Understanding Uruguay's Updated Tax Residency Rules

Uruguay has shifted the goalposts for high-net-worth individuals and remote workers seeking tax residency. Under the recently implemented Law No. 20,446, the thresholds to qualify for the country’s famous tax holiday have increased significantly. While existing residents are grandfathered into their current benefits, those establishing residency now face a steeper financial climb to access exemptions on foreign-sourced capital income.

The standard tax holiday, which exempts foreign dividends and interest from local taxation, now requires a much larger commitment. To qualify, individuals must either spend more than 183 days per year in the country or make a substantial investment. These investment options include a contribution of approximately $100,000 to the new Uruguay Innova fund or a real estate purchase valued at roughly $2 million.

Who it affects

These changes primarily impact wealthy expats and digital nomads who previously used lower investment thresholds, such as the former $500,000 real estate option, to secure residency. For the average digital nomad, the most viable path is now physical presence. If you spend more than half the year in Uruguay, you can still qualify for tax benefits without the heavy capital requirements. However, the popular 7% flat tax option has been phased out for newcomers, making the timing of your application vital for long-term planning.

What to do

If you are considering a move to Uruguay to optimize your tax setup, you should focus on the following steps:

• Determine your path: Decide if you will qualify via physical presence (183+ days) or through the "Uruguay Innova" fund.
• Verify non-residency: You must be able to prove you have not been a tax resident in Uruguay for the two years preceding your application.
• Consult a notary: Property investments require formal certification, and applications must be filed with the DGI (Tax Authority) to receive a tax residency certificate.
• Monitor regulations: While the law is in effect, specific executive decrees regarding the withdrawal of funds from the innovation program are still being finalized.

Check our nomad news for more visa updates, or read our full Uruguay guide for the complete picture.