Learning Uruguay

Every day brings ????

Working in Uruguay

Posted by urufish on June 10, 2007

 

Thanks to one of our more active board members asking me a question today about whether taxes apply to the work he’s doing, I’ll post what I know about the process here. 

There are several kinds of taxes and fees in Uruguay that can apply to working people or companies.  The ones I know most about are the corporate tax, patriminio, the BPS fees, personal income tax and IVA.  

If you are working or planning to work in Uruguay as an average Joe (or Jane) without capital investments, etc, the ones you want to know about are the above, minus patrimonio.  So what applies to what? 

For an average Joe (or Jane), you will either  a) not have a company and attempt to fly under all radars or b) you will register a unipersonal company.  This is like a DBA (doing business as) back home.  Dont know about the process in the USA, but in Canada, you go to a local province (state) office and register the business name.  You go to a bank and with your social insurance number, open an account in the name of the company and if you’re lucky, you will make money to put in the bank account.  For tax purposes, you report it as personal income. 

Here, you SHOULD go to an accountant and have them set it up for you.   You MUST register with the BPS and the minimum monthly fees for a one man (or woman) company is less than $2000 (pesos) per month.  This goes to cover your pension and some other social services.  There is a benefit to doing this.  You can collect pension when you’re old enough and you can get public medical services.  

Unipersonal companies are given a RUC, the number you use to remit your IVA with.  Yes, you collect IVA when you have a unipersonal company, but only from Uruguayans.  If your work is with foreigners, (companies or people) or if your work is ‘done’ outside Uruguay, you do not have to charge IVA (see scan attached).  If you can convince the DGI your income is generated outside Uruguay, (eg. web designing using remote control software on a terminal outside of Uruguay), that should satisfy a nit-picking DGI man and you dont pay income tax on the income.  Practically speaking, if you’re billing someone/something outside the country, you dont charge IVA. 

Another option is to open an SA, a limited company.  I wont go into detail on that here, but just like back home, you do it to limit your liability in case something should go wrong and someone sues over it.  Should you do this, corporate tax applies (I think it’s 30% going to 25% in the reform).  Dividends earned from the corporation are not subject to the new Uruguayan income tax.  That’s because the income tax (as of a week ago) does not tax dividends. 

Other options include opening a Zonamerica company (free trade zone).  You would do that if you need limited liability and your clients are outside Uruguay.  Another perk of a freezone company is they usually come with bearer shares.  I’ll leave that to your imagination. 

  The DGI Application

 Your company ‘book’.. the DGI book..

 DGI needs to make sure you live where you say you do…

  DGI’s response.. do not collect IVA on export services

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4 Responses to “Working in Uruguay”

  1. Brazzie said

    Hi Irv, thanks for the great info.

    Are you sure the unipersonal is the same as DBA? At least here in the US DBA (Doing Business As) does not require anything more than registering it with the State. You are taxed as a regular individual. The only advantage it confers is a protection of a trade name at the State level and being able to cash checks under that name. I think a unipersonal is closer to a llc, which is a real company with a federal tax ID and such.

  2. urufish said

    It was an assumption on my part. DBA is the same in Toronto.. but if you’re in a state that charges sales tax, you have to apply for a sales tax license. That’s essentially what the DGI is.. your RUC. BPS gets involved because if you have a company name, you must be a company and as such, you are supposed to pay social costs. Clearly, that part doesn’t have an equal in Canada or the US.
    I always that an LLC was a limited liability company-which would be equivalent to an SA here.

  3. Jose said

    Wait!
    If you’re a regular Joe or Jane you don’t have to (and shouldn’t) open an unipersonal company. I won’t recommend any one open an unipersonal company unless it’s really needed.

  4. urufish said

    Hola Jose… no you dont have to… not sure about shouldn’t… an accountant would be the best qualified person to give that advice… and as you say, if it’s really needed… Some kinds of businesses aren’t really businesses… por ejemplo.. if you translate enlgish to spanish or vice versa, part time.. and dont make much money at it, you wouldn’t open a unipersonal company…
    That’s why I said that you can ‘fly under the radar’ and not have one.
    I assume similar reasons apply in Uruguay as they do back home in Canada and the USA for opening businesses, with perhaps one exception.. receiving cheques.
    Up north, if we want to receive a cheque made out to our company name, we must register a business name.. and perhaps even collect and remit taxes. But a unipersonal company in Uruguay does not allow you to get cheques made out to your company name. That’s something we northerners find confusing and very strange.

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