Company Registration in Uruguay: A Go-Forward Strategy

Company registration in Uruguay for business is not just a marketing move but a proactive step in the hard times of economic globalization. Now is the time when it is especially important to correctly see the economic situation in the world and make timely decisions, including those related to company registration or relocation abroad.

The business environment in different countries tends to change with time, becoming more or less favorable. No wonder entrepreneurs are looking for a business paradise in other parts of the world, and they relocate their companies abroad to preserve their business, make it more prosperous, or protect their assets. Uruguay is a business-friendly country that has its benefits to offer.

This small country is located in the Southern Hemisphere, and its economy demonstrates stable growth due to robust agricultural and tourism sectors. The locals are friendly to expats. The country is open to foreign investments, has efficient laws, and offers you to take advantage of its free trade agreements.

Company Registration in Uruguay: Benefits for Business

Company registration in Uruguay is a pretty straightforward process, and it will cost less as compared to many other jurisdictions. The duration of company registration in Uruguay (with the help of our experts) is no more than 45 days. As a bonus, we offer a bank account in Uruguay and/or abroad for new and experienced entrepreneurs!

Uruguay’s advantages for company registration:

• This is a country with a growing economy, stable political system, and high living standards.
• The Latin American jurisdiction welcomes foreign investments and business by providing certain tax incentives in free economic zones and in the case of income derived abroad.
• The level of democratic freedoms in Uruguay is in first place in South America, which results in equal rights for foreign and local investors. 
• The foreign business can use lowered customs and tax rates to import different kinds of appliances and equipment on a temporary basis.
• Absence of currency control in Uruguay gives business a possibility to import and withdraw invested capital and income from the country without limitations.

Uruguay has become a second home for many foreigners. Comfortable climate without sudden temperature changes and favorable geographic location of the country mean that there are no serious natural cataclysms in Uruguay. 

Considering that business conditions may be deteriorating and thus pushing you to look for new destinations, you may consider tax residence in Uruguay. Unlike many other countries, you will not need to spend a fortune to get a residence permit in Uruguay. A foreigner can become naturalized in Uruguay after two years of permanent residence in the country. 

Uruguay’s International Image and Trade Relations

Uruguay is a country with a free market economy focused on the export of agricultural products. Also, the country is one of the main software developers in Latin America, and highly-qualified specialists get a good salary even if they do not have their own company or business.

Uruguay set its trading priorities and concluded free trade agreements within the trade and economic union of MERCOSUR member countries that also include Argentina, Brazil, and Paraguay. Unlike other Latin American and Caribbean countries, Uruguay has a good reputation and is not considered an offshore jurisdiction. 

In 2007, the relations between Uruguay and the USA were formalized by a framework agreement on trade and investments. The Uruguayan government has concluded such investment agreements with more than 30 states. 

Free Economic Zones in Uruguay

There are special economic zones in Uruguay that contribute to development and accumulation of the industrial capital in the country and are a favorable place for business relocation and registration of new companies. These limited regions exempt foreign companies and business from payment of the following kinds of taxes:

• Corporate tax
• Property tax
• Tax on dividend paid to non-residents
• Tax on goods and services imported to the free zone
• State duties connected with the activity inside the free zone and export

The companies registered and operating in Uruguayan FEZs are fully exempt from payment of all taxes, except for those paid on the employed professionals’ salaries.

What Companies Can a Non-Resident Start in Uruguay?

Company registration in Uruguay does not require the foreigner to become a citizen or live in the country. Neither do the Uruguayan laws require foreign businesses or investors to have a local partner in Uruguay. There are no limitations by type of business activity, except for those monopolized by the state that require a license:

• Banking sector
• All kinds of insurance services
• Means of communication
• Electricity
• Water purification activities

Subsidiaries and Partnerships

You can register a representative office of a foreign company (Oficina de Representacion) or a subsidiary (Sucursal) in Uruguay. However, a representative office is not a separate legal entity in the country that can carry out commercial activities and promote or advertise the goods and services of the parent foreign company.

If a foreign company subsidiary is set up, it will not be a separate legal entity, either – however, it can carry out its activities in the country. All responsibility for the subsidiary’s activity shall be borne by the parent foreign company.

Sociedades Anónimas (SA) – Joint-Stock Company

This is the most popular legal structure used by large businesses in Uruguay. You can open a closed or open joint-stock limited liability company. The corporation can conduct any activity that should be specified in the Articles of Association. A foreigner can form and register a company from scratch or use the services of a consulting company to buy a ready-to-operate business.

Requirements for Joint-Stock Companies in Uruguay:

1. The company name should contain the letters of Spanish alphabet without mention of any public institutions or organizations, such as Bank, Savings, Buildings Society, Loans, Trust, Assurance, Insurance, Fund Management, Fiduciary, Re-Insurance, Investment Fund, Broker. 
2. The company should have at least two shareholders and one director that may be individuals or legal entities residing in any country, including foreigners.
3. SA capital is represented by shares without any requirements for minimum or maximum share capital. One investor can solely own 100% of shares.
4. At least 25% from the volume of the company’s authorized capital should be paid before the date of its registration in the State Register. Also, each shareholder should guarantee that he or she will pay 50% of the amount declared in the company’s Articles of Association upon company registration.
5. The corporation should have its registered office in Uruguay where it will keep all the corporate information (register of shareholders and list of founders). The corporation should also have an assigned registered agent (resident of Uruguay) – an individual or a legal entity.
6. The company should keep accounts and submit financial reports on a regular basis.

Law No. 19,484 ‘On International Financial Transparency and Ultimate Beneficiary Identification” took effect on January 1, 2017 in Uruguay. Regardless of compliance with bank secrecy rules, all the country’s financial institutions should provide the data to the Central Bank about the personalities of beneficial owners (owners and non-residents) that they serve as clients.

Sociedad de Responsabilidad Limitada (SRL) – Limited Liability Partnership

This structure is well-suited for the activities of small and medium enterprises, and you cannot buy a ready-to-operate company of this type in Uruguay’s consulting agencies. SRL (Sociedad de Responsabilidad Limitada) is a legal form that you can set up by concluding a corporate agreement between at least two and maximum 50 partners. The agreement is registered in the National Register of Commerce.

All partners of the limited liability company can participate in business governance, and their liability is limited:

• The SRL company capital contains each member’s investment share. The authorized capital can be increased with time.
• Each SRL partner is liable with his or her share invested in the company as stipulated in the contract.
• Each partner shall contribute at least 50% from the amount declared in the contract. 
• If a SRL has more than five members, the company may not be transferred to a third party without the consent of 75% of partners that own the company capital. 
• The company’s corporate agreement shall be executed in Spanish. Upon completion of the legal entity registration process, the SRL management should publish an extract from the Register of Commerce in Uruguay’s official and private printed edition.

Individual Entrepreneurs

This is a widespread kind of small business in Uruguay that will be suitable for foreign immigrants and budding entrepreneurs: 

• An individual entrepreneur in Uruguay does not form a legal entity and does not imply payment of any minimum capital.
• An individual entrepreneur is registered in DGI, BPS (Social Security Bank) and MTSS (Ministry of Labor and Social Security).
• The entrepreneur has the right to hire employees.
• The company’s profits are recorded in the owner’s tax declarations.
• An individual entrepreneur has the right to specify several types of activities at registration and make corrections later on.
• The owner is personally liable for all financial and legal liabilities. 

Both locals and foreigners can be registered as individual entrepreneurs in Uruguay, and they will have to pay income tax and social security contributions.

Taxes Payable by SA and SRL

Offshore international companies in Uruguay pay no tax on foreign assets and income. Nor are any taxes levied on the dividends paid abroad:

1. Uruguay has a territorial taxation system, which means that foreign sources of company income are not subject to taxation.
2. If the company receives income locally in Uruguay, it has to pay a corporate tax (IRAE) in the amount of 25% from net profit (until the end of 2022).
3. Companies are required to annually pay a fixed company management tax (Impuesto de Control de las Sociedades Anónima (ICOSA)), but they may also be exempted from this liability in a number of cases.

Immigration to Uruguay for Entrepreneurs

Many foreign companies that want to enter the South American markets or have interests in Argentina and Brazil have created regional offices of their business in Uruguay. This decision is based on the country’s stable economy and Uruguay’s potential that has not been fully revealed yet. 

Uruguay offers the following spheres of activity for international business and investments:

• Banking sector (company registration means that you get a state license).
• Mining industry for the world and local companies
• Chemical and pharmaceutical industry.
• Logistics (use of free economic zones in the country’s ports).
• Agriculture, which is in demand among Uruguay’s budding entrepreneurs and experienced investors. The company may be registered as an LLC or as a JSC with a view to considerable expansion.
• Real estate and tourism are profitable niches in Uruguay where you may become an investor or register a company.
• Trade on the local and world markets.
• Technologies and many other things.