new residents.
• 3:38
  SPEAKER_00: Existing holiday holders are explicitly grandfathered.
• 3:42
  SPEAKER_00: Lay 20.446 confirms that all foreign sourced capital income and gains fall within their existing exemption for its full remaining term.
• 3:52
  SPEAKER_00: Philippe May, founder and CEO of EC Holdings, confirmed that existing tax residents on the holiday are not affected and called the reform a positive change for Paraguay the main competition.
• 4:07
  SPEAKER_00: Only those investing$100,000 annually in designated facilities benefit from the new fund-based path, he noted, and the changes broadly reflect the new government's fiscal priorities.
• 4:20
  SPEAKER_00: Litve argued the reform actually improves life for current holiday holders by creating an option to extend benefits beyond 11 years through the 6% transition.
• 4:30
  SPEAKER_00: He says that eliminating the$590,000 route, quote, will price out many from the program who don't have the capital and don't want to commit to living in Uruguay over six months a year, end quote.
• 4:44
  SPEAKER_00: His sharpest worry is political, not fiscal.
• 4:47
  SPEAKER_00: Before 2011, Uruguay ran a purely territorial system.
• 4:52
  SPEAKER_00: Citizens and foreigners alike paid nothing on foreign income.
• 4:56
  SPEAKER_00: Successive reforms have narrowed that exemption for Uruguayans, while preserving it for qualifying immigrants, and Litve warned that the widening gap rightfully creates a sense of unfairness, drawing a parallel to the backlash against Portugal's now defunct first version of its non-habitual residency regime.
• 5:17
  SPEAKER_00: High net worth real estate investors willing to commit$2 million still get 11 tax-free years without full relocation, then five at 6%.
• 5:27
  SPEAKER_00: Those comfortable with$100,000 per year into the innovation fund get the same holiday without a large upfront outlay, though the fund's returns and liquidity terms depend on regulations still to come.
• 5:41
  SPEAKER_00: It issues securities, not donation receipts.
• 5:45
  SPEAKER_00: Litwede judged the lump sum option at approximately$300,000 annually, overpriced for the regional context, pointing out that Paraguay, Panama, and Honduras offer cheaper tax residency with less presence required.
• 5:59
  SPEAKER_00: For an equivalent or lower annual cost, he added, Italy, Greece, Poland, or Switzerland all offer lump sum regimes in countries where demand for relocation by high net worth individuals is higher.
• 6:12
  SPEAKER_00: Whether the Frente Amplio raises the revenue it needs or simply redirects prospective residents toward those competitors will depend on regulatory details still to come.
• 6:22
  SPEAKER_00: Uruguay's comfortable middle ground between tax haven and full fiscal commitment has vanished.
• 6:30
  SPEAKER_00: This episode first appeared as an article by Ahmad Abbas on IMIDaily.com.
• 6:36
  SPEAKER_00: Subscribe for free to the IMI newsletter for breaking news and updates from the investment migration industry, and upgrade your membership to IMI Pro to get access to our exclusive professional community, citizenship catalog, investment migration company Rolodex, private briefings, and more members only content.