Introductory Business Guide: Uruguay’s Legal Overview

Ramon Bado

Estudio Dr. Mezzera

08.11.22 Download PDF

Legal Overview

Registered companies and partnerships

Foreign corporate firms may land in Uruguay through basically two means:

  • Setting up as a branch (same legal entity as parent company); or
  • Acquiring or incorporating a local legal entity (such as a corporation).

In order for a foreign company to establish in Uruguay as a branch and develop its corporate purpose, it should:

  • Provide evidence of the existence of the company pursuant to the laws of the country of origin;
  • Register before the National Registry of Commerce, following the required legalization process (or Apostil); and
  • Make publications as any local company.

Foreign officers and directors are subject to same responsibilities as local officers of local entities.

  • In the case of the incorporation of a new legal entity, Uruguay’s two most commonly used types of legal entities are Corporations characterized by its capital being represented by nominative or bearer shares, and the Limited Liability Companies.

Classification of Registered Companies

  • Limited Liability Company (Sociedad de Responsabilidad Limitada, hereinafter: “S.R.L.”): the capital is divided in quotas. Members’ liability is limited to the number of quotas subscribed or acquired.
  • Sociedad Anónima (Corporation: “SA”): the capital is divided into shares and shareholders’ liability is limited to the value of the number of shares subscribed by a shareholder.

Regular aspects of the S.R.L.

  • R.L.s are always privately held and frequently (not necessarily) used by small and medium-sized companies;
  • They have no purpose limitations except for financial or insurance activities, strongly regulated through the corporation type of legal entity;
  • Is a “personal” entity, which means that the company may be dissolved in the event of death or incapacity of a partner;
  • The transfer of interests between partners is free and has no limitations unless otherwise agreed or that changes the system of majorities;
  • Any change in quota holders requires an amendment to contract (bylaws) and Ownership interests are nominative;
  • Formation procedures are simpler than in a corporation;
  • R.L. are not regulated as the corporation;
  • They may have between 2 and 50 partners.

Sociedad Anónima (“S.A.”)

The Corporation (Sociedad Anónima, “S.A.”) is a type of company used for the development of commercial, real estate, industrial, farming activities, banking, and any scope of business accepted by the Law. The law also foresees the existence of special Corporations that have as their purpose specific activities, with requirements of constitution and operation that differ from those established for the regular S.A.

  • They have no operative restrictions whatsoever and, in general, corporations may develop any type of activity. For the development of some particular activities (such as banking or insurance), they require the prior approval of the competent Office;
  • Liability of investors to shareholders is limited to the amount of capital they have committed to contribute;
  • In corporations, stakeholders are completely dissociated from the company and the board (in opposite to personal entities such as the S.R.L.);
  • Shares may be nominative or to the bearer, except for financial, insurance, radio and TV broadcasting or agricultural companies, in which the shares must be nominative;
  • Bearer shares are transferred by simple delivery, while registered shares must be endorsed and their transfer must be informed to the Corporation;
  • After incorporation, S.A.s may have one single holder of the entire corporate equity.


  • Board of Directors:
  • S.A.s are managed by a Board of Directors or an Administrator, as stated on the Bylaws or the Ordinary Shareholders’ Meeting. The Administrator or directors may be natural or a legal entity, nationals or foreigners. During the term in which the company is acting “under incorporation”, they are jointly liable with the corporation. In corporations in which the main purpose is strongly regulated (such as banking or insurance), with permanent control by the Central Bank, the Board shall have at least three directors.

    Directors usually run general day to day management of the business and make all decisions except for those reserved to shareholders Decisions within the Board are taken by majority of members.

    Directors are not required to be domiciled in Uruguay.

  • Shareholders’ Meetings:
  • It is necessary to hold an annual Ordinary Meeting in order to consider the operation of the corporate businesses, the Board of Directors’ performance and to approve the financial statements of the financial year. For the consideration of issues other than those addressed at the Ordinary Meeting (such as dissolution or capital injection), it is necessary to call an Extraordinary Meeting.

    Shareholders’ Meetings generally make decisions by the absolute majority of votes of the shareholders attending at it, unless otherwise provided for by law or the corporate bylaws.

    The Board of Directors or the Administrator must call all shareholders meetings and the notice must be published on the Official Gazette (Diario Official) and another paper, publications that are not required when are attending shareholders representing the entire paid-in capital.

    Except for companies listed on the stock exchange, the Central Bank of Uruguay keeps record of the holders of nominative and bearer shares. These holders must submit an affidavit containing their particulars and the par value of their securities. This information is confidential.

Other types of Legal Entity

Free Zone Corporations (or “SAZF”) are a special type of corporations which are exclusively intended to carry out trade, industrial activities or service operations in Free Zones. Their incorporation is carried out according to a simplified system which does not require the approval of corporate By-laws by the Administration (Auditoria Interna de la Nación), although there must be control of the paid-in capital by the special Governmental Agency controlling corporations (Auditoria Interna de la Nación or “A.I.N.”). Corporate by-laws must be filed before the Registry of Commerce and the “user contract” (allowing the corporation to act inside the free zone) with the General Trade Office – Free Zones Area.

Partnerships (Partnership Interests)

  • Sociedad Collective, SC (General Partnership):
  • The capital is divided into partnership interests, expressed as a number of partnership units. Partners are unlimitedly, jointly and severally liable for partnership debts.

  • Sociedad en Comandita Simple:
  • The capital is divided into partnership interests, expressed as a number of partnership units. There are two categories of partners in this company type: general partner and silent/ limited partner. General partners are unlimitedly liable for partnership debts. Silent partner’s liability is limited to their capital contribution.

  • Sociedad de Capital e Industrial (Partnership made up of Capitalist and Industrial Partners):
  • The capital is divided into partnership interests. There are two categories of partners: capitalist and industrial partners. Capitalist partners are un- limitedly, jointly and severally liable for partnership debts. Industrial partners’ liability is limited up to the total of unpaid earnings.

  • Sociedad Anónima Simplificada, SAS (Simplified Corporation) – Act 19.820:
  • This is a new company type which, unlike the common SA or SRL, it can be easily incorporated following standard bylaws, and saving costs because fewer formalities and procedures required. The company may operate with a single member, either a natural or artificial person.

  • Sociedad en Comandita por Acciones, SCA (Partnership Limited by Shares):
  • General partners are liable for partnership debts; silent partners’ liability is limited to their subscribed capital. The capital is divided into shares.

Public Offer of Shares

An authorization from the Central Bank of Uruguay (Superintendencies de Services Financiers) is required for a corporation to become public. A company is admitted to the public offering regime and then the specific securities are approved. Additionally, authorization from one of the two stock exchanges is required to list securities on that stock exchange.

The Board of Directors shall meet at least once every month, unless the Articles of Association require a larger number of meetings. Meetings can be held at any director’s request. Where requested, the Chairperson will be in charge of calling the meeting, which must be held within five days after receiving the request.

Financing of a Company

Companies are financed in several ways:

  • Capital contributions from shareholders in the form of shares;
  • Loans, debt and bank financing;
  • Negotiable Debt Securities;
  • Equity investment from private equity funds;

Commencement of business

There are various procedures to be followed before a company may commence business as a formal independent entity. A simple company formation will generally take about three days for registration plus any additional days for drafting the articles of association, legal opinions, approvals by the A.I.N., and publications on the Official Gazette.

The company will be registered before the Tax Governmental Authorities (Direction General Impeditive and Banco de Prevision Social), and a bank account for the initial capital should be opened).

Depending on the location of stakeholders and directors, the process can take between 4 and 8 weeks.

Corporate Insolvency

Under the Business and Reorganization Act 18.387 (“Bankruptcy Act”), insolvency proceedings may occur in two different ways:

  • Insolvency or business reorganization proceeding (either voluntarily or filed by creditors); and
  • Direct (straight) bankruptcy.

The Bankruptcy Act’s main goal is to save the company going through particular crisis and is a system for the benefit of the debtors, allowing them to continue managing and administering their property. Debtors are able to continue performing the usual operations and activities and given the opportunity to reach an agreement with their creditors, that may accept allow the debtor to pay in several installments, with a reduction of principal to be paid. Depending on the terms of the agreement, the votes needed among all common creditors to approve the repayment formula.

A direct (straight) bankruptcy proceeding, on the other hand, is a process through which debtors lose the administration of their property and cease their business operations and activities. All their property is liquidated and debts are paid off with the proceeds. If enough capital is raised, debts are paid off in full. If not, debts are paid partially, on a pro rata basis, according to the rights, categories and privileges that creditors may have and hold, observing a basic principle of equality among all creditors. This principle is called pars condition creditorum.

Company Winding-Up

The Company Act provides that a number of steps will be followed in order to liquidate a company. These include:

  • Preparation of an inventory and balance sheet of the company for liquidation purposes;
  • Realisation of corporate assets and cancellation of liabilities;
  • Preparation of the final liquidation balance sheet;
  • Request for any contributions owed by Members;
  • Publication of partial distribution agreements;
  • Submission of the final balance sheet and plan of distribution to members;
  • Performance of final distribution;
  • Cancellation of registration of the Articles of Association at the Public Registry of Commerce and Tax Authority.

Ramón Bado



Estudio Dr. Mezzera
Rincón 422 piso 3,
Montevideo CP 11.000
Tel. +598 29 15 05 00
Ramón F. Bado

Tax overview

Company registration

After incorporation, the notary submits the application form registration to the commerce register.

The company must take charge of its own formalities with the national tax authorities and apply to be registered in the National Taxpayer Registry for a unique number for VAT, Income Tax and Capital Tax and also withholding taxes.

The company must also apply for a Social Security Registry and National Ministry of Social Labor for their employees including an insurance for the legal cover of its employees.

Taxation of companies

The tax period follows the dates of the financial year of the company.

  1. Profit
  2. Income tax is calculated on the basis of the net profit after tax made during the fiscal period.

    The rate of income tax paid by companies is 25%.

    Non-resident entities are subject to IRNR on their gross income of Uruguayan source at a flat rate of 12% but entities located in a low or nil tax jurisdiction are subject to a 25% rate.

  3. Capital
  4. Tax on capital is 1.5% of the equity.

    In the case of financial entities the rate is 2,8%. The rate applicable to entities located in low or nil tax jurisdictions is 3%.

    Capital tax is a national tax applied to all companies and some should pay a minimum capital tax named ICOSA for about USD 500.

  5. Value added tax (VAT)
  6. VAT levies on the sale of goods and provision of services within the Uruguayan customs territory, as well as on the introduction of goods to the country.

    The general rate is 22%. There is a reduced rate of 10% applicable to certain goods and services, while there are some others that are specifically exempt. Exports of goods and services are subject to a zero-rate regime under which no VAT is included in the export invoice, but input VAT associated can be recovered.

    Services that qualify as exports are listed in the regulations. VAT calculation is made on a monthly basis, for both payment and return filing (except for the case of some small companies that file VAT returns annually).

Treaties on double taxation

Uruguay has a wide range of double taxation treaties / agreements to avoid the double taxation of companies and individuals as well as to encourage regulatory and economic cooperation, generally following OECD models. The different treaties / agreements have different rates of withholding and interest arrangements.

In order to benefit from the treaties to avoid double taxation, the beneficiary has to prove the tax residence in the relevant jurisdiction by providing a tax residency certificate issued by the competent authority for such purposes. Uruguay has also signed the Multilateral Instrument for the Implementation of Measures Related to Tax Treaties to Prevent Base Erosion and Profit Shifting.

Uruguay also has a number of Tax information exchange agreements (TIEAs) that are only aimed at exchanging information.


Dividends and profits distributed are subject to a withholding tax of 7% as long as they are related to income subject to IRAE.

In addition, undistributed profits (over 5 years old) are also subject to a 7% tax as they are considered national dividends. Withholding on dividends is considered a final tax and the tax rate applicable may be reduced in application of a treaty to avoid double taxation

Treatment of losses carried forward

A tax loss incurred in one year, adjusted for inflation (IPC), may be carried forward to offset taxable profits arising in the following five years. Losses cannot be carried back.

Obligations of the employer

Social security

Social Security Contributions are payable by both, the employer and the employee, over all benefits related to the activity carried out in Uruguay.

Employee contributions are withheld on a monthly basis by the local company and paid directly to the Social Security Authority.

Employer contributions amount to 12.625% and are formed as follows; 7.5% corresponds to retirement contributions, 5% contributions to health insurance and 0.125% corresponding to the labor reconversion fund.

There is a special regime for the case of rural establishments where employer contributions are made based on the area of the exploited property applying special rates.

On the other hand, the worker contributions vary between 18,125% and 21,125% and are formed as follows; 15% corresponds to retirement contributions, 3%, 4.5% or 6% are contributions to health insurance depending on the amount of their income and whether or not they have children under 18 years of age and 0.125% corresponding to the labor reconversion fund.

Personal income tax (IRPF)

Individuals that are considered tax residents in Uruguay are subject to Personal Income Tax (IRPF) on their income of Uruguayan source, income for work carried out abroad for a local company and holding income of foreign source (namely interest and dividends). Work income is subject to progressive rates that go up to 36% with a non-taxable threshold.

Holding income is subject to a general rate of 12%. Some interests on specific local deposits are subject to a reduced rate of 7%.  Dividends from local companies are subject to a 7% rate provided they relate to profits subject to IRAE. Dividends from foreign entities are subject to a 12% rate.

Foreign tax credit is available for interests and dividends of foreign source, limited to the local tax applicable. Non-resident individuals that become tax residents have a tax holiday available on interests and dividends of foreign source. This holiday lasts for a period of 10 years starting the year in which tax residency is determined in Uruguay.

Taxation at source

Uruguay has adopted in general terms a territorial concept of taxation, with some exceptions so Uruguay taxes apply to those who are domiciled or reside in Uruguay.

Guillermo Campione



Cerrito 534, Piso 4
11000 Montevideo
Tel. +598 2 916 8100
Fax +598 2 916 8100
Guillermo Campione

Join our Legal Network