Uruguay remains one of the most relevant jurisdictions for Latin American families evaluating a change of tax residence. As of 2026, the conditions for accessing one of its most significant benefits have been updated.
What the Tax Holiday is
Uruguay’s Tax Holiday allows individuals who obtain tax residence to choose to pay tax only on Uruguayan-source income during the year of the change and the following ten fiscal years. In practice, this means no taxes on foreign-source capital income, such as interest or dividends from international investments, and no obligation to report them.
What changed in 2026
In September 2025, the access conditions were reformed. Those establishing tax residence from January 1, 2026 onwards must meet at least one of the following requirements:
- Investment in urban real estate exceeding USD 2,000,000.
- Capitalization of investment funds exceeding USD 100,000, directed toward productive projects or research and innovation activities.
It is important to clarify that the requirement to remain more than 183 days in the calendar year is maintained as another option. Sporadic absences of up to 30 consecutive days are allowed.
For properties located in departments without coastline on the Río de la Plata or the Atlantic Ocean, the tax cost is computed with a 100% increase. In all cases, investments made from September 1, 2025 onwards are eligible.
To qualify, the individual must not have been a Uruguayan tax resident in the two immediately preceding tax years, nor have previously used the tax holiday.
What happens when the Tax Holiday ends
At the end of the period, the taxpayer may choose between two options. The first involves paying personal income tax at 6% for an additional five fiscal years, subject to a real estate investment exceeding USD 1,000,000 or annual fund capitalization above USD 100,000. The second allows for a fixed annual payment of USD 300,000 for up to twenty fiscal years, reducible to USD 200,000 under certain physical presence or business investment conditions. As a third option, there is the general regime, which pays a 12% IRPF (personal income tax) on taxable income, without any additional investment.
Why timing matters
The Tax Holiday is a concrete tool, but making the most of it depends on having the right structure in place and defining the timing of the residence change carefully. Decisions made without a comprehensive view of the overall wealth picture can limit access to the benefit or generate unexpected tax consequences in the country of origin.
For full details on requirements, conditions and effects of the regime, download the complete document below.
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