Uruguay Tax Residency in 2026: The New Tax Holiday Rules

Key points

• Uruguay changed its rules for new residents from 1 January 2026, through Budget Law 20.446. Anyone planning a move should use the new rules, not older guides.
• Residents now pay 12% on foreign capital income: dividends, interest and, since 2026, also foreign capital gains and rental income, with credit for foreign tax paid.
• New tax residents can opt out of that tax for the year of arrival and the ten following years (11 in total), with a possible further five years at half the rate.
• To qualify for that holiday, a new resident must spend more than 183 days a year in Uruguay, buy real estate worth more than UI 12.5 million (about US$2 million) or contribute US$100,000 a year to the National Innovation Fund.
• The former 60-day route with a smaller property investment and the permanent 7% option are no longer available to new residents; people who obtained the holiday before 2026 keep it.

What makes you a tax resident of Uruguay?

What makes you a tax resident of Uruguay? You become tax resident if you spend more than 183 days in the country during a calendar year, or if your centre of vital or economic interests is in Uruguay, for example because your spouse and minor children live there or your main business or investments are based there. Tax residence is separate from immigration residence: a residence card lets you live in Uruguay, while tax residence decides how Uruguay taxes you. The tax authority (DGI) issues a tax residence certificate on request.

Uruguay has long attracted Argentines, Brazilians, Europeans and North Americans with its political stability, investment-grade credit rating, strong institutions and a tax system that historically left most foreign income untaxed. The 2026 reform keeps Uruguay attractive for people who genuinely move there, but it has made the tax holiday more demanding and introduced tax on foreign income for everyone else.

How Uruguay taxes residents since 2026

Uruguay's personal income tax (IRPF) is mainly source-based. Salaries and fees for work done in Uruguay are taxed at progressive rates up to 36%, and Uruguayan capital income at 12% (7% for Uruguayan dividends).

Foreign income is where the 2026 reform changed most. Until 2025, residents were taxed at 12% only on foreign dividends and interest. Since 1 January 2026, foreign capital gains and foreign rental income are taxed too, also at 12%, losses can be offset against gains, and tax already paid abroad can be credited. A decree of May 2026 sets out the practical rules for calculating and paying the tax.

Foreign salaries for work performed abroad and foreign pensions remain outside Uruguay's income tax. There is no inheritance or gift tax, and the wealth tax applies to assets located in Uruguay.

The tax holiday for new residents

New tax residents can choose, once, to be taxed under the non-resident income tax (IRNR) on their foreign capital income for the year in which they become resident and the ten following years. Because the non-resident tax applies only to Uruguayan-source income, this choice in practice means 11 years without Uruguayan tax on foreign dividends, interest, gains and rents. At the end of that period, a further five years at half the normal rate, 6%, may be available. Uruguayan-source income continues to be taxed normally throughout.

To qualify, a new resident must meet one of three routes:

• Physical presence: more than 183 days a year in Uruguay, with no investment required.
• Real estate: an investment in Uruguayan property worth more than UI 12.5 million, about US$2 million at 2026 values.
• Innovation fund: a contribution of US$100,000 a year to the National Innovation Fund during the holiday period.

The holiday is available to people who were not Uruguayan tax residents in the previous five years. Residents who obtained the holiday before 2026 are grandfathered and keep their exemption on the original terms for the rest of its term.

What changed for people planning a move

Older guides describe routes that no longer apply to new residents:

• The economic-interest route based on a property investment of about UI 3.5 million (roughly US$500,000 to US$600,000) combined with 60 days of presence a year is gone.
• The option to pay a permanent reduced 7% on foreign dividends and interest after the holiday is gone; the post-holiday option is now the five-year 6% transition.
• Residents who do not qualify for the holiday now pay 12% on foreign capital gains and rental income, not only on dividends and interest.

In practice, the reform rewards people who really live in Uruguay for most of the year, or very wealthy investors who buy property above US$2 million, and taxes part-time residents' foreign investment income.

Steps to become tax resident

• Obtain immigration residence: temporary or permanent residence through the National Migration Directorate, with proof of identity, clean criminal records and means of support.
• Get the Uruguayan identity card (cédula) and register with the DGI.
• Establish real presence: a home, local bank account, health coverage and the days in the country that the chosen route requires. Keep travel records.
• Elect the tax holiday in your first year if you qualify, and keep the evidence of the qualifying route.
• Request the tax residence certificate to show banks and your former country.
• Close the old residence properly. Our guide to tax residency explains why leaving the previous system matters as much as joining the new one.

Points of attention

• Your former country may keep treating you as resident if your family, home or business stay there, or may charge an exit tax.
• Uruguayan banks report accounts under the Common Reporting Standard, and banks abroad will report to Uruguay once you are resident there.
• U.S. citizens remain taxable in the United States on worldwide income wherever they live; Uruguay's holiday does not change that.
• The value of the unidad indexada (UI) moves with inflation, so the dollar equivalent of the property threshold changes over time.

Bottom line

Uruguay remains one of the most stable and attractive places in Latin America to move to, and its 11-year tax holiday on foreign capital income is still generous for people who really make it their home. Since 2026, however, the holiday requires more than 183 days of presence, a property investment of about US$2 million or a yearly contribution to the innovation fund, and other residents pay 12% on foreign capital income. Our guides to territorial tax systems and the best countries to move to from the USA compare Uruguay with the alternatives.

Our Private Advisory Session models your income under Uruguay's 2026 rules, chooses the qualifying route and plans the move, the residence application and the exit from your current tax system.

Sources

• Dirección General Impositiva (DGI): Tax residence
• IMPO: Budget Law 20.446 (2025–2029)
• Dirección Nacional de Migración de Uruguay
• Uruguay XXI: Tax residence for investors