Private Wealth 2019

Last Updated August 06, 2019


Law and Practice


Innovation Tax & Trust are international tax advisers involved in tax planning and fiduciary services for high net worth individuals and family offices. They are a young and dynamic team that includes lawyers, CPAs, financial controllers and corporate experts. The practice is often sought out by clients with regional operations for cross-border tax advice and assistance on corporate services, fund structuring, wealth transfer, business succession planning, administration of trusts, estate planning and restructuring of assets. The firm aims to stay at the forefront of advice on family offices and restructuring of family wealth.

In general terms, the Uruguayan tax system relies on the source principle, meaning that only income derived from a Uruguayan source will be taxed. The applicable regulations establish that income from activities developed, property located, or rights economically used in the country are considered to be of Uruguayan source. Nevertheless, there are several exceptions for individuals and specific items of foreign-source income are taxed.

Taxation on individuals is based on their residence in the relevant tax year. An individual is regarded as a tax resident in Uruguay if they stay in the country for more than 183 days during a calendar year, and establish their main centre of activities, or have economic or vital interests in Uruguay. Tax residence is also presumed if the taxpayer's spouse and children live in Uruguay. The tax applicable is Personal Income Tax (Impuesto a la Renta de las Personas Físicas or IRPF) which levies income from labour at progressive rates ranging from 0% to 36% and income from capital at fixed rates, depending on the type of income. For instance, dividends are taxed at a 7% rate if they are from a Uruguayan source. Interest is taxed at fixed rates which vary from 3% to 12%; and capital gains are only taxed at a 12% rate when derived from a Uruguayan source. For capital gains derived from the alienation of shares the net income will be 20% of the purchase price, achieving an effective tax rate of 2.4% for this type of income.

Foreign-sourced interest and dividends received by a resident individual will be subject to taxation at a rate of 12%. This is an exemption to the source principle for individuals.

Furthermore, Uruguay has CFC rules which are applicable when a resident individual obtains foreign-sourced holding income from a low or no taxation country.

Income will be considered derived from a low or zero taxation regime or jurisdiction when:

  • the effective income tax rate said income is subject to is less than 12%, or
  • there is no automatic exchange-of-information treaty in force with the relevant country.

In this sense, Uruguayan Tax Law provides that the income these types of entities receive will be attributed to the resident shareholder and therefore taxed through IRPF at a rate of 12%. Furthermore, the law provides the application of the provision previously described when one or more non-resident entities are interposed in the structure.

Another relevant tax in Uruguay is Wealth Tax (Impuesto al Patrimonio), applicable to net Uruguayan-sourced wealth on an annual basis. Individuals will be subject to progressive rates ranging from 0% to 2.75% with the minimum non-taxable amount being USD128,620 as of 31 December 2018. At the other end of the spectrum, entities are taxed at a flat rate of 1.5%.

In Uruguay, there is no specific gift tax, but donations are considered as sales for tax purposes, and the donor is taxed on the difference between the fair market value of said good, and the acquisition cost. This rule was included in the Tax Law to prevent abusive structures. If donations were exempt for tax purposes, taxpayers could previously use this mechanism to hide a sale and therefore, avoid paying any taxes.

There is also no estate tax, but a Transfer Tax (Impuesto a las Transmisiones Patrimoniales or ITP), which levies tax on transfers of real estate property on the value of the property fixed by the municipal government (Dirección General del Catastro Nacional) at a rate of 4%. The ITP also applies to transfers at death, but at a tax rate of 3% paid by the heirs.

Transfer Tax has remained unchanged in Uruguay since it was included in the tax law back in 1996 and it is not expected to change in the near future. Having said that, it is important to note that Uruguay has been introducing different provisions to its tax system in reaction to OECD directives, which has raised concern among many individuals regarding the stability of the tax laws.

As previously mentioned, Uruguay has included different tax provisions to comply with OECD directives.

Retained earnings taxed by corporate tax which have not been distributed, will be considered distributed if they are more than three fiscal years old and if they have not been reinvested. Such fictional distribution of dividends is taxed at a rate of 7%.

Regarding the Common Reporting Standard (CRS), at the end of 2016, the Uruguayan parliament approved Fiscal Transparency Law No 19,484 which, among other important modifications, implemented the automatic exchange of financial account information in tax matters based on the OECD CRS.

The following are countries with which Uruguay has bilateral exchange relationships for the automatic exchange of Country-by-Country reports between tax authorities: Andorra, Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada, Chile, Colombia, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Guernsey, Hong Kong, Hungary, India, Indonesia, Ireland, Isle of Man, Italy, Japan, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malaysia, Malta, Mauritius, Mexico, Monaco, Netherlands, New Zealand, Norway, Pakistan, Poland, Portugal, Russia, San Marino, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland and the United Kingdom.

The Fiscal Transparency Law was later regulated by Executive Decree No 77/017, establishing that financial institutions (including, but not limited to, banks, securities intermediaries and insurance companies in certain cases) must report the identity and residence of account-holders, and may require certain information from individuals for this report.

However, as from 2019, when the balance of the pre-existing accounts of non-residents and resident individuals and companies is less than approximately USD20,000, these accounts are exempt from being reported to the tax authority.

On 2 November 2016, Uruguay adhered to the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information. Such agreement authorises the automatic exchange of information with all signing countries.

The adherence to this agreement is essential for the implementation of the automatic exchange of the Country-by-Country Report, developed under BEPS Action 13, which contributes to international co-operation on information exchange.

Moreover, Uruguay has an extensive network of international tax treaties for the purpose of preventing double taxation and fulfilling the country's commitments on fiscal transparency and exchange of information. Some of those treaties are currently in force in Germany, Ecuador, Hungary, Mexico, Spain, Switzerland, Liechtenstein, Portugal, Malta, Argentina, India, South Korea and Finland.

As mentioned in 1.1 Tax Regimes above, Uruguay has also implemented CFC rules which are applicable when a resident individual obtains passive foreign-sourced income from a low or no taxation country. The most relevant provision includes the attribution of profits to the resident shareholder.

All these tax provisions and multinational transparency initiatives that have been implemented by Uruguay to comply with OECD directives, affect planning for clients in the following way: resident individuals can no longer get tax deferral on their foreign-sourced holding income by using offshore low-taxed entities.

Many high net worth individuals who are looking for confidentiality regarding their financial assets and who mistrust governments and tax authorities, are migrating their bank accounts to the United States of America, since the USA does not adhere to the OECD CRS, and applies only FATCA policies to US nationals.

One of the most important cultural factors to outline regarding succession is that Uruguay has a considerable old-age population, and traditional rich families continue to apply a patriarchal system, whereby they are mostly unwilling to turn over wealth and control to younger generations.

From a legal point of view and in accordance with Uruguayan rules of Private International Law, a succession has alienation-relevant elements when an individual dies leaving assets in different jurisdictions.

Uruguay enshrines the Germanic principle of plurality of succession. This means that multiple successions could be processed in each state where the deceased has left assets (lex rei sitae).

Uruguayan judges are competent to process succession where assets are located in Uruguay. In this case, said succession will also be governed by Uruguayan law with respect to the assets located in Uruguay, and it will determine who will be the heirs and the validity and effects of the will, among other aspects.

All such considerations are regardless of the place of death of the person whose succession is being considered.

When assets are not located in Uruguay, the applicable law for succession purposes will depend on the existence of international treaties. If there is no international treaty in place (European countries), the situation could be complicated since the judges of each state will apply their own Private International Law rules.

Uruguayan forced heirship laws in general terms determine that if the testator has only one child, the testator can freely dispose of 50% of their estate, if they have two children they can freely dispose of 33% of their estate, and if they have three or more children they can freely dispose of up to 25% of their estate. The will must be signed as public deed before a Uruguayan notary public and witnessed.

The surviving spouse may have the right to receive a portion of the assets of the deceased. If the deceased had no direct descendants, the surviving spouse’s portion shall be one quarter of the estate assets. If the deceased had descendants, the surviving spouse’s portion shall be equal to the legitime of one direct descendant.

If there are no heirs (direct or indirect) and the deceased has not drawn up a will, the ultimate heir will be the government (currently, the Agency of Public Education).

In Uruguay, the general marital regime applicable is the 'conjugal partnership,' meaning that the assets acquired during the marriage become the property of the conjugal partnership. The assets received during the marriage by donation or succession are property owned only by the spouse who receives them. Another type of marital regime is 'the separation of property,' by which once the couple is married, they separate their assets by a judicial proceeding. If the couple decides to separate their property before the marriage, they must execute a prenuptial agreement. This prenuptial agreement must be executed prior to the celebration of the civil marriage, by public deed issued by a notary and registered at the National Registry of Commerce in the Personal Acts section. Uruguayan law prohibits donations and purchases among spouses. As a rule, one spouse cannot transfer marital property without the consent of the other spouse, except in certain situations, with a few exceptions, such as non-registrable assets.

Transfers of real estate properties are subject to tax as follows:

Transfer Tax – ITP

  • both transferor and transferee will be subject to taxation at a rate of 2% each; and
  • where the transfer is caused by death, the applicable rate will be 3% for direct ascendants or descendant heirs.

The tax rate will be calculated with consideration for the fiscal value of each real property, which is in general lower than the market value of the assets.

Personal Income Tax – IRPF

  • 12% on the difference between the sale price of the property and the fiscally adjusted value. The ITP paid for the transfer is also a deductible expense to determine the net income.

Regarding transfer of the remaining type of assets, other than real estate property, taxpayers may choose to pay IRPF under a fictional criteria which allows the taxpayer to consider 20% of the sale price (or on the fair market value if no sale price is negotiated) as the net income. This implies that the effective tax rate will be 2.4% on the sale price of the asset.

As mentioned in 2.2 International Planning above, there is no inheritance tax in Uruguay. However, succession may be subject to taxation in some cases. If a resident individual inherits a movable good (ie, a vehicle or cash), no taxes are applicable to the beneficiary. Where an immovable good is inherited, then the beneficiary is subject to ITP (Impuesto a las Transmisiones Patrimoniales). Beneficiaries are not subject to IRPF on these transactions. When the transfer is made during life, the transferor will be subject to IRPF on the income generated from the transfer at a rate of 12%.

From a tax perspective, no specific regulation has been issued so far regarding the tax treatment of email accounts and cryptocurrency. However, the tax treatment applicable to the transfer of these assets could be the same applicable to assets under the general rules, as they can be regarded as assets from a legal perspective.

Moreover, cryptocurrency works and has the same characteristics as cash. In this sense, transfer of cryptocurrency (ie, Bitcoins) will not be subject to taxation under general rules. This argument relies on the fact that there is no income generated for the transferor on the transfer of cash.

The tax treatment for the transfer of other digital assets would be the same applicable to assets according to general rules of taxation. The transfer of a digital asset can result in an equity increase for the transferor and is therefore subject to IRPF/IRAE (depending on the taxpayer) at a rate of 12% or 25% respectively, to the extent that it is of Uruguayan source. Foreign-sourced equity increases will not be subject to taxation in Uruguay.

Uruguay's legal system is based on a civil law system with written commercial and civil laws consolidated into codes, recognising only the unity of ownership, unlike commonlaw jurisdictions that recognise the existence of a legal and equitable title.


However, Uruguay has introduced a similar legal institution, known as Fideicomiso, regulated under Law No 17,703, which was published on 4 November 2003 (hereinafter referred to as 'Trust Law'). Trusts are defined as legal arrangements by which the trust property constitutes a set of property rights, or other real or personal rights, which are transmitted by the settlor to the trustee for the management of, or to be exercised in accordance with the terms and conditions of, the trust, for the benefit of a beneficiary (or beneficiaries) designated in the trust. The trustee must return the property at the termination of the agreement or fulfilment of the condition to the settlor, or transfer it to the beneficiary/beneficiaries in accordance with the terms and conditions under which it was created. Trusts can be created by inter vivos acts or by will.

There are two important prohibitions related to the trustee:

  • they cannot be the beneficiary, except for guarantee/collateral trust carried on by financial institutions; and
  • they must be the ultimate holder of the trust property.

Uruguayan Trust Law provides four types of trusts according to their function:

  • Guarantee/collateral Trust: usually used for financing purposes, making recovery less expensive and much faster, and avoiding judicial proceedings. Assets are transferred so that the trustee holds them for a certain period, until a contractual obligation, guaranteed by the trust, becomes enforceable;
  • Investment Trust: usually used for construction purposes or real estate developments. This type of trust has the particularity that assets transferred to the trust must be invested by the trustee in risky, speculative operations, with the main objective of obtaining profits;
  • Financial Trust: usually used for project financing. The beneficiaries are holders of certificates of participation of the trust property, debt securities issued guaranteed with the trust assets or mixed nature rights. This vehicle is very helpful for securitising accounts receivable and to shield future cash flow. Only financial institutions or investment fund administrators are allowed to be trustees of Financial Trusts; and
  • Management Trust: Usually used for estate and tax planning. Assets are transferred to the trustee in order to manage them and deliver the earnings to the designated beneficiary. All types of personal or real property, whether tangible or intangible, may be transferred as trust property.

Uruguayan Trust Law provides that in the event that one trustee acts as such in more than five trusts in a calendar year, that person will be considered a professional trustee and, in consequence, they will be subject to registration and information requirements.


As for foundations, they are regulated under Law No 17,163 which was published on 10 September 1999 (hereinafter referred to as 'Foundation Law'). Foundations are legal entities recognised as such by the competent authority. They are created through the contribution of assets, rights or resources, made by one or more natural or legal persons with the main objective of general interest, without any profit purpose.

Although foundations are regulated under Uruguayan law, their use for estate planning is very limited in comparison with the common law jurisdictions.

Although Uruguayan law does not provide a national Private International Law rule that expressly refers to the trust and its recognition, there are general national legal provisions that cover it. Specifically, Articles 2398 and 2399 of the Uruguayan Civil Code, which refer to the applicable laws and the competent judges of certain international legal acts, expresses that the existence, nature, validity and effects will be governed by the law of the place of enforcement.

Foreign income received by individual residents will be subject to taxation as long as it is derived from passive investments. Furthermore, as already explained, Uruguay CFC rules apply when a Uruguayan tax resident obtains certain types of income abroad through an entity domiciled in a country of low or no taxation. If that is the case, said income will be attributed to the resident individual.

Distributions made by a foreign trust to a Uruguayan beneficiary will be subject to IRPF at a rate of 12%. Income derived from the administration service rendered by a Uruguayan resident acting as a fiduciary of a foreign trust, will not be subject to taxation in Uruguay as it is considered to be foreign-sourced income.

By default, Uruguayan trusts are irrevocable, unless the express powers of revocability have been reserved by the settlor in the trust instrument/agreement.

However, Uruguayan Trust Law provides certain mechanisms by which settlors may retain some control over trusts, for example:

  • Judicial Trustee removal: both the settlor and the beneficiary can ask the court to remove the trustee if the trustee is in breach of their duties and obligations in accordance with the trust instrument; and
  • Express Power of Trustee removal: the settlor can reserve the express power to remove the trustee in the trust instrument. By this means, the settlor retains control over the day-to-day management of the trust, when the settlor is not satisfied with the trustee's performance. It is important to bear in mind that the latter could have tax-adverse consequences.

In international financial centres which are governed by common law, one of the most popular methods to retain control over trusts is by designating a protector. The protector’s role is to ensure that the wishes of the settlor are fulfilled. The trust instrument usually details the protector's responsibilities and powers.

As in irrevocable trusts, the settlor relinquishes all control in case of any emergency, and the protector can step in and intervene. The protector may be granted limited or an expansive list of powers, for example, being able to remove and replace the existing trustees.

The figure of the protector is not expressly provided for in Uruguayan Trust Law, but neither is it prohibited, so Uruguayan state planners have been using it lately with more frequency.

The most popular methods for asset protection planning recognised by Uruguayan Law are the following:


In succession planning, the will has historically been the most popular tool. It makes it possible to decide how to distribute the inheritance and often prevents conflicts between the heirs regarding its distribution. However, unlike those countries ruled by common law where the right to dispose of the assets after death prevails over forced heirships, Uruguay provides for forced heirship rules, irrespective of whether the person has died testate, intestate or having established a testamentary trust.


Although the use of trusts in estate planning is limited in Uruguay, it is used in certain cases. Assets may be transferred in trust by the settlor, in order to protect them from eventual family business risks, for the benefit of their children, spouse or any third party.

Business Companies

The most frequently used business organisations are corporations (where corporate capital may be represented by registered shares or bearer shares) and limited liability companies. The free-zone corporations are a type of corporation which can carry on all types of commercial and industrial activities and provide services within the free-trade zones and outside Uruguay. They are exempt from all taxation, except for the annual cannon (approximately USD650 per year).

Prenuptial Agreements

Structuring the marriage regime is also a way of planning protection regarding family business assets and organising succession. In Uruguay the general regime of property between spouses is community of property of marital partnership. Before the spouses get married, they may implement a prenuptial agreement establishing how assets and financial matters will be handled. The prenuptial agreement must be executed on a public deed and registered with the corresponding registry. The main benefit that arises from the prenuptial agreement is that spouses maintain independence in relation to their own estate.


Many individuals prefer to do lifetime gifts for asset protection planning purposes. Some decide to retain their right to use and derive beneficial interest, and transfer ownership of certain assets to their children.

When speaking of succession planning, the will usually appears as one of the most helpful tools. It makes it possible to decide how to distribute inheritance and often prevents conflicts between the heirs.

Unlike other countries ruled by common law, where the right to dispose of the assets after death prevails over forced heirships, Uruguay has forced heirship rules, irrespective of whether the person dies testate, intestate or having established a testamentary trust.

Forced heirship rules provide that the number of dependent children the testator has, determines the percentage of assets that the testator can freely dispose of, as described in 2.3 Forced Heirship Laws.

The testamentary trust is another helpful tool for succession planning. In this case, the trust is originated by a will by which specific assets are to be transferred to a trustee. The rules for such trust should be established in the testament. However, the rights of forced heirships cannot be limited by a testamentary trust.

Uruguayan law does not allowan adjustment to reflect a discount for lack of marketability and control.

Most disputes regarding fiduciary vehicles, such as trusts, arise from not respecting the forced heirship rules when transferring assets or when the trust acts beyond its scope. These types of disputes are generally solved by judicial proceedings, although nowadays it is very common to include arbitration clauses.

Regarding compensation within a legal dispute involving trusts, or similar entities, the obligation of the responsible party for the harmful conduct due to its negligence generates the obligation to compensate for the damages and the profit loss caused by such conduct.

Most trustees are organised as corporations or limited liability companies, since shareholders’ liability is limited to their contribution to the company’s capital. In this way, service providers are able to limit their liabilities and in effect, they can carry out their business activities with limited responsibility and with greater assurance.

In Uruguay, the standard of conduct for trustees is the same as the one for company administrators or directors – they shall transact business with the prudence and care of reasonable business professionals, acting on the basis of the confidence placed in them. Professional trustees and financial trustees shall also act with loyalty and business ethics.

Under no circumstance can the trustee be discharged of their liabilities or responsibilities for damages caused by their gross negligence, as well as for those caused by their dependants. A trustee may only not be held liable for damages caused by its minor negligence, if an exemption has been agreed in the trust.

In Uruguay, trusts are not separate legal entities, instead they are considered to be legal transactions or agreements between the settlor and the trustee. Trusts are therefore incapable of entering agreements, or undertaking any other legal formalities in their own name. The appointed trustee is the person or entity with the capacity to undertake these legal formalities.

Considering the above, it is not possible to pierce the veil of the trust itself, but it is possible as the trustee, since the holder of the legal estate transferred by the settlor, which has been divided for a fiduciary purpose, is distinct from its personal estate. Accordingly, Article 7 of the Uruguayan Trust Law refers to the Uruguayan Business Company Law No 16.060 in terms of the unenforceability of the legal status. Articles 189, 190 and 191 of the same law provide that the legal status may be disregarded, when it is used to break the law, to violate public order, or if it is used fraudulently against the rights of partners, shareholders or third parties.

Corporations which are often used for asset protection and estate planning purposes are also subject to unenforceability rules provided under Business Company Law.

The general rule is that the trustee can be held liable when they act with gross or minor negligence (and when such exculpatory clause was not expressly agreed in the trust instrument). Also, whenever the trustee executes any act that is unenforceable to the settlor or to the beneficiary, the interested party may request the revocation of such act to the competent judge.

Uruguayan Trust Law does not provide for the possibility that the trustee may attend court to request an opinion, advice or directive in cases of conflict of interest, interpretation doubts, etc. Nor are there provisions that the trustee could support or endorse their action with the authorisation or approval of the protector and thus be exempted from all liabilities.

Regarding the possibility of delegating authority for specific aspects to a third party, Article 106 of circular No 2326 of 17 May 2019, issued by the Central Bank of Uruguay (BCU), provides that financial trustees shall request the prior authorisation of the superintendent of financial services of the BCU to delegate any services inherent to their own duties. To delegate the financial trustee of private offering financial trusts requires prior authorisation from the beneficiary. However, financial trustees are not allowed to delegate or outsource the disposition of the funds and other trust assets.

However, delegation of the trustee’s duties does not imply exemption or limitation of the liabilities that the Trust Law, or the respective trust instrument, imposes.

There is no specific law or regulation that encourages trustees to invest assets prudently, in consequence, the standard of conduct of a reasonable business person will apply.

Uruguayan Trust Law provides that the obligation assumed by the trustee is an obligation of means in opposition to an obligation of results, and at the time of a judicial assessment, it shall be determined if the trustee acted with the care of a reasonable business person. Moreover, the trustee shall act in good faith according to the general principle enshrined in Article 1291 of the Uruguayan Civil Code.

The care of a reasonable business person is a professional responsibility more demanding than that of an average person, since such standard requires technical and professional knowledge, as well as specific experience in the business entrusted to their care.

The trust assets constitute a separate fund and are not part of the trustee's own estate. Legal title to the trust assets stands in the name of the trustee. The trustee has the power and the duty, in respect of which the trustee is accountable, to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed on the trustee by Uruguayan Trust Law.

Considering the above, the trustee can hold active business on behalf of the trust, is able to use the trust assets without limitation, and dispose, encumber and contract obligations in relation to the trust assets. Also, it must be taken into consideration that according to Article 19 of Uruguayan Trust Law, the trustee has a duty to keep separate accounts and inventory from their own assets.

Irrespective of whether the trustee can hold active business on behalf of the trust, it is very common that trusts conduct their business through a business company, as this is more practical in terms of day-to-day administration.

In order to be eligible for citizenship in Uruguay, foreign applicants of legal age must provide evidence that:

  • they have a family settled in the republic; capital or property in the country; or exercise any science, art or industry and have lived for three years in the republic without interruption; or
  • they do not have a family settled in the republic but have any of the attributes mentioned above and have lived for five years in the republic without interruption; or
  • they have been granted a special venue by the general assembly for notable services or relevant merits.

Permanent and Temporary Residency

On the other hand, there are two residency options in Uruguay – permanent residency and temporary residency. Permanent residency can only be granted to those who intend to reside permanently in the country. It is recommended to spend at least half a year in Uruguay first. The applicant must certify their livelihood requirements, which will vary according to the activities performed, and must have no criminal record.

Citizens from Mercosur countries have an expedited way to obtain permanent legal residency in Uruguay and this procedure is conducted at the Ministry of Foreign Affairs. The advantage of such an expedited procedure is not having to provide information on means of livelihood and an address in Uruguay.

Temporary legal residence will be more appropriate if a person intends to remain in Uruguay for a period exceeding 180 days but less than two years, and its effectiveness will depend on the activity the temporary resident develops. The temporary legal residence category covers seven different types, including scientists, expatriate professionals, students, clergy, journalists, artists and athletes.

Tax Residency

Notwithstanding the above, a legal Uruguayan resident may not be a resident for tax purposes because different rules apply. An individual is considered a tax resident if they:

  • stay more than 183 days in Uruguayan territory during any calendar year (unless the person provides evidence of tax residence in another country); or
  • have their main economic activities or personal interests in Uruguay (for example, when their spouse and minor children have permanent residence in Uruguay).

Tax residence can also be credited if a foreign individual owns real estate property for a value exceeding USD1,864,007 (value as of 31 December 2018).

In 2012, Law 18.910 introduced a special tax residence regime, also called 'Tax Holiday.' This regime establishes that those foreign individuals who become tax residents in Uruguay will have a five-year window during which they will not be subject to taxation on any foreign-sourced income.

Uruguay does not offer a fast-track citizenship procedure through an investment or payment programme. However, citizens of Mercosur countries may obtain permanent legal residency by an expedited procedure, see 7.1 Requirements for Domicile, Residency and Citizenship, above.

According to the Uruguayan Civil Code, individuals obtain full legal capacity at the age of 18. In general terms, parents have the legal authority to manage and maintain the assets of minors, known as patria potestad. Several rules and duties are established for parents in the care and administration of minors, in the areas of health, clothing, feeding, education, and in general, to provide guidance.

In Uruguay, there are no special trusts for individuals with disabilities. However, an administration trust or a testamentary trust could be created to provide and care for disabled individuals, with the curator being appointed as trustee.

The Uruguayan Civil Code provides the possibility of appointing a guardian, which is usually done in cases of minors or adults with disabilities. A civil court shall appoint the guardian.

Any adult may be declared legally incapable by a court, and the court must then appoint a curator for this person. The process must be initiated by a relative, the spouse or the attorney general. In a case of mental incapacity, the judge must personally interrogate the individual and receive at least two medical reports.

The pension system is the main means by which the Uruguayan government helps families and individuals cover disability, old age and retirement. The current pension system consists of compulsory savings retained by employers in the case of dependent workers, or directly paid by taxpayers who are independent. In general terms, workers are divided into a mixed system of three levels according to their payment:

  • an intergenerational solidarity system which is a distribution system with pensions paid by the social security administration; or
  • a mandatory individual savings regime, which is an individual capitalisation system administered by Pension Savings Fund Administrators (AFAPs) through which personal accounts and the amounts to be received by the worker are related directly to the contributions paid into their personal account; or
  • those included in the first level may opt to contribute up to 50% of their pension contribution to the individual savings system (AFAP) and the remaining 50% they must contribute to the intergenerational solidarity system.

Another option is to choose a life insurance policy to protect families and individuals. In Uruguay there are several life insurance policies available.

Uruguayan law provides the same treatment for children born out of wedlock, adopted children, surrogate children and posthumously-conceived children. Consequently, they all have the same rights to inherit or be included in a class of beneficiaries as if they were born within a legal marriage.

It is important to highlight that in 2013, Uruguay legalised assisted reproduction, but specifically prohibited surrogate pregnancy arrangements.

Uruguay recognises same-sex marriage as well as domestic partnerships and these have the same economic effects as conventional marriage. Also, Uruguayan law regulates and permits the adoption of children in a same-sex marriage.

Uruguayan Tax Law provides several benefits that encourage charitable giving, for example, granting donors the possibility to deduct the amount donated against their income tax calculation, or granting tax credits that can be used against taxes to be paid, including IRAE and Wealth Tax.

The taxable base in the case of donations is the difference between the tax value and the fiscally adjusted value of the goods donated. Consequently, for IRPF purposes, the taxpayer will be the donor and not the beneficiary. This result will be subject to IRPF at a rate of 12%, unless the donation is made to a public entity.

In Uruguayan Corporate Tax Law, there is a special donation regime, only applicable to companies, that has specific and more advantageous benefits. In order for a donation to be included in this provision, however, the following requirements must be met:

  • the donation must be destined for a purpose specifically included in Article 79 of Uruguayan Corporate Tax Law;
  • the entity beneficiary of the donation must file an investment project stating how the funds will be used; and
  • donations must be deposited in cash, in the Banco de la República Oriental del Uruguay, in a unique and special account created for this purpose, on behalf of the Ministry of Economy and Finance.

The taxpayer will be granted the following benefits when making this type of donation:

  • tax credit for 75% of the amount donated to be used against income or Wealth Tax; and
  • the remaining 25% can be deducted as an expense for tax purposes.

However, these laws are not used for tax planning and wealth planning since most of the entities recognised as beneficiaries of the donations are non-profit entities and therefore cannot distribute benefits to the donor.

Foundations and civil associations are the most commonly used vehicles for charitable purposes. The main feature of these types of legal entities is that they must be non-profit organisations. A foundation can be incorporated by a unilateral act of its founding member by will (mortis causa) or by gift (inter vivos). A civil association, on the other hand, must be incorporated by a multilateral act between its members that joins the different corporate bodies. Both entities are subject to the control of the Ministry of Education and Culture.

Article 69 of the Uruguayan constitution provides that institutions that pursue private education and cultural purposes are exempt from all national and municipal tax. As a consequence, foundations and civil associations that pursue such interests are exempt from all taxes.

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Law and Practice


Innovation Tax & Trust are international tax advisers involved in tax planning and fiduciary services for high net worth individuals and family offices. They are a young and dynamic team that includes lawyers, CPAs, financial controllers and corporate experts. The practice is often sought out by clients with regional operations for cross-border tax advice and assistance on corporate services, fund structuring, wealth transfer, business succession planning, administration of trusts, estate planning and restructuring of assets. The firm aims to stay at the forefront of advice on family offices and restructuring of family wealth.

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