When considering options for business incorporation in South America, Uruguay is likely to be at the top of the list. For several decades, the country has attracted foreign investors with its favorable trade regimes, political stability, highly educated workforce, and tax and legal advantages.

 

Registering a company in Uruguay with the support of AA Lawrange specialists offers the opportunity to address your legal matters with minimal effort, whether it involves immigration to this beautiful country of plains and vibrant culture or simply diversifying your assets. We tailor individual programs for each client and can always offer more solutions than expected.

 

General Characteristics of the Jurisdiction

Although Uruguay is a very small country – only Suriname is smaller in area in Latin America – it has the highest percentage of middle-class residents on the continent (60%). It is sometimes called the “Switzerland of Latin America,” and for good reason.

 

Please note! The official name of the jurisdiction is the Oriental Republic of Uruguay. It borders Brazil to the north and Argentina to the east. The area covers 176,215 square kilometers, which is slightly smaller than the state of Washington in the USA. The country’s currency is the Uruguayan peso (UYU) (1 USD = approximately 43 Uruguayan pesos). The official language is Spanish, but English is also quite widespread among the local population. The legal system is based on Spanish civil law.

 

Unlike most countries in the region, Uruguay has a good reputation and is not associated with being an offshore haven. With a developed agricultural base and food industry, the country, with a population of 3.5 million, produces food for over 30 million people. Moreover, Uruguay has recently become a promising point for offshore exploration, attracting major energy players and record investments. However, the most important sector of the economy remains the service sector, accounting for 70% of GDP, with tourism services playing a major role.

 

Uruguay’s well-developed financial sector facilitates a large number of capital operations and transactions in foreign currencies. The international community’s trust in the country’s economic policy and legal framework is reflected in the level of foreign direct investment (FDI) in Uruguay. Among all companies registered in the country, about a quarter are foreign, predominantly American companies.

 

Advantages of Registering a Company in Uruguay

The government recognizes the role foreign investments play in economic development. Uruguay’s legal system treats foreign and national investments equally. Most investments are made without prior authorization, and investors can freely transfer capital and profits abroad.

 

Registering a company in Uruguay is attractive because it allows the use of the territorial income principle for tax purposes. This means that income earned from activities abroad is not taxed.

 

Economic Stability and Favorable Business Climate

For the past three decades, the country has adhered to a consistent economic policy, providing political and legal frameworks. Political parties strictly follow this rule when coming to power. The presidential elections in October 2024 are unlikely to change this.

 

Please note! Uruguay is a proponent of free trade, a founding member of the Southern Common Market (MERCOSUR*/ MERCOSUR – Mercado Común del Sur), and a party to numerous Free Trade Agreements (FTA) with countries worldwide.

 

*Note: MERCOSUR is a trade and economic union originally created by Argentina, Brazil, Paraguay, and Uruguay, later joined by Venezuela and Bolivia. There is a particularly favorable trade regime among these countries.

 

Tax Incentives and Favorable Conditions for Entrepreneurs

Even without considering the territorial taxation principle (a major advantage of the jurisdiction), Uruguay offers benefits such as free economic zones for international entrepreneurs.

 

Please note! The Uruguayan government currently manages twelve free trade zones: Fray Bentos (UPM), Nueva Palmira, Libertad, Punta Pereira, Colonia, Colonia Suiza, Florida, Rivera (state-controlled), Zonamerica, WTC, Science Park, and Aguada Park.

 

Free trade zones provide companies with additional tax preferences. Furthermore, projects aimed at expanding or modernizing production are not subject to taxation.

 

Simple Registration Procedure and Flexible Legislative Norms

To encourage foreign entrepreneurs to establish businesses in Uruguay, appropriate legislative frameworks and procedures have been adopted. Registering a company in Uruguay can be done in just a few days.

 

Moreover, there is no need to have a resident among the founders – a legal entity can be 100% established by non-residents. This positively affects both the time frame and the cost of registration.

 

Comparative Data on the Jurisdiction

Compared to popular business incorporation jurisdictions such as the Cayman Islands, Seychelles, Vanuatu, Panama, British Virgin Islands, and Belize, the registration cost in Uruguay is average, but the time frame is more acceptable. Therefore, we recommend Uruguay for those who need express incorporation.

 

Various Forms of Entrepreneurship in Uruguay

The jurisdiction offers a necessary range of business organizational forms, allowing an optimal choice for any project’s specifics. In addition to companies and partnerships, a branch (Sucursal) and a representative office (Oficina de Representacion) can be established in Uruguay.

 

It should be noted that a representative office is not a separate legal entity and is not entitled to engage in commercial activities, promoting the goods and services of the parent foreign company.

 

A branch is also not a separate legal entity but can conduct business in the country. The parent foreign company is responsible for it. This form can be used for specific goals or periodic activities in Uruguay, provided the activity aligns with that of the parent company.

 

Let’s consider the two most popular forms of doing business in the country in detail.

 

Joint Stock Company (SA)

A Uruguayan joint stock company or corporation (Sociedad Anónima – S.A.) is a legal entity whose capital is divided into shares. The shares of public corporations are listed on the Montevideo Stock Exchange (BVM). A private corporation has a limited number of shareholders, and its shares are not publicly traded.

 

Registering a business in Uruguay in this form requires at least two shareholders, who can be residents or foreigners. The company is managed by a board of directors, which can include local or foreign individuals, residing in Uruguay or abroad, as well as legal entities. There are no restrictions on the types of activities for an SA, except for providing financial and insurance services.

 

The share capital must be expressed in local currency. At least 25% must be paid in at the time of registration (contributed by the shareholders to the company’s capital). There are no requirements for a minimum capital amount. Each shareholder’s liability is limited to the paid-in capital.

 

Please note! This organizational form is very popular among large businesses in Uruguay.

 

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Limited Liability Company (SRL)

A Uruguayan LLC (Sociedad de Responsabilidad Limitada) is a company whose capital is divided into quotas instead of shares. The number of founders can range from 2 to 50 individuals or legal entities of any residency. Their liability is limited to their contribution to the capital. Like the SA, there are no requirements for a minimum capital amount.

 

Please note! This organizational form is suitable for small and medium-sized businesses and is the most widely used in the country.

 

Incorporation Capital and Director Requirements

There is no strict requirement for a minimum share capital for incorporating a legal entity in Uruguay. Therefore, the business owner or owners can determine a convenient amount at their discretion. However, it is necessary to comply with the requirement regarding the contribution of part of the capital at the time of registration.

 

The company can be managed by a single individual or a Board of Directors. It is not mandatory for the director to be a shareholder/founder of the company. Additionally, the director does not necessarily have to be a natural person. Legal entities are also permitted to act as directors.

 

Official Registration Procedure and Required Documentation

Incorporating a legal entity in the country takes approximately 2 to 6 days, up to a maximum of 10 days, after submitting documents to the National Trade Registry. The procedure involves the following steps:

 

  • Step 1. Choosing and checking the uniqueness of the company name.

The name must be in Spanish. Some words are restricted and others require a license to use.

 

  • Step 2. Preparing the company’s articles of incorporation and bylaws.

All documents must be verified by a local lawyer and notarized by a state notary in Uruguay.

 

  • Step 3. Approval of the articles of incorporation by the State Audit Office (AIN* – Auditoría Interna de la Nación). 

За такое утверждение предусмотрен админ. сбор в размере около 20 долларов США.

 

*Note: AIN is a division of the Ministry of Economy and Finance of Uruguay (MEF), responsible for ensuring compliance with legal requirements in company charters. After approval, AIN provides a certificate.

 

  • Step 4: Registering the legal entity with the National Trade Registry (RNC*).

 

*Note: RNC is an agency that works with the General Registration Directorate or Dirección General de Registros.

 

Please note! Required documents for registration:

 

  1. articles of incorporation;
  2. AIN approval certificate;
  3. application form;
  4. receipt of administrative fee payment (about 70 USD).

 

  • Step 5. Depositing a portion or all of the share capital in a local bank account.

 

  • Step 6. Publishing an extract of the company’s articles of incorporation in the Official Gazette (Diario Oficial de Uruguay).

Other official publications can be chosen to announce the creation of the new company. The publication cost is usually about 30 USD.

 

  • Step 7. Obtaining a unique taxpayer registration number (RUT – Registro Único Tributario).

The company is registered with the National Tax Administration (Dirección General Impositiva – DGI). In some cases, such as hiring local staff, registration with the Social Security Administration (Banco de Previsión Social – BPS), the Ministry of Labor and Social Security (MTSS), and the State Insurance Bank (BSE) may also be required.

 

Important! To open a company in Uruguay with the support of AA Lawrange, the client needs to provide the following information and documents:

 

  1. identification documents for founders and directors;
  2. several name options for the company;
  3. description of its structure and business activities.

 

Please note!  If necessary, the documentation for the registered company can be notarized and apostilled (Uruguay is a participant in the 1961 Hague Convention).

 

Notary Registration

Corporate documents – the articles of incorporation and annex (internal rules and policies) – require notarization by a state notary. Before notarization, the notary reviews the draft of the articles of incorporation.

 

The articles of incorporation must include the following information:

 

  • company name;
  • information about the share capital;
  • legal address;
  • management structure;
  • purpose of the business;
  • method of profit and loss distribution;
  • detailed liquidation plans.

 

Obtaining a Tax Number (RUT)

The tax identifier for a Uruguayan company is called RUT (Registro Único Tributario). To obtain it and start commercial activities in accordance with the country’s tax laws, one should apply to the National Tax Administration (Dirección General Impositiva – DGI).

 

The application should be accompanied by the following documents:

 

  • two copies of the identification documents of the founders or their legal representative;
  • two notarized copies of a document containing the signatures, personal details, and registered addresses of the company’s founders.

 

Trademark Registration

For certain business needs, it might be necessary to register a trademark in Uruguay. Documents are prepared, and an application is submitted to the Patent and Trademark Office (PTO).

 

Please note! In Uruguay, it is possible to register a trademark for a specific class, as well as file a “multi-class” application. This means that one trademark application can include two or more classes of intellectual property protection for different goods and/or services.

 

Opening an Offshore Account in Uruguay

Non-resident companies can open an account in any currency in Uruguay. To open a corporate account, the following documents are needed:

 

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  • articles of incorporation;
  • proof of registration with the National Trade Registry;
  • a copy of the publication in the Official Gazette;
  • proof of registration with the DGI.

 

Important! Some banks may require the business owner to be present to open an account. Additionally, a copy of the owner’s passport, proof of residence, and a recommendation letter from a bank where the owner already has an account may be required. An explanation of the sources of income might also be necessary.

 

The average account maintenance fee at a Uruguayan bank is 40 USD per month. However, there is also a separate transaction fee.

 

Important! If an offshore company has an account in a Uruguayan bank, it may be required to pay an annual tax of 1.5%, which applies to the total amount of assets held in the bank account during the financial year. Therefore, it might be worth considering opening a bank account in another jurisdiction.

 

Alternatively, a company incorporated in Uruguay can open an account in an offshore bank in another country. For example, options like Seychelles, BVI (British Virgin Islands), Belize, Panama, etc., can be considered.

 

Criteria for Choosing a Bank for the Company

Uruguayan banks offer various types of accounts with many features and benefits. These should align with the business owner’s goals and the company’s activities. Special attention should be paid to the pricing for international transactions. Some banks restrict foreign operations for companies with foreign shareholders.

 

The choice of the bank and the flexibility of its policy will determine how quickly and efficiently the new company can start its operations. Specialists at AA Lawrange can assist in making this choice by clearly presenting all the pros and cons.

 

List of major banks in Uruguay:

 

  • Banco Santander,  a subsidiary of the Spanish banking giant;
  • Banco Itaú Uruguay,  part of the Brazilian financial conglomerate;
  • Banco de la República Oriental del Uruguay (BROU), the largest state bank in the country;
  • BBVA, a subsidiary of the Spanish multinational financial services company, focuses on corporate and investment banking services;
  • Scotiabank, a subsidiary of the Canadian multinational bank, specializes in international banking and trade finance.

 

Advantages Compared to European Countries

If you are still unsure where exactly you want to incorporate your international business and are considering Uruguay among many other options, we want to highlight the advantages of this jurisdiction compared to EU countries.

 

Please note! Registering a company in Europe, aside from prestige, involves strict regulatory and tax requirements. Uruguay offers a much more favorable environment in this regard. Company maintenance will be cheaper and less burdensome. Additionally, you gain access to unique and underdeveloped markets in South America and beyond.

 

Registration Costs and Business Support

The costs of incorporation and business operation depend on its scale, types of activities, legal structure, and several other factors. If you want to create a company in Uruguay to take advantage of the territorial taxation principle – that is one thing, but if you plan to conduct real activities in the country and earn income from them – that is completely different.

 

Annual Maintenance Costs

If the enterprise does not operate within the jurisdiction and does not have to pay income tax, the costs of maintaining the business will be minimal. The main expenses include paying the annual state fee (fixed tax), accounting and reporting services, extending the legal address, etc.

 

Available Business Support Services

There is no need to independently search for contractors to support your business in Uruguay. The Lawrange legal association has connections with partners who will provide everything necessary. The client only needs to order and receive a package of services according to the specific business needs.

 

Legal Aspects and Obligations

All legal entities established in Uruguay are required to have a legal address (registered office) in the country. This address is the official one for all business correspondence and notifications. The company’s documentation must also be stored at this address.

 

Important! Some activities in Uruguay require mandatory licensing. This includes activities related to attracting third-party funds, various types of insurance, communication services, electricity, and water purification. Consulting activities related to providing advice on investing funds in company assets are prohibited.

 

Taxation

Uruguay’s tax system is based on indirect taxes, particularly VAT (22%). Among direct taxes, the notable ones are the tax on economic activity profits – Impuesto a las Rentas de las Actividades Económicas (IRAE) and the wealth tax. Profit derived from economic activities of any kind within Uruguay during the relevant financial year (net financial income from a Uruguayan source) is subject to taxation. Deductions are only allowed for expenses related to taxable profits, provided there is documentary evidence.

 

The general IRAE tax rate is 25%. According to Uruguay’s Income Tax Law, this rate applies to individuals, resident enterprises, or permanent establishments of non-resident legal entities. The income tax for non-residents is set at 12%, and the wealth tax is 1.5%.

 

Very Important! Offshore legal entities do not pay tax on income earned outside the jurisdiction.

 

SA companies, upon registration, must pay a fixed tax (Impuesto de Control de las Sociedades Anónima – ICOSA) at a rate of 1.5% based on a notional amount, updated annually ($50,963 in 2024). Additionally, the tax must also be paid annually by companies at a rate of 0.75% of the same notional amount at the end of each financial year. This applies to both foreign and local companies. Thus, the registration tax for an SA in 2024 amounts to approximately $765, and a functioning company needs to pay around $380 at the end of the year.

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Reporting Requirements

If you open a company in Uruguay, you must prepare for the requirement to submit annual reports, as this is mandatory for all businesses in the country. The reporting period in Uruguay aligns with the calendar year. It is advisable to submit the report by the end of the month following the end of the reporting period. If total assets exceed 1.3 million USD, companies must have audited financial statements.

 

Accounting Conditions

Accounting requirements for businesses are aligned with international standards. If accounting documents are not in Spanish, they must be translated.

 

Legal Obligations and Liability of Founders

The liability of founders/shareholders of Uruguayan companies in the form of SA and SRL is limited to the amount they contribute to the share capital. Personal assets are not subject to liability.

 

Recommendations for Potential Investors

According to a study published by the Economic Commission for Latin America and the Caribbean (CEPAL), inbound investment in Uruguay tripled in 2022. Significant investment flows into the country come from Spain, Argentina, Finland, and Brazil. Over the past decade, Uruguay has strengthened bilateral trade, investment, and political ties with China, its main trading partner.

 

The government continuously provides new incentives for local and foreign investors. The funds are invested in sectors such as energy production (particularly wind energy projects), financial technology, services, and agribusiness.

 

Please note! Despite Uruguay’s overall investment appeal, investors should be aware of varying degrees of bureaucracy when dealing with certain government institutions or ministries. Some rules and processes lack flexibility, and the timelines for certain procedures may not always meet expectations. Therefore, foreign entrepreneurs should prepare for this characteristic of Uruguay.

 

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Why Choose Lawrange

Our team has been assisting with the establishment and management of international businesses for over ten years. Our effective legal services are supported by a broad network of partners worldwide. We work with different jurisdictions and projects, staying updated on legislative changes in various countries, understanding the intricacies of interacting with government regulators and supervisory bodies.

 

Conclusion

Uruguay is a unique country in the South American region that has become a hub for international business establishment, the development of an innovative financial sector, and free trade. Incorporating a company in Uruguay provides the opportunity to benefit from a favorable business climate for foreign investors, maintained through the rule of law, low political risks, macroeconomic stability, strategic location, and investment incentives.

 

The country offers tax and legal advantages for international business, actively promotes innovation and progress, and strives to stay ahead of its neighbors in regulating the technology and IT sector. Here, foreign investors can expect to receive a comprehensive range of opportunities to manage their business assets with full flexibility.

 

FAQ

What are the capital requirements for registering a company in Uruguay?

There are no minimum capital requirements or limitations on the maximum amount. However, a certain portion of the founding/share capital must be contributed at the time of registration. For SA, this is 25%.

 

Is the presence of founders required for company registration in Uruguay?

No, it is possible to open a business in Uruguay without the founders being present. A power of attorney can be granted to a representative in the country. However, the presence may be required for opening a corporate bank account.

 

How often should shareholders’ meetings be held after company registration in Uruguay?

Shareholders’ meetings should be held at least once a year. Shareholders can be represented by their proxies. The legislation does not specify the location of such meetings, allowing them to be held abroad.

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