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Situated idyllically between Brazil, Argentina, and the Atlantic Ocean, Uruguay offers a mildly warm climate, beautiful spanning beaches, and many urban jungles to explore. It’s also a great place to live if you want to minimize your tax burden. With more than 3.5 million residents in this country and generally no taxes imposed on foreign-earned income, you’ll want to understand how Uruguay taxes for US expats work to remain tax compliant.
In this guide, we’ll take you through all the crucial details you need to know regarding paying and filing your expat taxes in Uruguay.
Americans living abroad typically must pay their US taxes and taxes to the foreign country where they reside. However, every country has its own tax rules; some even have treaties and agreements with the US.
Uruguay does not currently have a tax treaty with the US, which means US expats in Uruguay are on the hook for paying US and Uruguay taxes on their income. However, some US tax breaks may help reduce your US tax bill, which we’ll walk you through later.
How much can you expect to pay in income tax in Uruguay? Here is how taxes for foreigners in Uruguay are calculated.
Whether a resident or non-resident of Uruguay, you typically have to pay income tax. However, Uruguay typically does not levy income tax on any income earned outside the country. So if you make foreign income, it may be exempt from taxation (there are some exceptions).
If you’re a resident of Uruguay, you’ll owe tax on both Uruguay and foreign income. However, non-residents are only on the hook to pay tax on income earned in Uruguay. Non-residents are not taxed on their foreign-earned income.
You are considered a country resident in Uruguay if you meet specific requirements, including the following:
It is presumed that if a person is defined as a resident of Uruguay, their spouse and dependents are also considered residents of Uruguay.
The 183 days are defined as all days in which the person had a presence in an Uruguayan territory; the time of arrival or departure does not apply. Days spent going to or coming from another country are not computed into the 183 days.
A fiscal residence in another country must be proven by a certificate issued by the fiscal authority of that country. If that amount is less than fiscal interest in Uruguay, you will be considered a resident.
If you lived in Uruguay for less than 183 days, you’re typically not considered a resident and instead labeled a non-resident. As of July 2007, all Uruguayan-sourced income is taxed, regardless of resident status.
Uruguay’s income tax is based on a progressive scale — the more money you earn, the higher your income tax rate:
Self-employed people may have to pay social security contributions based on their income in Uruguay.
Companies in Uruguay pay a corporate income tax rate of 25%.
All consumers in Uruguay pay a value-added tax on goods and services, similar to the sales tax in the United States.
In Uruguay, the general VAT rate is 22% (some exclusions apply).
Wealth tax in Uruguay ranges from 0.1% to 0.4% (for residents) and 0.7% to 1.5% (for non-residents). Different rules apply depending on where you live in the country.
There is no inheritance tax in Uruguay.
Property tax rates range from 0% to 0.3% in Uruguay, depending on the value of your property.
In Uruguay, employers contribute 12.625% of an employee’s salary to social security funds. The employee will pay between 18.1% to 23.1% into social security.
Though the United States has tax treaties with many countries, Uruguay is not currently one of them. As a US expat, you may be taxed by the US and Uruguay on the same income.
Yes, Uruguay does have a totalization agreement with the United States. This agreement prevents US expats from paying into both Social Security funds.
You’ll need to file a personal income tax form in Uruguay. When you need to file your tax return depends on whether you’re a resident or non-resident.
The Uruguay tax year is the same as the calendar year, spanning from January 1 to December 31. Residents must file their tax returns with the Uruguay tax authority between June and August of the preceding year. Non-residents must turn in their Uruguay tax returns by May.
We hope this guide helped answer your questions about the tax regulations for US expats living in Uruguay. But taxes can be complicated — especially when living in a foreign country — so if you still have questions, feel free to contact Greenback Expat Tax Services.