The IRAE regime explained: what it is, real vs ficto, and what IRAE ficto is for

If you have a unipersonal or company in Uruguay, sooner or later an acronym shows up: IRAE. It's a bit scary, but at heart it's three simple ideas. In this post we explain what IRAE is, the two ways to file it — real and ficto — and, above all, what IRAE ficto gives you, the option many small entrepreneurs choose.

What IRAE is

IRAE stands for Impuesto a la Renta de las Actividades Económicas (business income tax). It taxes companies' profit — that is, income coming from the combination of capital and labor. The rate is 25%, but note: it's not applied to everything you invoice, but to your net income (the profit). The law sets it like this:

The IRAE rate is set by law, and it applies to net income — not to revenue:

«La tasa del impuesto será del 25% (veinticinco por ciento) sobre la renta neta fiscal.»

In English: The tax rate shall be 25% (twenty-five percent) on net fiscal income.

Two ways to file it: real and ficto

There are two paths to calculate that income. Under the real regime, you keep accounting and income is your revenue minus your deductible expenses — you pay 25% on the actual profit. Under the ficto regime, you don't need full accounting: income is “estimated” by applying a percentage to your revenue, and the 25% is applied to that result. Real reflects your reality in detail; ficto is a simplification.

IRAE ficto: who it's for and what it gives

IRAE ficto is designed for small taxpayers: those not required to keep sufficient accounting (generally, with prior-year income below 4,000,000 UI). What it gives you is simplicity: you skip full accounting and compute the tax with a simple calculation on your revenue. The law enables it like this:

And the ficto option is provided for those not required to keep full accounting:

«Los contribuyentes que no están obligados a llevar contabilidad suficiente podrán determinar sus rentas netas en forma ficta.»

In English: Taxpayers not required to keep sufficient accounting may determine their net income on an assumed (ficta) basis.

How the ficto is calculated

The ficto works through a progressive scale by income brackets: each bracket gets a percentage that determines your “assumed income” (renta ficta), and the 25% IRAE is applied to that assumed income. In practice, for small income the tax is very low: the first bracket is 12%, which equals about 3% of what you invoice (12% × 25%). This is the scale in force since 2023:

Assumed-income scale (since 2023)

Real or ficto? How to choose

The rule of thumb: ficto usually suits those with few deductible expenses (for example, personal services with little structure), because they pay on a small percentage of their revenue. Real suits those with many real expenses (inventory, rent, salaries), because they deduct all of it. One important detail: once you opt for ficto, you must keep it for a minimum of five fiscal years, so it's worth deciding with advice.

IRAE, IRPF and Monotributo

IRAE isn't alone. Pure personal services can pay IRPF instead of IRAE, and the smallest can use Monotributo. Which one applies depends on your activity — whether labor or capital predominates. We explain it in our posts on who can open a unipersonal and the taxes each legal form pays.

In short: IRAE taxes business profit at 25%; you can file it in real form (revenue minus expenses, with accounting) or ficto form (a percentage on your revenue, without full accounting). For small entrepreneurs, IRAE ficto is simple and, in the low brackets, very light. Want to know what you'll owe and when in your case? Tributo builds your calendar and shows where each number comes from. And always verify with the DGI before deciding.