Uruguay’s New Tax: Your Before-July Checklist

Uruguay · Expat Living

Uruguay’s most-debated expat policy starts biting next month. If you became — or are about to become — a tax resident, the Uruguay foreign income tax needs a decision now, not after July.

What is actually starting in July

Under Decree 95/026, Uruguay begins collecting a 12% tax on certain foreign income of new tax residents from July 2026. The regulations define the target as passive income — think dividends, interest and similar offshore returns.

Crucially, banks become withholding agents. That means the tax can be deducted at the account level, so you cannot simply forget it until filing season.

Holiday or 12%: the choice you must make now

Uruguay still offers the long-standing alternative: a multi-year tax holiday on foreign income for new residents, or a reduced flat rate. You generally pick one lane, and the window to choose is tied to when you establish residency.

That is why this is a June decision. Electing the holiday after the fact is far harder than planning it before July, so model both paths with a Uruguayan accountant now.

Your before-July checklist

Start with status: confirm whether you are already a tax resident or will cross the threshold this year, since the rule targets new residents. Then inventory your foreign income and separate passive flows (dividends, interest) from your remote salary.

Next, get written advice on holiday-versus-12% for your numbers, and tell your bank how to treat your accounts so withholding is not applied in error. Finally, keep dated records of your move, because the election and the residency date must line up.

Who this does and does not hit

Most remote workers earning a foreign salary are not the main target; the rule is built around passive offshore income. Tourists and short-stay nomads on the 180-plus-180 permit are not tax residents at all.

The people who must act are new residents with dividends, interest or trust income abroad. If that is you, the difference between the holiday and the 12% can be substantial — and the clock runs out with June.

Couples and families should map this together, since residency and account structures can differ between partners and change the maths. And if you are still deciding where to land in the region, weigh Uruguay’s stability and clean banking against the new tax — for many it still wins, but now with eyes open.

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