Regime Rate
0%
Under the 7-Year Tax Holiday
Standard Top Rate
36%
without this regime
Duration
7 yrs
Maximum 7 years from application
Target Profile
Income Exemption
Uruguay
Tax Savings Illustration
Example: €150,000 Annual Gross Income
Under 7-Year Tax Holiday
€0
Standard Rate
€37 800
Annual Saving
+€37 800
Eligibility Requirements
Who qualifies?
- Individuals who become Uruguayan tax residents for the first time
How the Regime Works
Full details
For first 11 years of residency (extended to 11 from 7 in 2020): option to pay 7% on foreign-source passive income OR declare 0% (complete exemption during transition period). After 11 years, full IRPF applies.
Regime vs Standard Rates in Uruguay
| Tax Type | Standard Rate | Under This Regime | Saving |
|---|---|---|---|
| Income Tax (top rate) | 36% | 0% | -36.0pp |
Frequently Asked Questions
What is the 7-Year Tax Holiday in Uruguay?
The Foreign Income Exemption for New Tax Residents (Ley 18.718) is a special tax regime in Uruguay that provides 0% flat rate to qualifying individuals or entities. For first 11 years of residency (extended to 11 from 7 in 2020): option to pay 7% on foreign-source passive income OR declare 0% (complete exemption during transition period). After 11 years, full IRPF applies. Legal basis: Ley 18.718/2011; modificado por Ley 19.670/2018.
Who is eligible for the 7-Year Tax Holiday?
Eligibility for the 7-Year Tax Holiday is limited to: Individuals who become Uruguayan tax residents for the first time. Applicants typically must not have been Uruguay tax residents during a specified prior period. Always verify current conditions at the source: Ley 18.718/2011; modificado por Ley 19.670/2018.
How much tax do you pay under the 7-Year Tax Holiday?
Under the 7-Year Tax Holiday, you pay 0% personal income tax — compared to the standard Uruguay top rate of 36%. This is a complete exemption for qualifying residents.
How long does the 7-Year Tax Holiday last?
The 7-Year Tax Holiday lasts for 7 years from the year you first qualify. After this period, standard Uruguay tax rates apply unless you qualify for another regime or change tax residency.
How do I apply for the 7-Year Tax Holiday?
Application procedures for the 7-Year Tax Holiday are set out in Ley 18.718/2011; modificado por Ley 19.670/2018. You typically need to file a formal application with Uruguay's tax authority after establishing residency. Consult a local tax advisor for guidance.
Other Special Regimes to Compare
Disclaimer: This information is for general guidance only and does not constitute tax advice. Tax laws change frequently. Always consult a qualified tax professional before making residency or tax planning decisions.