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Key Legal Landmarks
- Is my money safe in Uruguay?
- Can I take my money out of Uruguay at any time?
- Should I be worried about currency risk?
- Can I safely purchase a property?
- Should I worry about taxes?
- Can I obtain residency and move my belongings easily?
- Can I work or do business in Uruguay without restrictions?
- Is it easy to open a bank account?
Uruguay's Legal Landmarks
- Investor Friendly Country:
- Foreign investors and local ones are treated equally
- No limitations to ownership of property by foreigners *
- No restrictions to enter/exit the country
- Business rules are Investor Friendly:
- No currency exchange controls or forced conversion issues
- Foreign Currency can be used freely: Dollars, Euros, etc.
- No restrictions or taxes when transferring money into the country
- No restrictions or taxes when transferring money out of the country
- Strict banking secrecy and tax secrecy laws
- Solid Legal System:
- Strong reputation for respect of contracts and private property
- Independent and reputable Judiciary
- Corruption is not an issue in Uruguay
- Private Property rights are strongly protected:
- Constitutional right, enforced
- No history of expropriations
- Title Insurance available
Immigration and Residency
Obtaining Uruguayan Residency
- Simple process, but bureaucratic
- It takes 8 to 10 months (avg.) to obtain resident status
- After 3/5 years, one can apply for citizenship/passport
- Steps to obtain residency:
- First, gather all the necessary documents (abroad)
- Then, enter Uruguay, as a tourist
- Within 90 days (extendable for another 90 days), submit the application at DNM
Once the application is filed, the person may stay in the country indefinitely, as a "temporary resident"
What documents do I need?
- Most documents are obtained abroad:
- Birth certificate
- Marriage certificate *
- Police record from country of origin and countries where the person has lived in the last five years (For U.S. citizens, this document is obtained in Uruguay, at the local Interpol office)
- Documents that prove that one has income to support him/herself
- Legalization (a type of stamping) at the Uruguayan Consulate in country where issued
- Legalization and certified translation once sent to Uruguay
Proof of Income: Key Requirement
- Residency applicants must prove that they have an income stream of at least USD 500 per month
- There are many options to prove this:
- Pension from abroad
- Mutual fund or Retirement fund income
- Proceeds from the lease of a property abroad or in Uruguay
- Work contract in Uruguay
- The documents that prove the income source must be certified by a Notary (a type of attorney), in Uruguay
Bringing Personal Belongings
- What can I bring free of import duties and taxes?
- All my household belongings
- When can I bring them?
- When I submit my residency request, I’ll ask for an authorization to bring my personal belongings, which I will take to the Uruguayan Customs Authority
- The goods have to be brought in before resident status is granted
- How do I bring my belongings?
- By posting a bond with the Customs Authority, for the value of the import duties and taxes I would have paid if I were not applying for residency. When residency is granted, the bond is returned.
- Who helps me bring my personal belongings?
- A Customs Agent in Uruguay
- My shipping agent in the country of origin
- My attorney/the person handling my residency in Uruguay (all three must coordinate actions)
- What documents must I produce to bring my belongings?
- A list of the goods must be stamped at the Uruguayan Consulate in the country of origin, before shipping them
- The DNM authorization for the Uruguayan Customs Authority
- A special case, Law 16.340, allows to bring a car free of import duties, but has many hurdles and is seldom used
Myths on Residency
Myth: I need to be a permanent resident in order to own a house or to do business in Uruguay
Truth: Residency is not required to own property or do business in Uruguay
Myth: I can bring a car free of import duties
Truth: Yes, but only under Law 16.340, which requires that I prove USD 1,500 of monthly income, plus ownership of a property that I won’t be able to sell for 10 years, and other requirements
Myth: Owning a property in Uruguay automatically qualifies me in order to obtain residency
Truth: No. Requirement is income proof, not ownership of assets
Tips on Residency
- Send your immigration lawyer copies of the documents you intend to submit, before travelling, so they can be verified and translated in time for the filing.
- Work on the wording of your income proof document with your immigration lawyer, to make sure it meets what is needed.
- Send your immigration lawyer and customs agent the list of belongings you plan to bring, so they can verify whether the list is reasonable or not.
- Open a bank account in Uruguay.
The three most important questions to get started:
- Who can purchase property?
- How can property be purchased?
- What can you purchase?
- Anyone: There is no differential treatment, nor restrictions or impediments for foreign buyers of property.
- Any way: individual(s), corporate vehicle (local/foreign), IRA.
- Anything: No limitations (such as restrictions on borderline property, beachfront, etc.).
The purchase process requires the assistance by a Notary ("Escribano"), a type of attorney, appointed by the Buyer.
The Notary's role:
- Analyzes the ownership history and other details to ensure you buy a clean title
- Drafts the reservation and the purchase document
- Escrow agent for the deposit on the property
- Records the purchase at the Property Registry
Proof of Ownership: Public Property Registry recording
The Purchase Process: Steps
- The buyer selects a property, and agrees on the price
- The buyer appoints a Notary Public (from a law firm), who will draft the first document, the reservation document ("Boleto de Reserva"), which:
- Secures the purchase, committing seller and buyer
- Sets a penalty if either party breaches the commitment
- Sets the amount that is deposited when signing the reservation (usually 10% of the price).
- The deposit is not handed to the seller: it stays with your own Notary
- Allows 30-60 day window to verify the good standing of the deed
- Sets the closing date: full price is paid and property is transferred
- Analyzes the title/deed to ensure the buyer obtains a clean title
- Verifies information in Public Registry, tax situation, etc.
Transaction Costs for the Buyer
Transaction Costs total approximately 8-9% in Uruguay:
- Real Estate Agent Fee: 3% plus VAT (22%) = 3.66%
- Notary Public´s Fee: 3% plus VAT (22%) = 3.66%
- Deed Registration Stamp Duties (“Montepios”): 0.55%
- Registry and Tax Certificates Stamp Duties: USD 300 on average
- Property Transfer Tax: 2% of the Fiscal Value of the Property (which is usually substantially lower than the market value)
The Transaction Costs when selling are lower:
- Real Estate Agent Fee: 3% plus VAT (22%) = 3.66%
- Property Transfer Tax: 2% of the Fiscal Value of the Property
Financing Your Purchase
- Usually Short-Term (less than 2 years)
- Interest rate: Usually Approximately 6-8%
Bank Financing with Local Banks:
- Limited for Non-Residents; when available, expect:
- Up to 10 years
- Up to 50% of the Property's value
- Income Proof and other documentation required
* Note: These conditions are the current market ones
Tips and Suggestions When Purchasing Property
- Appoint a Notary Public from a respected Law Firm, who is bilingual and understands tax and estate matters, ownership through companies and laws in your country.
- Leave a Power of Attorney with your Lawyer/Notary so He/She can sign purchase documents on your behalf.
- Decide on the best ownership structure with your Lawyer.
- Make bank arrangements for closing / determine who receives your funds in Uruguay to make the payment
Opening a Bank Account
Uruguay's Banking system is a solid one:
- Few banks, all foreign-owned plus one government bank (BROU)
- Strict Banking Privacy Laws
- No history of forced conversion or freezing of deposits
It's easy to open a bank account:
- Foreign non-residents can open accounts in any currency
- Only a few banks do not open accounts to U.S. citizens
- No special requirements for foreigners:
- ID (passport)
- Proof of Address (utilities bill)
- Bank reference letter plus local reference, proof of income source
- No Inheritance Tax
- Moderate business taxes if you start a local business (corporate income tax is a flat 25%)
- Low Property Taxes
- Uruguay only taxes certain types of foreign income (dividends and interest), at 12% and makes sure you are not double taxed: if you already pay taxes on those types of income elsewhere, Uruguay does not tax you
- Taxes during ownership: Municipal and “School tax” (combined): 0.5- 0.7% (avg.)
There is also an “Asset Tax”, but this tax is being phased out and will disappear by 2017. For properties below USD 600,000* the tax is 0, and for properties above USD 600,000: 0,4% (avg.).
- Rental income tax: 12% (can be reduced to 10.5%)
- Capital gains tax (when reselling a property):
- 12% of the gain if the property is owned personally
- 12% if the property is owned by a foreign corporation
- 25% if the property is owned by a local corporation
Taxes: General Rules
Taxes for a Property Owner
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