Skip to the main content.
How To Protect Your Wealth In Uruguay

4 min read

How To Protect Your Wealth In Uruguay

Imagine the confidence you could feel if your hard-earned money was shielded from potential risks and uncertainties. Perhaps you don’t feel sure about the rule of law in Western countries, plagued with biased laws or bills of rights that quickly turn into wastepapers when "emergencies" arise. 

All you want is serenity, knowing that your financial future is safeguarded. Therefore, if you’re an expat searching for the perfect destination to protect your wealth, let me tell you that you’re not alone.

The world of wealth protection might be overwhelming as sometimes you don’t know if you’re making the right choice or even how to begin. All these questions are normal when looking for a place to protect your assets and legacy. 

Thankfully, many jurisdictions around the world offer tax and business-friendly environments where you can use various tools to secure your assets. 

With its unique allure, prosperous economy and robust legal framework, Uruguay is one of them. Even though remote islands are usually the most common tax havens, Uruguay offers multiple benefits for expats seeking a secure and prosperous future.

This South American country has an underrated potential to safeguard your assets in various ways. Let’s begin. 

 

Montevideo, Uruguay - Uruguay offers multiple benefits for expats seeking a secure and prosperous future.

Montevideo, Uruguay

URUGUAY’S TAX SYSTEM

As an expat, one of the non-negotiables for every new destination is a good tax regime. What’s the point of moving abroad if the tax regime of your new country punishes wealth creation like your home country?

Far from being a tax haven, Uruguay offers an enticing tax regime for expats. By exploiting Uruguay's tax incentives for foreign investors, you’ll encounter an excellent place for tax optimization. 

As in much of the Western world, the income tax rate for residents is progressive, ranging from 10 to 36%. Also, other types of income, such as rents, royalties, capital gains and interests, are taxed at a rate of 12%. 

Individuals who acquire tax residency in Uruguay will be subject to income tax at a rate of 12% on foreign-sourced financial returns (dividends, interest, benefits from trusts and foundations and redemption in investment funds).

However, foreign individuals who obtain Uruguayan tax residency have the option to enjoy a 10-year tax-free holiday or opt for an indefinite reduced rate of 7%. 

 

Related content: How Expats Can Utilize Uruguay's Political System

 

Pocitos Beach, Montevideo, Uruguay

Pocitos Beach, Montevideo, Uruguay

TRUSTS AND FOUNDATIONS

Setting up a trust or foundation might look like a move reserved for high-net-worth individuals, but that couldn’t be further from the truth. 

Uruguay’s legal framework is robust for establishing and operating trusts, making it an enticing jurisdiction not only for asset management and estate planning but also for infrastructure projects. 

Trusts are regulated by Law No. 17703, also known as the “Ley de Fideicomiso.” Here’s how trusts work in Uruguay:

  • Trust Formation and Parties Involved: A trust is a legal arrangement where a grantor (fideicomitente) gives the trustee (fiduciario) the ownership of specific assets. The trustee manages the assets for the advantage of designated beneficiaries (beneficiarios). Upon a written agreement, also known as Trust Deed, the rights, duties and responsibilities are laid out;

  • Types of Trusts: In Uruguay, trusts can either be general or financial. General Trusts are often used for managing real estate, businesses or businesses. On the other hand, Financial Trusts are devoted to financial assets;

  • Trustees and Professionalism: Trustees play a pivotal role in the trust structure. To be considered professional trustees, they must meet certain requirements, such as engaging in a minimum number of trust transactions in a calendar year or being a financial institution committed to habitual and professional trust management;

  • Benefits and Uses: Trusts in Uruguay offer efficient estate planning, higher levels of asset protection and avoidance of potential probate delays and costs;

  • Tax Advantages and Confidentiality: Uruguay’s trust laws highlight confidentiality, which can be crucial for individuals and families looking for financial privacy. Moreover, trusts come with multiple tax advantages according to the specific structure and tax laws of the grantor’s home country.

 

On the other hand, foundations are regulated by Law No. 17163, also known as “Asociaciones Civiles - Fundaciones.” Here’s how foundations work in Uruguay:

  • Foundation Formation and Parties Involved: Foundations are legal entities recognized by the competent authority (typically the Ministry of Education and Culture and the Public Prosecutor’s Office regulated by Decree-Law No. 15365), constituted through distributions of assets, rights or resources by one or more individuals or legal entities. Foundations pursue non-profit goals of general interest and are formed either by public deed between the founders or testamentary disposition;

  • Types of Foundations: Foundations in Uruguay can be set up for multiple purposes, including charitable, cultural, educational and social causes, among others. Therefore, they can promote the welfare of the community or assist individuals in need;

  • Administration and Governance: Foundations are governed by a Board of Administration (Consejo de Administración), consisting of at least three members in charge of managing the foundation and fulfilling its objectives. The Board makes decisions by majority vote, and there are provisions for the appointment and removal of members;

  • Financial Aspects: The founders contribute assets, and the Ministry of Education and Culture recognizes the foundation’s legal personality. Also, this Ministry oversees the foundation’s finances to make sure that they comply with legal and regulatory requirements;

  • Dissolution and Asset Distribution: Foundations can be dissolved either by the decision of the Board of Administration or by court order. Upon dissolution, the foundation's assets may be transferred to other similar non-profit organizations, according to the foundation’s statutes. 

 

Related content: The Basics Of How To Get A Second Passport Or A Second Residency

 

Independence Square, Montevideo, Uruguay

Independence Square, Montevideo, Uruguay

PRIVATE PROPERTY PROTECTION

Apart from preserving your wealth, safeguarding your property is a must. Uruguay offers unique and enticing opportunities for individuals looking for privacy and security. Even though Uruguay offers a wide range of cities that cater to everyone’s needs and wishes, you can get a well-guarded enclave, getting closer to an off-grid lifestyle. 

If you’re into the countryside, off-the-grid properties, Uruguay has you covered. Plus, the country's residency and citizenship programs can provide an additional layer of protection for your property. The government has made great efforts to attract capital, presenting pathways to citizenship and long-term residency and ensuring that your investments are lucrative and secure.  

 

Barrio Reus, Montevideo, Uruguay

Barrio Reus, Montevideo, Uruguay

CONCLUSION

All in all, Uruguay is proof that protecting private property and a favourable tax regime will help an economy grow and attract foreign capital. Whether you want to reduce your tax bill, enjoy a lower cost of living, purchase property or even use trusts and foundations, Uruguay has you covered. 

Regardless of your circumstances, Uruguay is an excellent destination for wealth protection, with a wide range of financial vehicles and solid legislation to help you make the most of your assets. 

 

Banner Mikkels Birthday Bash 2024


WORK WITH ME

I help my clients to move offshore for freedom, privacy and autonomy by focusing on the immigration, legal, and tax issues that you will face when becoming an expat. If you would like to work one-on-one with me on getting out of your home country (or setting up a Plan-B location), then read this important letter and fill in an application form to become a Private Client. My fees are not cheap; however, I can assure you that when you work with a professional firm like ours, the results will be worth it.

 

BEST OF THE EXPAT WORLD

If you want the best intel from the expat world, including profitable offshore opportunities, little-known tax-saving strategies, and hard-won insights on immigration, passports, and Plan-B residencies, all delivered to your inbox every single week, then join our daily correspondence, EMS Pulse. Currently enjoyed by over 37,000 expats and expat-hopefuls worldwide. Fill in the form below to join our newsletter free:

 

Mikkel Thorup

Written by Mikkel Thorup

Mikkel Thorup is the world’s most sought-after expat consultant. He focuses on helping high-net-worth private clients to legally mitigate tax liabilities, obtain a second residency and citizenship, and assemble a portfolio of foreign investments including international real estate, timber plantations, agricultural land and other hard-money tangible assets. Mikkel is the Founder and CEO at Expat Money®, a private consulting firm started in 2017. He hosts the popular weekly podcast, the Expat Money Show, and wrote the definitive #1-Best Selling book Expat Secrets - How To Pay Zero Taxes, Live Overseas And Make Giant Piles Of Money, and his second book: Expats Guide On Moving To Mexico.

Recent Posts

The Gold Standard: Identifying The Top 5 Nations For Gold Acquisition

The Gold Standard: Identifying The Top 5 Nations For Gold Acquisition

After earning your wealth, it's crucial to safeguard it, and protective trusts are your solution. These legal frameworks are designed to protect your...

Continue Reading
Unlocking Investment Opportunities: Analyzing Trends in the Ecuador Real Estate Market

Unlocking Investment Opportunities: Analyzing Trends in the Ecuador Real Estate Market

Considering buying property in Ecuador? You're in the right place. This article is here to help you master the ins and outs of the Ecuadorian real...

Continue Reading
Why Highly Paid Professionals Need A Second Residency In 2024

Why Highly Paid Professionals Need A Second Residency In 2024

Imagine building a successful career for decades, only to find yourself hit by a lawsuit that your insurance cannot cover. Even your domestic LLC,...

Continue Reading