Uruguay sets the rules for taxing residents’ foreign investment income

When Uruguay’s budget law reset the tax holiday in December 2025, it also widened the tax on residents’ foreign investment income and left the detail to the executive. That detail has now arrived. Decree 95/026, signed by the President acting with the Council of Ministers on May 6, 2026, sets out how the personal income tax, the IRPF (Impuesto a la Renta de las Personas Físicas), applies to income from assets held outside Uruguay.

We covered the new tax holiday rules in December, in our article on Uruguay’s reset tax holiday. This piece looks at the people the holiday does not cover, and at what the decree means in practice.

Who the tax applies to

The tax applies to Uruguayan tax residents on foreign capital income: dividends, interest, rent from property abroad, and since January 1, 2026, gains on selling foreign assets such as shares, bonds, funds and real estate. The standard rate is 12%. In practice, that means three groups:

• Long standing residents who never chose the holiday, or whose holiday has ended.
• New residents from 2026 who do not qualify for the holiday, for example because they spend less than half the year in Uruguay and have not made one of the qualifying investments.
• Residents after the new holiday who qualify for its five year follow on period by meeting the investment conditions, who pay half the normal rate, 6%. Residents who chose the older permanent 7% option keep that rate.

People still inside their holiday are taxed under the IRNR, the tax on non residents, which does not reach this foreign income. The decree confirms that people under the impatriate regime, the legal name for the holiday, can, like non residents, give a sworn statement to a Uruguayan intermediary so that no tax is withheld.

How gains are measured

The decree gives a choice, made each year, between two methods:

• Actual gain. Sale price minus documented cost, measured in the currency of the investment. Cost documents from abroad must be properly translated and legalised, and reasonable in the view of the tax authority, the DGI (Dirección General Impositiva).
• Deemed gain. A fixed share of the sale price: 15% for foreign real estate, which works out at 1.8% of the price, and 20% for other foreign assets, or 2.4% of the price.

Two further rules matter. For listed assets bought before December 31, 2025, the cost is taken as their quoted value on that date, so gains built up before the reform are not taxed. And a gain is taxed when the proceeds are paid or made available, not when the trade is agreed. Losses under the actual method on these sales cannot be set against other kinds of income.

Foreign companies and trusts are looked through

The provision with the widest reach is a transparency regime, sometimes called look through. A Uruguayan resident who is a beneficial owner of at least 5% of a non resident entity, or of certain Uruguayan investment vehicles, is taxed on their share of that entity’s passive foreign income as the entity receives it, whether or not anything is paid out. Holding investments through an offshore company or similar structure therefore no longer defers Uruguayan tax. Tax already paid abroad, including tax paid by companies further up the ownership chain, can be credited, up to the Uruguayan tax due on the same income.

How the tax is collected

• Through a Uruguayan intermediary. Local firms that hold foreign securities for clients will withhold 8% each month on income earned so far in the year. The taxpayer can treat this as the final tax.
• Through a foreign broker or held directly. Where no one withholds, the resident makes advance payments every six months at 12% of the income accrued, starting in July 2026. These can also be treated as final, which removes the need to file a return for that income.
• A fixed annual option. Taxpayers can choose, once, to pay a fixed 1,875,000 UI a year (Unidades Indexadas, an inflation linked unit, about US$300,000) covering all of this income, for up to 20 consecutive years. The DGI will set the terms. It only makes sense for very large portfolios.

What new residents should plan

The decree does not change the residency rules: Uruguay still grants permanent residence on stable foreign income, with no investment required. It changes the tax planning around a move. Before becoming resident, it is worth confirming whether you qualify for the holiday, which requires that you were not tax resident in Uruguay in the two previous years; gathering purchase records for foreign assets, translated and apostilled where needed, so you can use the actual gain method; and reviewing any holding company or trust for the 5% look through rule. Where you keep investments affects how the tax is collected, so that is worth deciding with an adviser too.

If you hold investments through a company, we can review whether the structure still serves a purpose once look through applies, with the licensed accountants and lawyers in our local team in Uruguay advising on the tax side. We help clients apply for residency and quote our fees in writing.

This article is general information, not legal, tax or investment advice.