The 'Netflix tax': VAT on digital services from abroad in Uruguay

When you pay for Netflix, Spotify or an international app, a Uruguayan tax is already baked into the price. It became popularly known as the 'Netflix tax': since Law 19.535 (2017) and its regulation, digital services rendered from abroad but consumed in Uruguay are taxed by VAT (IVA) — and in some cases by non-resident income tax (IRNR). Here's what's covered, who actually pays, at what rate, and why as a consumer you almost never have to file anything.

Which services are covered?

The law targeted two big groups: audiovisual services provided over the internet (streaming of films, series and music: Netflix, Spotify and the like) and mediation or intermediation services through platforms — apps that connect the supply and demand of other services. The key is where it's consumed: if the service is used or economically enjoyed in Uruguay, it's deemed rendered inside the country even if the company is abroad. The VAT text puts it like this:

VAT, Title 10, article 5 (territoriality), paragraph added by Law 19.535:

«La prestación de servicios realizados a través de Internet, plataformas tecnológicas, aplicaciones informáticas, o similares, cuando tengan por destino, sean consumidos o utilizados económicamente en el país, se considerarán realizados íntegramente dentro del mismo.»

In English: The provision of services carried out through the Internet, technological platforms, computer applications, or similar means, when they are destined for, consumed, or economically used in the country, shall be deemed carried out entirely within it.

Intermediation platforms

The second group is platforms that act as intermediaries between whoever offers a service and whoever demands it (for example, transport, lodging or delivery apps). When both parties are in Uruguay, the activity is deemed carried out entirely in the country; when one of the parties is abroad, the rule deems it carried out 50% within the national territory. The same VAT provision defines it:

VAT, Title 10, article 5, on mediation or intermediation services:

«Interprétase que los servicios de mediación o intermediación prestados a través de Internet, plataformas tecnológicas, aplicaciones informáticas, o similares, con el objeto de intervenir directa o indirectamente en la oferta o en la demanda de la prestación de servicios (operación principal), cuando ambas partes se encuentren en el país, se consideran realizados íntegramente dentro del mismo.»

In English: It is interpreted that mediation or intermediation services provided through the Internet, technological platforms, computer applications, or similar means, with the aim of intervening directly or indirectly in the supply or demand of the provision of services (the principal operation), when both parties are located in the country, are deemed carried out entirely within it.

Who pays the tax?

This is the reassuring part for the user: the party liable to pay (and to collect) is generally the non-resident company that provides the service. DGI set up a regime for those foreign providers to register and settle the tax in Uruguay. That's why, when you pay your subscription, VAT is already included in the price: it's not a charge you have to add or declare yourself. The platform collects it inside what it bills you and remits it to DGI.

At what rate?

VAT applies at the general basic rate of 22%. For audiovisual streaming consumed in Uruguay, 100% is taxed. For intermediation platforms, if one of the parties is abroad, only 50% of the operation is taxed. In addition, these same services can trigger IRNR (non-resident income tax) on the foreign provider's income, under the same source criterion. The provider handles all of this; for the consumer, the effect is simply the final price you see.

And me, as a consumer, do I have to do anything?

In the vast majority of cases, no. If you're an individual paying a streaming subscription or using an international app, you don't have to register, file returns, or pay anything separately: the tax already comes inside the price. The formal obligations (registration, assessment and payment of VAT/IRNR) fall on the non-resident company. The regulation of this whole regime is in Decree 144/018.

• VAT and financial inclusion in Uruguay: how it works
• IRNR: how non-residents are taxed in Uruguay

Frequently asked questions

• Do Netflix and Spotify pay taxes in Uruguay? Yes: since 2018, on their services consumed in the country, with VAT (and possibly IRNR).
• Is VAT included in the price? Yes: the foreign provider collects it inside what it bills you and remits it to DGI.
• Do I have to declare anything? As a consumer, generally no: the obligation is the non-resident provider's.
• What's the VAT rate? The basic 22%.
• Why is 50% sometimes taxed? On intermediation platforms, when one of the parties is abroad, the operation is deemed carried out 50% in the country.
• Since when does it apply? Since Law 19.535 (2017), in force from 1 January 2018, regulated by Decree 144/018.

In short: the 'Netflix tax' isn't a new tax you pay separately, but the application of VAT (and sometimes IRNR) to foreign digital services consumed in Uruguay. The provider company registers, collects and pays; you, as a user, are already paying it inside your subscription price, with no paperwork at all.