Over recent decades, the Information Technology (IT) sector has grown very significantly; however, the supply of specialised human resources has not kept pace. Today, companies in the sector cannot find in Uruguay the number and/or quality of staff they need to keep growing.
To address this unmet demand, on 16 August the Legislature passed a law that seeks, through certain tax incentives, to encourage IT technicians and professionals to move to the country.
Tax incentives
IT technicians and professionals may choose to pay Non-Resident Income Tax (IRNR) on their employment income and not participate in the current social security system, in which case they are not required to make the corresponding contributions.
Opting for IRNR means paying a flat rate of 12%, as opposed to personal income tax (IRPF), which, although it has a tax-free allowance and allows certain deductions, taxes income at progressive rates from 10% to 36%. A flat 12% rate is significant for high salaries such as those paid in this sector.
The option must be exercised at the start of the first employment relationship under this law, and applies for the calendar year in which it begins and the following four years. If the worker changes jobs during this period, they may keep these benefits in the new job.
Conditions to access the tax incentives
The option may be exercised provided all of the following conditions are met:
- The person must be a foreigner or a national who has not been tax resident in Uruguay in the 5 tax years prior to moving to the country.
- They must work full time in the country. The Law requires actual presence in the country for at least two-thirds of the days in the calendar year.
- They must state in writing their wish not to participate in the country's current social security system.
- All of their employment income must come from work carried out in Uruguay, exclusively as an employee, providing software development services and other services related to software development.
The benefits only apply to employment contracts that began on or before 28 February 2025.
Non-compliance or withdrawal from the regime
Compliance with conditions 2 and 4 must be verified each calendar year, as set out in the regulations. If they are not met in any year, the option can no longer be used and the general regime will apply.
If the worker decides to withdraw from the regime early, the withdrawal is irrevocable and covers both taxes.
If you need further information, please do not hesitate to contact our team or email info@inglobal.com
Our team is available to advise you.
