Working in Uruguay?
Taxation and Social Security in Uruguay
The Non-Double Taxation Rule
Expats are considered tax residents if they spend more than 183 days in one calendar year (which doubles as the tax year) in Uruguay. Tax rates are progressive and range from 0-30%. Usually, taxes are withheld from your paycheck, and you rarely need to file a tax return.
Uruguay is generally not party to double taxation treaties. However, in an effort to keep the country interesting for expats and immigrants, the Uruguayan government introduced a new tax incentive in 2012: expats who are residents under tax legislation now have an optional five-year window in which their income derived from foreign sources is not taxed. After five years, the usual 12% rate on foreign interest and dividend income applies, as long as this income is not taxed at a rate of 12% or more anywhere else in the world. This is called the non-double taxation rule. Note that all other possible foreign income sources, such as pensions or rents, are not taxed in Uruguay.
KPMG offers a fairly detailed overview of the Uruguayan tax regime and its application to expatriates on their website.
Benefits and Pensions: Social Security in Uruguay
Overseen by the Instituto de Seguridad Social, social security in Uruguay operates on a mixed system of social insurance, individual accounts, and assistance programs. The benefits provided by the system include pensions (old age, disability, and survivors’), sickness and maternity, unemployment, and family allowances. Individual accounts are mandatory and managed by AFAPs (pension fund managers) — which one you choose is up to you.
Contributions are calculated on the basis of gross monthly earnings of up to 74,128 UYU, some 2,332 EUR in September 2016. Of the first 24,709 UYU, 15% goes towards social insurance, and 15% of earnings above this threshold go towards the individual account.
Uruguay has social security agreements with Argentina, Austria, Belgium, Bolivia, Brazil, Canada (also including Quebec as a special case), Chile, Colombia, Ecuador, El Salvador, France, Greece, Israel, Italy, Luxemburg, the Netherlands, Paraguay, Peru, Portugal, Spain, Switzerland, and Venezuela.
As one of the special incentives granted to companies operating in the many free trade zones in Uruguay, foreign employees working in a FTZ may opt out of contributing to the social security system altogether, which may be preferable for expats from countries which do not have social security agreements with Uruguay.
Working Legally in Uruguay
Being legally able to take up employment in Uruguay is a very easy affair for expats, no matter where in the world they might come from. We have taken a closer look at the topic in our article on moving to Uruguay.
However, as always with these matters, you might feel more at ease if you hire a professional to help you, no matter how hassle-free the process might seem on paper.
We do our best to keep this article up to date. However, we cannot guarantee that the information provided is always current or complete.