Uruguay launches a new version of the tax residence permit program
On July 1, 2020, a new version of the tax residence permit program in Uruguay will be launched. This statement was made by the country's President Luis Alberto Lacalle Pou. To participate in it, a foreigner will need to fulfill two conditions: stay in the country for at least 60 days annually, and also purchase real estate in the amount of $377 thousand or invest $1,6 million in a local business. In return, they are guaranteed complete exemption from income and property taxes for ten years.
As it was
In January, when taking office as president, Lacalle Pou noted that attracting 100 to 200 thousand tax residents willing to invest in the Uruguay economy or choose it for permanent residence would bring great benefits to the country. However, the immigration scheme that existed at that time was not suitable for this: it was not competitive enough and did not live up to the hopes placed on it.
Under the old rules, obtaining tax residency in Uruguay required purchasing real estate for $1,8 million or investing $5,4 million in a local business, as well as residing in the country for at least 183 days per year. By comparison, becoming a tax resident in Antigua and Barbuda required purchasing or even renting real estate, paying an annual tax of $20, and spending at least 30 days per year on the islands. Clearly, with cheaper and more advantageous programs available, the Uruguayan tax system existed only formally.
What's new
The redesigned scheme looks much more interesting than its predecessor. Under the new conditions, the threshold amount of investment in real estate has decreased by almost five times, and investment in business has decreased by more than three times. In addition, there is another way to obtain a tax residence permit by opening a business with the creation of 15 jobs for citizens of the country.
Hello neighbors
Despite the fact that de jure any foreigner can obtain Uruguayan residency, it is obvious that de facto the Uruguayan proposal concerns wealthy citizens of its closest neighbors, and primarily Argentina. Its president, Alberto Fernandez, has been extremely wary of Lacalle Pou's initiative to reform the program, warning his colleague against creating the conditions for Uruguay to become a haven for tax evaders.
Nevertheless, according to experts at Elma Global , the introduction of the new rules has come at the right time. Recently, Fernández, addressing Argentina's economic problems, signed a decree introducing a one-time tax on the country's wealthiest residents, which will add $4 billion to the treasury. The document will affect approximately 11 Argentines with assets exceeding $2,9 million. Each of them will have to pay an average of approximately $364.
It is curious that the size of the one-time tax fee is only slightly less than the amount of the minimum investment in Uruguayan real estate, by investing in which you can get a residence permit and tax exemption for the next ten years.
Uruguay Launches New Tax Residence Permit Program