Renting a commercial premises in Uruguay: guarantee, contract and who pays what

For many small businesses, renting premises is the most expensive and longest commitment they sign. And unlike a housing lease, here almost everything is negotiated: the term, how the rent goes up, who pays the property taxes, what happens if you have to leave early. This article walks through what to look at before signing: the guarantee, the contract, the recurring costs, and the tax side — rent as a deductible expense and the IRPF the landlord owes.

The guarantee: the first thing you'll be asked for

Almost no landlord hands over premises without a guarantee. The key point for a business is that the state-backed guarantee — the Servicio de Garantía de Alquileres (SGA) run by the Contaduría General de la Nación — is designed for housing, not for commercial premises. The official procedure page says so:

Procedure 'Alquiler por Contaduría General de la Nación' (gub.uy):

«El Servicio de Garantía de Alquileres (SGA) le permite acceder a una garantía de alquiler para casa-habitación, con respaldo del Estado.»

In English: The Rental Guarantee Service (SGA) lets you obtain a rental guarantee for a dwelling, backed by the State.

In plain terms: if you're renting business premises, you take a different route. In practice the options seen on the market are a security deposit, a property owner acting as guarantor (a real-estate guarantee), a guarantee from a private institution such as ANDA, or an insurance-style rental product sold by insurers and estate agencies. Each has its own requirements, cost and lead times, set by the provider rather than by law: ask whichever one you plan to use directly, before you reserve the premises. The official catalogue of rental-guarantee procedures is here:

The contract: here, what you sign matters more

The urban and suburban leases law (Decreto-Ley 14.219) treats commercial premises differently from housing, starting with the minimum term, which depends on the intended use:

Decreto-Ley 14.219, article 3 (minimum terms by intended use):

«Los contratos de arrendamiento para casa-habitación y otros destinos que no sean industria y comercio, tendrán un plazo mínimo de dos años. En los contratos de arrendamientos para industria y comercio el plazo mínimo será de cinco años.»

In English: Lease contracts for dwellings and other uses that are not industry and commerce shall have a minimum term of two years. In lease contracts for industry and commerce the minimum term shall be five years.

And the price and its increases are set by the parties, in the same article:

«Las partes fijarán de común acuerdo el precio del arriendo en moneda nacional para todo el plazo del contrato pudiéndose convenir incrementos escalonados de alquiler para períodos de doce meses.»

In English: The parties shall set by mutual agreement the rental price in national currency for the whole term of the contract, staggered rent increases for twelve-month periods being permitted.

That combination — a long default term plus a freely agreed price — is why the wording of a commercial lease matters so much. Before signing, look closely at: the term and what happens at expiry, the index or criterion used to adjust the rent (staggered increases or the official reajuste coefficient), whether you can terminate early and with what notice or penalty, whether you may carry out works and who keeps them, and whether you can assign the contract if you sell the business. Which regime and which clauses apply to your specific case depends on the property and the contract: have a professional review it before you sign.

Recurring costs: ask before, not after

Rent is rarely the only monthly payment. Commercial premises usually add the Contribución Inmobiliaria (departmental), the Impuesto de Enseñanza Primaria (national), common expenses if the unit is in a building, and utilities: UTE, OSE, connection fees, and sometimes a commercial electricity tariff that costs more than the residential one. The official sources for the two property taxes:

Who pays each of those isn't set by tax law: it's set by the contract. It's very common for the tenant to take on Contribución, Primaria and common expenses, but it isn't automatic. Ask for last year's actual amount for each item, not a verbal estimate, and add it to the rent so you know what the premises really cost you per month.

Rent in your IRAE: a deductible expense, if documented

If your business files IRAE, the rent for your premises is a business expense. The general principle is in Title 4 of the Texto Ordenado:

Texto Ordenado 2023, Title 4, article 30 (general principle):

«Para establecer la renta neta se deducirán de la renta bruta los gastos devengados en el ejercicio necesarios para obtener y conservar las rentas gravadas, debidamente documentados.»

In English: To establish net income, there shall be deducted from gross income the expenses accrued in the financial year that are necessary to obtain and preserve the taxed income, duly documented.

But there's a limit that surprises many: if the landlord is an individual taxed under IRPF on that income, the deduction isn't 100%. The next article sets a proportional deduction:

«Cuando los gastos a que refiere el inciso tercero del artículo anterior constituyan para la contraparte rentas gravadas por el Impuesto a la Renta de las Personas Físicas (IRPF), en la Categoría I de dicho impuesto (Rendimientos del Capital e Incrementos Patrimoniales), o rentas gravadas por el Impuesto a las Rentas de los No Residentes (IRNR), la deducción estará limitada al monto que surja de aplicar al gasto el cociente entre la tasa máxima aplicable a las rentas de dicha categoría en el impuesto correspondiente y la tasa fijada de acuerdo con lo dispuesto por el artículo 23° de este Título.»

In English: Where the expenses referred to in the third paragraph of the preceding article constitute, for the counterparty, income taxed by the Personal Income Tax (IRPF) under Category I of that tax (Capital Income and Capital Gains), or income taxed by the Non-Residents Income Tax (IRNR), the deduction shall be limited to the amount resulting from applying to the expense the ratio between the maximum rate applicable to income of that category in the corresponding tax and the rate set under article 23 of this Title.

In plain terms: the expense is deducted in proportion to the rate the counterparty pays versus the IRAE rate. With today's usual rates — 12% for IRPF Category I and 25% for IRAE — that's 12/25, i.e. 48% of the rent. Check the rates in force and your own case with your accountant, because it changes if the landlord is a company that also files IRAE. The underlying requirement never changes: the expense must be duly documented, with an invoice issued to your RUT. Rent with no invoice is not a deductible expense.

On the other side: the landlord's IRPF, and VAT

The landlord has their own obligation: rental income is real-estate capital income and pays IRPF. You don't pay it, but it explains why the landlord will ask for your details and why the price is usually quoted 'net'. There are designated withholding agents (the State, ANDA or estate agencies, for example) that withhold and remit the tax; an ordinary small business isn't a withholding agent just for renting premises, so don't assume you must withhold — confirm it with your accountant. On top of that, leases of real property are exempt from VAT, so the rent invoice normally comes without VAT. The sources:

Before signing: can the premises legally host your activity?

This is the most expensive and most avoidable mistake. Premises can look immaculate and still be useless for what you do: authorisation depends on the registered use of the property, the municipal commercial permit, the fire service and, depending on the trade, health or activity-specific permits. Signing first and finding out later leaves you tied to a multi-year contract for premises you can't use. Ask the landlord for the current permits, check with the intendencia for your specific trade and address, and if in doubt make signing conditional on obtaining the permit. We explain it in detail here:

• Permits to open a shop or business in Uruguay
• Contribución Inmobiliaria and Primaria: the property taxes

Frequently asked questions

• Can I use the Contaduría General de la Nación guarantee for commercial premises? No: the SGA is a rental guarantee for dwellings. For premises you use other routes (deposit, an owner as guarantor, ANDA, insurance).
• Does a commercial lease have a minimum term? The law sets a five-year minimum for industry and commerce leases, against two years for dwellings and other uses. How it applies to your contract is worth checking with a professional.
• Who pays the Contribución Inmobiliaria and Primaria on the premises? The contract decides. It's common for the tenant to take them on, but it isn't automatic: read it before signing and ask for last year's real figures.
• Can I deduct the rent in IRAE? Yes, it's a necessary and deductible expense if duly documented. But if the landlord is an individual paying IRPF, the deduction is proportional (with today's rates, 12/25 of the expense).
• Does rent carry VAT? Leases of real property are listed among the services exempt from VAT in Title 10, so the invoice normally comes without VAT.
• Do I have to withhold IRPF from the landlord? Only if you are a designated withholding agent. A small business renting premises usually isn't; confirm with your accountant before deducting anything.

In short: the state guarantee is for housing, so for premises you go the private route; the law gives you a long minimum term and leaves the price to what you agree, which makes the contract the key document; property taxes and expenses are allocated by that same contract, not by law; rent is an IRAE-deductible expense but proportionally so if the landlord is an individual; and permits are verified before signing, never after.