Uruguay's Tax Holiday in 2026: What Changed and Who Still Qualifies
Updated September 15, 2026. Based on enacted legislation and official guidance linked below.
Uruguay still offers a substantial tax holiday to qualifying new tax residents. The 2026 reform changed who can access it and expanded the foreign capital income that the tax system reaches.
For someone who actually moves to Uruguay, an investment-free route remains available. For someone hoping to qualify through property while spending little time there, the calculation has become more demanding.
But there is another distinction to make before looking at properties or counting days: the holiday concerns specified foreign capital income. A salary paid from abroad is not automatically foreign-source income when you do the work in Uruguay.
That is where I would start. What income do you have, where is it earned, and which residence route will you actually satisfy?
What Changed in 2026
The framework comes from Law 20.446, Uruguay’s 2025-2029 budget law, promulgated on December 16, 2025. It introduced a new holiday regime for people acquiring Uruguayan tax residence from January 1, 2026. Other parts of the reform also affect existing taxpayers. Law 20.446, effective-date provision; new holiday provision.
The implementing rules arrived in stages:
- May: Decree 95/026, issued May 6 and published May 21, regulated foreign capital income, attribution and collection.
- June: DGI Resolution 1517/026, issued June 29 and published June 30, set operational rules and transitional deadlines.
- August: Resolution 1783/026, issued August 5, revised payment arrangements. Decree 188/026, issued August 10 and published August 19, specified the holiday’s investment conditions.
These dates matter because a summary based only on the budget law or the May decree can miss later requirements. Decree 95/026; Resolution 1517/026; Resolution 1783/026; Decree 188/026.
What the Holiday Gives You
Qualifying newcomers can elect to be taxed under IRNR, Uruguay’s nonresident income-tax regime, for specified foreign capital income. For the covered foreign income, that produces effective exemption from Uruguayan income tax during the holiday.
The period is the tax year in which residence changes plus the following ten tax years. If the relevant year is 2026, the period runs through 2036, subject to eligibility. It is not eleven full years measured from whatever day you arrive.
The election is once-only. For entry into the new holiday, you must not have been a Uruguayan tax resident during the two immediately preceding tax years, and the restrictions on prior use of the old regime must also be satisfied. Title 7, article 24-BIS.
Financial derivatives fall under a separate statutory source provision and are not sheltered by this holiday. Nor does it exempt ordinary Uruguayan-source salary, business or rental income. IRPF source provisions.
Three Ways to Meet the Holiday Conditions
The investment thresholds are in Indexed Units, or UI, an inflation-linked unit of account. A dollar quotation is only a conversion at a particular date. Check the relevant valuation rules and current exchange rate before treating a property’s advertised price as sufficient. The INE publishes the official UI values.
1. Meet the tax-residence presence test each year.
The statutory test is more than 183 days during the calendar year, counted under Uruguay’s tax rules. Exactly 183 counted days is insufficient. Certain sporadic absences can count, subject to the rules and evidence of tax residence elsewhere, so the legal calculation is more specific than simply counting nights in a hotel. Title 7, article 2(A); day-count rules.
Meeting this test in each relevant tax year removes the holiday’s investment requirement. The other entry conditions and the election still matter.
2. Invest more than 12,500,000 UI in qualifying urban property.
The property must have been acquired from January 1, 2026. The test uses updated fiscal cost. Property in a department with neither RÃo de la Plata nor Atlantic coastline receives a 50% uplift for this holiday valuation.
This property condition has no separate minimum day count, but you still need to establish tax residence. Crucially, the property counted for the holiday cannot also be counted toward the real-estate tax-residence tests discussed below.
3. Contribute at least 625,000 UI annually to qualifying investment funds.
The law provides for funds financing productive projects, research or innovation applied to production. The decree makes them subject to requirements set by the Ministry of Economy and Finance, or MEF. An ordinary investment fund or private business investment does not automatically qualify. Holiday investment rules, article 5-SEXIES.
As of the September 15, 2026 review for this article, the implementing MEF instrument and a qualifying fund offer could not be verified. Treat operational availability as something to establish before committing money. Anyone proposing this route should identify the applicable MEF rules and show how the specific fund meets them.
The conditions must be satisfied in the years for which relief is claimed. If you stop qualifying and later qualify again, the regulation allows relief to resume within the original period. It does not pause the clock or give you a new holiday. Article 5-SEXIES, final paragraph.
Tax Residence Comes First
A residence card, tax residence and the tax holiday answer three separate questions.
Immigration residence gives you permission to reside in Uruguay. Tax residence follows tax-law tests. The holiday is a tax election available to qualifying tax residents. Getting the first does not automatically give you the other two. Compare the official permanent-residence procedure with DGI’s tax-residence certification requirements.
Besides presence, tax residence can arise through a person’s principal activities or economic or vital interests. The investment presumptions include:
| Tax-residence investment route | Main condition |
|---|---|
| Property | More than 15,000,000 UI; no minimum days specified in this investment presumption |
| Property plus presence | More than 3,500,000 UI invested from July 1, 2020, plus at least 60 days of actual presence in the calendar year |
| Company investment creating jobs | More than 15,000,000 UI invested from July 1, 2020, creating at least 15 new direct, full-time jobs under the prescribed conditions |
| Promoted business project | More than 45,000,000 UI in a company involving qualifying activities or projects declared of national interest |
These are summaries of the tests. Valuation, job-creation conditions and proof of tax residence in another country can affect whether a presumption applies. None of these investments alone establishes eligibility for the new holiday. Tax-residence regulation, article 5-BIS.
That is why a property budget needs two calculations. If you rely entirely on the property presumption with no specified minimum days, you need residence-qualifying property exceeding 15 million UI and separate holiday property exceeding 12.5 million UI. Without the holiday’s inland uplift, those tests total more than 27.5 million UI in the relevant fiscal valuations.
Using the 60-day residence route instead means more than 3.5 million UI for residence, the required presence, and separate holiday property exceeding 12.5 million UI. Someone who establishes tax residence through a different ground may have a different calculation. These examples apply the residence tests together with the mandatory non-overlap rule.
So the old property-and-60-day route survives. What it no longer does for a new 2026 resident is unlock the holiday by itself.
What Is Taxed Without the Holiday?
The reform expanded the foreign capital-income base. Specified foreign capital returns, including rent, and gains on eligible foreign assets can now fall within IRPF. Covered assets can be held directly or through relevant entities; using an offshore company is not a prerequisite for the tax to apply. Foreign-income regulation, article 3.
The general residual rate is 12%, subject to applicable relief, credits and alternative regimes. Foreign financial income such as interest and dividends was already within the earlier system; 2026 did not introduce a 12% tax on every kind of foreign income for the first time. Current rate provision; earlier legislation taxing foreign financial returns.
The legislation excludes certain categories, including specified intellectual-property, goodwill and image-right income, from this foreign-source extension. That is not a blanket exemption for those payments when they have a Uruguayan source. Derivatives have their own treatment. Source provision; referenced income categories.
Two provisions can materially affect the bill. Qualifying foreign income taxes paid on the same covered income can be credited against Uruguay’s tax, within the Uruguayan liability and documentation limits. For eligible quoted foreign assets acquired before December 31, 2025, the rules use the December 31 quotation as fiscal cost for the actual-gain calculation. That can exclude earlier appreciation; it is not a universal cost reset for every asset. Foreign tax credit; foreign-asset gain calculation.
The reform also expanded attribution rules that can bring income of covered entities into the hands of resident ultimate beneficiaries before an ordinary dividend distribution. The rules include participation and structure tests. An offshore holding company needs to be assessed under those provisions. Attribution regulation.
The 8% Withholding Option and Filing
Under the ordinary regime, qualifying resident intermediaries that professionally and habitually intermediate foreign movable assets and exercise custody generally withhold at 8% on the covered income. Holiday beneficiaries and taxpayers using the special 6% or 7% regimes have different treatment. Taxpayers can elect to treat that withholding as final, so there is not necessarily a further payment bringing that income’s tax to 12%. Qualifying intermediaries; withholding and final-treatment rules.
The election has a procedure. DGI requires communication to the responsible intermediary before January 31 of the following year. Final treatment can remove the filing obligation for the covered income; it does not necessarily remove every other return obligation you have. DGI Resolution 1517/026, paragraph 18.
Where the relevant income is not withheld upon, semiannual advances at 12% generally apply under the foreign-income rules, with final-treatment options for eligible cases. Filing an annual return is not a substitute for required advances. Foreign property-income advances; foreign movable-income and gains advances.
The 2026 transition also needs attention. Specified remittances and first-semester advances were deferred to October. The August resolution sets October 26, 2026 for the specified first-semester foreign movable-capital-income advances. That is not a universal deadline for every tax payment, and the deferrals do not erase the underlying liability. Resolution 1517/026, transitional provisions; Resolution 1783/026.
What Happens After the Holiday?
There is an optional reduced-rate regime for the following five tax years. It charges 50% of the applicable rate, which is 6% at the current general rate of 12%.
It requires the prescribed urban-property investment exceeding 6,250,000 UI, with the inland valuation uplift where applicable, or qualifying annual fund contributions. It is a separate conditional election. The regulation does not say that simply finishing the holiday automatically gives everyone five years at 6%, nor does it expressly require a fresh property purchase at that point. Reduced-rate regulation, article 5-SEPTIES.
For larger portfolios there is also a post-holiday annual fixed-payment option for the covered foreign capital income. The standard amount is 1,875,000 UI, reduced to 1,250,000 UI in years satisfying the statutory presence test or the prescribed direct productive-business-investment condition exceeding 45,000,000 UI. Eligible spouses can elect to pay 15% of the relevant fixed amount. This option also extends to qualifying users of the earlier IRNR holiday after its expiry. Its statutory time limits and election requirements need to be checked; a late election should not be assumed to create a fresh twenty-year period. Post-holiday options; implementing conditions.
A different general simplified regime allows a payment of 1,875,000 UI annually for up to twenty consecutive years on the covered foreign capital income. It excludes people who exercised the specified old or new newcomer-regime options and does not contain the post-holiday spouse discount. DGI already provided for its election through the first year’s return, followed by annual returns. These are two distinct fixed-payment regimes, with different eligibility rules. General regime and exclusions; amount and duration; election procedure.
Remote Workers: The Foreign Payer Is Not the Deciding Factor
If you live in Uruguay and do your work there, the resulting salary or consulting income is generally Uruguayan-source. A foreign employer, foreign clients and payment into an overseas account do not by themselves change that. The capital-income holiday does not exempt this work income. Current IRPF source rule.
DGI’s official guidance addresses the point directly: professional services delivered from Uruguay over the internet to a foreign business are subject to IRPF because the activity takes place in Uruguay. Work actually performed abroad requires its own analysis, including Uruguay’s statutory source extensions. DGI guidance on services to foreign companies.
For a remote worker with an investment portfolio, both things can be true: the work income is taxable under the relevant ordinary rules, while qualifying foreign capital income benefits from the holiday. Model them separately.
If You Were Already Resident Before 2026
A valid earlier election can preserve the applicable relief for its remaining period and under its conditions. The earlier 7% option also remains relevant to qualifying people who already elected it; it is closed to new 2026 residents.
But a pre-2026 residence date does not shelter everyone from the expanded income base or attribution rules. The questions are what option you actually elected, when, how much time remains and which income it now covers. Earlier regime and cutoff; August amendment to the earlier election rules; 7% rate provision.
If You Are Leaving Australia
Australia’s Division 296 applies from the 2026-27 income year. It imposes additional tax on superannuation earnings attributable to balances above A$3 million: 15%, with a further 10% on the relevant earnings attributable to balances above A$10 million. It is not an annual charge of 15% or 25% on the account balance itself. 2026 Imposition Act, section 5.
Section 296-15 does not make Australian tax residence a condition of liability. Moving overseas therefore does not, by itself, remove Division 296 exposure while you retain Australian super. Enacted Division 296 provisions.
Ending Australian tax residence can also trigger a deemed disposal of certain assets. Individuals can elect to disregard the relevant departure gains and losses, but that generally leaves those assets within Australia’s capital-gains tax system until disposal or resumed Australian residence. The election changes continuing exposure rather than simply erasing the tax. ATO explanation of the departure election.
The useful calculation includes the Australian obligations that continue after you leave, as well as what Uruguay charges when you arrive.
How Paraguay Compares
Paraguay’s personal income tax generally follows a territorial system, so qualifying foreign-source income can sit outside its tax base without an eleven-year holiday clock. That describes the current rules, not a guarantee against future legislation. Law 6380/2019, articles 47-48.
The source question still matters. Work performed from Paraguay does not become foreign-source simply because the client is overseas. DNIT’s published, non-binding interpretation applies Paraguayan personal-income-tax rules to professional services performed locally for foreign companies. DNIT consultation on services to foreign companies.
Tax residence and its evidence also need attention: Paraguay requires immigration movement records for an individual’s tax-residence certificate application. A residency card alone does not settle that application or the tax position in the country you are leaving. DNIT certificate rules.
The comparison depends on your income, where you will work and how you intend to live. A headline foreign-income rate only answers part of it.
Where I Would Start
For someone actually relocating, Uruguay’s presence route remains worth examining because it can provide the holiday without a qualifying investment. For someone planning limited presence, establish the residence route and the holiday route separately before buying anything. For someone working remotely, calculate the work-income taxes separately from the portfolio benefits.
I send occasional residency updates covering rule changes and pathways across the Southern Cone through a separate residency list. If that would be useful, get in touch.
We run Uruguay residency files through our team in Montevideo, including the tax-residence question and whether the holiday is worth structuring for in your circumstances. If you are working through a move, contact us here and we will go through it properly.