Literal E (IVA mínimo): the simplest regime for a small sole trader
Literal E exempts the smallest taxpayers from IRAE and leaves them paying a fixed IVA mínimo. What it is, the 305,000 UI cap, what you pay, and who it fits — with official sources.
If your billing is modest, Literal E is probably your best friend: it exempts you from IRAE and leaves you paying a fixed monthly IVA mínimo, with no ordinary VAT to compute. It's the regime of most small sole traders. Here's how it works and when it fits.
What is Literal E?
It's the IRAE exemption for “small businesses”, set in literal E) of article 66 of Title 4 (formerly article 52 of the 1996 Ordered Text). The law defines it as:
Title 4 exempts from IRAE, in its literal E):
«Las obtenidas por los contribuyentes cuyos ingresos no superen anualmente el monto que establezca el Poder Ejecutivo.»
In English: Income obtained by taxpayers whose annual income does not exceed the amount set by the Executive.
IMPO — Title 4 (IRAE), art. 66 literal E)https://www.impo.com.uy/bases/todgi-2023/4-2024The cap: 305,000 UI a year
The “amount set by the Executive” is fixed at 305,000 UI of annual income (using the UI quotation at the start of the fiscal year). As long as you stay under that cap, you can use Literal E. If you exceed it, you move to the general regime (IVA + IRAE). Always verify the current value.
What you pay (and what you're spared)
Under Literal E you don't compute ordinary VAT (output minus input): you pay an IVA mínimo, a fixed monthly amount. In exchange, you can't deduct the VAT on your purchases. And you're exempt from IRAE, so you don't file its return. BPS contributions are paid separately, by category.
Who it fits, who's excluded
It suits anyone who bills little and wants the simplest possible setup. Watch one key detail: the exemption is for business income. Someone earning only labour income (pure personal services, no capital) is excluded from Literal E even if they stay under the cap. DGI publishes a comparison of Pequeña Empresa and Monotributo:
DGI — Comparison of Pequeña Empresa and Monotributohttps://www.gub.uy/direccion-general-impositiva/comunicacion/publicaciones/comparacion-pequena-empresa-monotributoAt a glance
| Question | Answer |
|---|---|
| Cap? | 305,000 UI of annual income |
| IRAE? | Exempt (no return filed) |
| IVA? | IVA mínimo (fixed monthly amount) |
| Deduct purchase VAT? | No |
| BPS? | Separately, by category |
In short: Literal E exempts you from IRAE and charges a fixed IVA mínimo — ideal for small sole traders — with a 305,000 UI cap and the pure-personal-services caveat. Check your case and the current cap with DGI, and when in doubt ask your accountant.