The Uruguayan Ministry of Economy and Finance has issued a Decree updating the IRPF framework for non-resident income, setting out detailed rules on fiscal transparency, asset valuation, dividend taxation and withholding mechanisms in line with National Budget Law No. 20,446.
Uruguay’s Ministry of Economy and Finance, through a Decree issued on 6 May 2026, has introduced detailed rules updating the taxation of income derived from non-resident entities under the Personal Income Tax (IRPF), in line with amendments set out in National Budget Law No. 20,446.
The regulation seeks to strengthen legal certainty by clarifying the scope of fiscal transparency, income imputation rules, and withholding mechanisms, while also defining specific valuation methods, thresholds, and taxpayer options applicable to foreign assets, dividends, and related capital income.
The following are the key components of the regulation:
1. Fiscal transparency and imputation regime
- Direct Imputation: Income obtained by non-resident entities (and specific resident entities) is imputed directly to IRPF taxpayers if they are the “final beneficiaries”.
- Participation Threshold: For this regime, a minimum participation of 5% is required, deviating from the standard definition in Law No. 19,484.
- Exceptions for investment funds: Shareholders of open investment funds can exceed this 5% limit for up to 30 days per calendar year without triggering the imputation regime, provided the excess comes from “passive modifications” (changes in other shareholders rather than new personal investment).
2. Taxation of foreign assets and real estate
- Real estate abroad: Income from the sale of foreign real estate is calculated as the difference between the sale price and the fiscal cost (calculated in the investment currency and converted at the exchange rate from the day before the sale).
- Taxation options: For real estate sales, taxpayers may opt to pay a 15% tax on the total sale price instead of the standard calculation. For other foreign asset transfers, a similar option exists at a 20% rate.
- Debt titles: The decree defines how to calculate returns for titles without explicit interest (e.g., zero-coupon bonds) based on the difference between nominal value and purchase price. For titles with explicit interest, tax is imputed to the holder at the time of payment.
3. Dividends and utilities
- Taxable Conditions: Dividends and utilities distributed by Business Income Tax (IRAE) taxpayers are taxed if they originate from taxed income generated after July 1, 2007, or from specific foreign capital yields.
- Imputation Priority: Distributed dividends are first imputed to IRAE-taxed net fiscal income, then to foreign capital yields, following specific chronological tiers.
4. Retention mechanisms and responsibilities
- Retention Agents: Local financial institutions, stockbrokers, and investment funds are designated as retention agents for returns on foreign assets.
- Retention Rates:
- A 12% retention rate generally applies to capital gains and specific returns.
- An 8% rate is established for certain residents managing foreign assets professionally.
- Transitory Rule for 2026: Retention payments for the first half of 2026 are scheduled to begin being remitted to the Tax Administration (DGI) in July 2026.
5. Simplified regime and credits
- Simplified Option: Taxpayers with income from foreign assets may opt for a “simplified regime,” paying a fixed annual amount of 1,875,000 UI (Indexed Units) for up to 20 consecutive years.
- Foreign Tax Credit: Taxpayers who paid analogous income taxes abroad can use those payments as a credit against their IRPF, provided the credit does not exceed the Uruguayan tax due on that same income
Overall, the Decree clarifies and strengthens the IRPF rules on foreign income, improving legal certainty, compliance, and withholding mechanisms.
