I'm looking into Uruguay very carefully. So far, I haven't found anything that's not to like. The weather is good, there is political stability, stable economy, good property ownership laws, and lots of beach frontage.

But I have found conflicting information about the tax structure for the country, specifically for property taxes. It's posible for taxes to be a deal breaker.

Does anyone have a good reiliable source for information about the tax structure for different countries around the world?

Heard Montevideo, is pretty good. Some people I know who used to live in Spain, are going back to Uruguay now. These are quite clever people.

Here you go. We do have people out there if you need help. Check with accountants as this is a guide and not definately up to date.

Rental Income Tax
Uruguay is highly unusual in that no individuals are subject to income tax (whether residents or non-residents). However, the new socialist government under Tabare Vazquez has announced it will impose income tax on individuals, though details are not known yet.

The Tax Reform project will be in force on 01 July 2007. Capital income, including rental income, earned by individuals is subject to 12% tax. The taxable income is computed by deducting municipal taxes, impuesto a primaria (property tax for basic to education), notary fees of the lease contract and administration costs from the gross rental income.

Net Worth Tax (Impuesto al Patrimonio -IAP)
Individuals and families are (instead) taxed through the Net Worth Tax (Impuesto al Patrimonio), sometimes referred to as the "Property Tax", calculated annually on December 31 for individuals, households and undivided estates. The taxable base is the difference between taxable assets (including properties, assets and rights within the country) and deductible liabilities (debts with banks in Uruguay), and is fixed by assessment by the General Real Estate Registry. A non-resident is taxable at a flat rate of 2% of the property's net worth value that exceeds the prescribed tax-free amount (minimo no imponible or MNI), which is UYP1,560,000 (US$62,726) for 2005. The tax-free amount is doubled for couples filing jointly.

Property Tax (Contribucion Imobiliaria)
Individuals owning immovable properties in Uruguay are subject to a property tax, imposed by departmental governments. The tax base is the local cadastral value of the property, as determined by the collection office (local tax authorities). The tax rates vary depending on the department.

For the department of Montevideo, the country's capital and largest city, property tax is imposed at progressive rates ranging from 0.84% to 1.6275%, wherein the applicable rate applies to the whole taxable value. No other deductions are allowed. For nonresident property owners, a surcharge of 100% applies, wherein the effective property tax rates become 8.4% to 16.275%.

For nonresident property owners residing in neighboring countries of Uruguay, the surcharge is reduced to 50%. In a special area of the coast line that is a major tourist interest, the nonresident owners are not liable for the surcharges.

A tax for basic education is also levied on immovable properties in Uruguay, payable by the owners. The tax base is the cadastral value of the property as determined by the Cadastral Bureau. The tax rates vary from 0.15% to 0.30%, depending on the property value.

Corporate Route
Companies earning Urugayan-sourced income are subject to corporate income tax (Impuesto a las Rentas de la Industria y Comercio) at a flat rate of 30%. The taxable income is computed by deducting income-generating expenses from the gross income. Other allowable deductions include advertising costs, bad debts, commissions, gifts, goodwill, guaranties, interest expense, rents, representation expenses, research and development, remuneration (to owners, partners, directors), royalties and technical assistance, salaries and wages, service fees, social welfare, taxes on income-generating assets and activities, training costs, travel expenses, and depreciation expenses.

Business Net Worth Tax (Impuesto al Patrimonio -IAP)
The tax base for this tax is computed b deducting the company's total liabilities from its total assets. The tax rates vary from 1.5% to 3.5%, depending on the taxpayer's classification and the type of assets involved. The general tax rate is 2%.



Capital Gains Tax
Capital gains earned by individuals, even nonresidents, on the sale of property are not taxable in Uruguay until June 2007. Effective 01 July 2007, capital gains are taxed at a flat 12% rate. The taxable income is the difference between the sales price minus the acquisition cost, which is updated by taking into account the Consumer Price Index.

Corporate Route
Capital gains earned by companies through selling real estate properties are treated as ordinary income and subject to the corporate income tax rate of 30%. The taxable income is computed by deducting income-generating expenses from the gross income.

__________________

Could you please expand on this answer to the question of Uruguayan property tax (contribucion inmobilaria).

You mention a surcharge of 100% for foreigners. Except from certain seaside areas of tourist interest.

Would this include Punta del Este? What areas are free of this VERY high surcharge.
I am sure that would put most people of purchasing in Uruguay altogether.

Gary Stevenson

I am just repeating what I've heard from my on-line friends in Uruguay, so this isn't official, and you need to verify before you buy.

There is now an income tax. Income tax is just on income earned in Uruguay. They don't tax on income earned by non-residents outside of Uruguay.

There is a local school tax that is quite low.

My friends tell me that property taxes are based upon a % of official valuation which has nothing to do with market value, and taxes have been quite low. Except that all property is currently being reevaluated, so no telling what that means.

There is some sort of tax free business zone in Monte Video.

Taxes in Puenta del Este are quite high because is is a large luxury area that sits virtually empty 9-10 months out of the year, and all those roads and infrastructure must be paid for. Infrastructure is very well kept up because of the value of the tourism.

It's my understanding that the tax surcharge on foreign owned property only applies to rentals and not to owner occupied property.

Agricultural land seems to be exempt from property taxes.

License plates for cars are much more expensive in Montevideo. Car registration prices vary considerably, depending upon where you live.

Import duty is about 60%, so not a lot of foreign goods available.

Uruguay just passed anti-squatting laws and actually appears to be enforcing them, so that automatically makes Uruguay more attractive than any other country in South or Central America for anyone who isn't going to occupy their house full time.

There are several beach areas important to tourism, so I am not sure which one might be exempt from the surcharge.