Uruguay offshore companies in 2023
Uruguay is the only South American country to offer a legally tax exempt offshore corporate vehicle to conduct international business. Below is an overview of this Uruguay offshore option. We hope this information will help our Clients structure a tax and cost efficient entity in South America. See this page for a draft invoice.
Advantages of an Uruguay offshore company
- Within two months, an Uruguayan Corporation (“Sociedad Anonima”) can be structured as an offshore entity with only i) US$1 of share capital ii) one shareholder and iii) one director of any nationality and country of residence;
- Offshore companies will be allowed to open a corporate bank account in Uruguay with benefits including i) no restriction on the amount of foreign currency held ii) no ceiling on transfers abroad and iii) no Central Bank commission fees on transfers abroad;
- If properly structured the offshore business in Uruguay will be legally exempt from local corporation tax;
- Our Clients setting up an offshore company in Uruguay usually do so in order to reduce taxation on foreign-sourced earnings, as this business entity enjoys 100% exemption from i) corporate tax and other taxes levied on corporate earnings and ii) no Uruguay withholding tax when remitting earnings to our Client’s parent company provided the income is sourced out of Uruguay;
- Using a Uruguay offshore company as a tax optimization vehicle also allow our Clients to pay lower taxes outside of Uruguay, thanks to the country’s double taxation avoidance agreements with 13 countries including Argentina, Ecuador, Mexico, Portugal and Spain.
Disadvantages of Uruguay offshore company
- The Uruguayan offshore SA has to pay a minimum flat tax (known as ICOSA) that amounts to approximately US$850 per annum;
- If the offshore company maintains an Uruguayan bank account, an annual tax of 1.5% is applicable on total assets maintained in the bank account during the financial year. Consequently, Healy Consultants recommends the corporate bank account be opened in another South American country, or in Europe or Asia or the Middle East;
- All offshore companies in Uruguay are required to keep accounting records and file annual unaudited financial statements;
- All companies must file a copy of the meeting minutes for the mandatory annual shareholders’ meeting with the Companies Registrar no later than 30 days after these meetings;
- The Uruguay offshore company is only allowed to conduct operations and sign contracts with entities based outside of Uruguay. All Uruguayan sourced income will be subject to 25% corporate tax (IRAE).