RIO DE JANEIRO, BRAZIL – Uruguayan President Luis Lacalle Pou has kept the pledge, made before taking office, that he would relax tax regulations to attract Argentine entrepreneurs: his intention, he said, was for 100,000 Argentinians to take their money to the neighboring country and even move there.
He did so on June 11th, by issuing a decree establishing that, as of July 1st, all foreigners who want to have their fiscal residence in his country will be able to do so easily. They will simply have to live there for 60 days a year and own property worth no less than US$377,000.
According to Uruguayan media, the Uruguayan chief executive has signed the decree and will forward a bill to Congress setting out the steps needed to become an Uruguayan citizen, as well as an extension of benefits for foreign citizens living in Uruguay.
Among the decree’s provisions is that Uruguay’s investment policy is based on offering opportunities, that it is an open-door country and that it “offers as a guarantee of its public investment and migration policies, its institutional framework, an environment of economic and social freedom and a land of unique natural resources”.
With regard to fiscal residence, the new administration has established that the capital requirement for obtaining it has been reduced from the current US$1.7 million to US$380,000. That amount is not actually fixed in dollars but in Indexed Units (UI), which is a value measure adjusted for inflation, similar to the UVA used in Argentina.
But the presidential decree also states that in addition to owning property of that value, the individual must prove a physical presence in the country for at least 60 days a year.
As published in the newspaper El Observador, tax residency is not limited to foreigners who own property but will also be available to those who are thinking of setting up a business.
For this group, residence will also be granted as of July this year for those investing US$1.6 million – until now it was almost US$5 million – and generating at least 15 direct jobs.
In parallel to this decree that aims to increase the number of fiscal residences for foreigners, the government will submit to the Uruguayan Congress a bill where it will seek to expand what in the neighboring country is called “tax holiday” of benefit to foreigners.
Currently, foreigners who maintain an Uruguayan tax residence for ten years are exempted from paying income tax, scheduled contributions, and personal property tax.
The “tax holiday” grants an exemption for five years, so that foreigners do not pay Income Tax on the income obtained from the interest on bank deposits, dividends from shares, bonds, debentures or fixed-income securities, among others.
With the bill, Lacalle Pou’s administration seeks to extend it to twice as much and that the “tax holiday” be extended to ten years.
In other words: Foreigners who take the Uruguayan tax residency for ten years, will not pay Income Tax, scheduled contributions nor Tax on Personal Property.
The country bordering Argentina grants two types of residence: the legal one, which is granted to foreigners who intend to stay in the country, either to work or for personal reasons; and fiscal residence, a concept that establishes that the Uruguayan fiscal resident individual, who is subject to the local tax regime, will pay the Income Tax on Individuals (IRPF).
According to the Uruguayan branch of newspaper El País, the decree signed by the president states that “the executive branch’s investment policy is based, essentially, on offering the world a country of opportunities”. For this reason, “a policy of encouraging investment is being promoted as an ideal instrument for generating employment and improving general well-being so that all foreigners who wish to choose Uruguay as a destination for their personal and economic projects can settle in the country”.
When Alberto Fernández took office as president of Argentina, Uruguay experienced a growth in requests for tax residence. The Uruguayan president himself had said he was interested in adding 100,000 Argentines as residents of his country. The political, economic, and institutional stability of the neighboring country seemed to attract many, and although there were many requests, a massive exodus had not yet occurred.
Source: infobae