Technical article

Uruguay: The 11-year Holiday for New Residents

From 1 January 2026, under Law 20.446, a new resident may get a tax holiday on foreign capital income.

By Neil Solomon · 3 min read

Picture a retired couple from Canada who are thinking about Montevideo. They hold investments and a family trust abroad, and their income is mostly interest and dividends. They ask a question about time. How long could they keep that foreign income free of Uruguayan tax?

A recent rule offers a long answer. It is also new, so it is worth reading with care.

What Uruguay taxes today

Uruguay taxes by source. Foreign passive income of residents, such as dividends and interest, is taxed at a flat 12%, and has been since 2011 (PwC, tier B, 2026). The top rate on labour income is 36%.

A person is resident with presence of more than 183 days, or through tests of substantial or economic interests. The real estate option for residence needs 60 days.

The holiday

From 1 January 2026, under Law 20.446, a new resident may get a tax holiday on foreign capital income. The period is 11 years: the year of arrival plus 10. After those 11 years, a further 5 years are taxed at 6%. The source for this is a news site covering migration (tier U, February 2026). It is the only source behind the numbers in this article.

The holiday has conditions. The person must not have been tax resident in Uruguay in the prior two years. Qualifying routes include buying real estate worth more than 12.5 million of Uruguay's indexed units (about US$2 million), making a payment to the National Innovation Fund, or meeting a presence test. The holiday does not cover derivatives. Some details were still waiting for regulation when the news site wrote.

The timeline

For a couple whose foreign income is, say, US$100,000 a year in this example, the ordinary 12% is US$12,000 a year, and under the holiday it is nothing for 11 years. The 6% years are half the ordinary rate.

Other taxes the heirs meet

Uruguay has no inheritance or gift tax. A page archived in June 2021 (tier U) says property transfers to heirs carry a transfer tax of 3%, and 4% for other transfers without payment. Net wealth tax is 0.1% for residents above about US$160,000 (PwC, 2026). The page may be out of date.

What this touches

The couple carry the choice of when to arrive, since the clock starts in the year of arrival. A trustee abroad carries the yearly statements. Each family member who moves has a separate arrival date, so the dates of each move matter. The holiday is about foreign capital income, so it speaks to interest, dividends and similar payments, and not to wages earned in Uruguay.

You might say: "A news story is not much to plan ten years on." The numbers here come from one report. The law has a number, 20.446, and the regulations were still being written. A family that plans around it could ask an adviser in Uruguay for the text of the law and the date each rule took effect.

You could set the holiday beside the ordinary 12% rate and see how many years of income it covers for your own mix of interest and dividends.

If you have looked at a residence rule that comes with a long clock, how did you decide whether to trust it? Share it here. Someone else may be doing that sum tonight.

Figures are estimates for planning, based on public data. Date read: October 2026.