Tax residency and the “tax holiday” in Uruguay: the expat guide

If you've moved or are thinking of moving to Uruguay, you've surely heard about the “tax holiday”. It sounds magical, but it's actually a concrete, limited benefit. To understand it well you need to separate two things: how you become a tax resident, and what tax relief the country gives you when you first arrive. Here we explain it simply. (Note: this is general information, not advice — for your case, consult a professional.)

Legal residency ≠ tax residency

These are two different things people often confuse. Legal residency is your right to live in the country (immigration). Tax residency defines where you're a taxpayer — where you “live” for tax purposes. You can have one without the other. The tax holiday is about tax residency.

How you become a tax resident

Meeting just one of several grounds is enough. The best-known is the day count: if you spend more than 183 days of the year in Uruguay, you're a tax resident. The DGI puts it like this:

The easiest ground to grasp is the day count:

«Serán considerados residentes fiscales quienes permanezcan más de 183 días durante el año civil en territorio nacional.»

In English: Those who spend more than 183 days during the calendar year in national territory will be considered tax residents.

• Spending more than 183 days of the year in Uruguay.
• Having your centre of vital interests here (your spouse and minor children living in the country).
• Having the main core of your economic activities in Uruguay.
• Having significant investments (e.g. real estate over 15,000,000 UI, or a project/company that creates jobs).

Uruguay taxes (almost everything) territorially

Here's the foundation of it all: Uruguay mainly taxes income generated in the country. A large part of your foreign income isn't taxed here. The most relevant exception for an expat is certain foreign capital income (interest and dividends), which does pay IRPF (12%). And it's exactly on that exception that the tax holiday acts.

The Tax Holiday: what it is

The “tax holiday” is a benefit for those who have just become tax residents: on that foreign capital income, you can choose between two options. The first, a temporary exemption (you file IRNR, which in practice means not paying on that income during the year of the change and the following ten):

Option A — the temporary exemption:

«el IRNR, por el ejercicio fiscal en que se verifique el cambio de residencia a territorio nacional y durante los diez ejercicios fiscales siguientes»

In English: the IRNR, for the fiscal year in which the change of residency to national territory occurs and during the following ten fiscal years

Option B — a reduced rate, instead of the exemption:

«el IRPF a la tasa 7% sin límite temporal»

In English: the IRPF at the 7% rate with no time limit

Heads up: the régime is changing (2025–2029)

Important: this régime was amended by the 2025–2029 Budget law. Broadly, the scheme becomes an exemption for eleven years and, after that, five years taxed at half the rate. Since the details and effective dates may change, don't make a decision without confirming the current version with the DGI and an advisor.

The tax holiday at a glance

Important: which income it applies to

The tax holiday applies only to that foreign capital income (interest, dividends) — not to your work. If you work on your own in Uruguay, your local activity is taxed like any unipersonal (IRPF, IRAE or Monotributo, as the case may be). So it's worth thinking about both together: your situation as a resident and your activity here.

In short: becoming a tax resident in Uruguay is relatively easy (183 days is enough), the country mostly taxes local income, and new residents get a tax holiday on certain foreign income — a benefit that, moreover, is changing with the 2025–2029 reform. It's a nuanced topic: use this as a map, but decide with advice. Want to sort out your local side (the unipersonal)? Tributo builds your calendar. And always verify with the DGI.