Tax Residency in Uruguay: What Changed (and What Didn't) Under the New 2026 Regulations

Throughout 2026 there has been a lot of talk about the reform of Uruguay's tax residency regime — and plenty of confusing information, including claims that some pathways had disappeared altogether. Now that the implementing regulations have been published (Decree 188/026, which completes the framework set by Law 20.446), the picture is finally clear. Let's go through what actually changed — and what didn't.

What did NOT change: the pathways to tax residency

Let's start by dispelling the most repeated myth. The criteria for acquiring tax residency in Uruguay remain exactly the same. Today you can become a tax resident through any of the following routes:

Physical presence. More than 183 days per year in Uruguayan territory (sporadic absences of no more than 30 consecutive days count as presence).

Center of vital interests. Having your family — spouse and minor children — habitually living in Uruguay.

Base of economic activities. Generating more income in Uruguay than in any other country (excluding pure capital income).

Real estate investment. Over 15,000,000 Indexed Units (UI) — roughly USD 2.5 million.

Real estate investment + 60 days of presence. Over UI 3,500,000 (around USD 580,000), combined with at least 60 days of physical presence during the year. Yes: this route is still in force to become a tax resident. What it no longer gives is access to the Tax Holiday: that option could only be used until December 31, 2025 (see below). The investment routes are presumptions: they do not apply if you prove you are a tax resident in another country.

Business investment. Over UI 45,000,000 (around USD 7.5 million) in a company with a project declared of national interest, or over UI 15,000,000 (around USD 2.5 million) while creating at least 15 direct full-time jobs.

What DID change: the Tax Holiday must now be earned year by year

The famous Tax Holiday — the possibility of paying no income tax (IRPF) on capital income earned abroad for 11 years (the year you become a resident plus the following ten) — still exists for those acquiring tax residency from 2026 onwards who were not residents in the two previous years. But here is the real change: becoming a resident is no longer enough. To enjoy the benefit, you must meet at least one of the following conditions every year:

Spending more than 183 days in Uruguay. The natural route for those who genuinely relocate.

Investing in urban real estate for more than UI 12,500,000 (around USD 2.1 million), bought on or after January 1, 2026. An interesting detail: if the property is located in a department without a coastline on the Río de la Plata or the Atlantic Ocean, its value counts for 50% more — meaning an investment of about USD 1,390,000 is enough to meet the threshold. A concrete incentive to look inland. Important: these properties cannot be the same ones used to establish tax residency through investment — they must be new investments. And they must be urban: a rural parcel, as chacras (small country estates) and farms usually are, does not count for this route.

Investing in funds. At least UI 625,000 per year (around USD 100,000) in investment funds that finance productive or research projects, under conditions set by the Ministry of Economy and Finance.

One welcome clarification introduced by the regulations: if you fail to meet the conditions in a given year, you don't lose everything — you can benefit again in any year in which you once more meet them, within the original 11-year window.

The other novelty: what happens when the Tax Holiday ends

Previously, the end of the Tax Holiday meant moving to the general 12% rate on foreign capital income. Now there are two alternatives:

A reduced 6% rate for 5 years. On a one-time basis, you may opt to pay half the general rate for the five fiscal years following the end of the Tax Holiday, provided you maintain qualifying investments (for example, urban real estate worth more than UI 6,250,000, just over USD 1 million, or annual contributions of about USD 100,000 to those funds).

A fixed annual amount. This is the big news for substantial estates: the option to pay a fixed annual amount of UI 1,875,000 (around USD 310,000) covering all income under the regime, for up to 20 fiscal years. The amount drops to UI 1,250,000 (around USD 210,000) if you spend more than 183 days in the country or invest over UI 45,000,000 in a company expanding its productive capacity. And spouses can join the regime by paying 15% of those amounts.

For large-scale foreign income, it is a fixed, predictable amount under the rules in force.

What about those who already had the benefit under the previous regime?

Those who had already opted into the Tax Holiday under the previous regime (the option could be exercised until December 31, 2025) keep their term. The difference comes at the end: when that term expires, they can only move to the fixed annual amount, not to the reduced 6% rate.

In summary

The reform reorganized the incentives. Becoming a Uruguayan tax resident is still possible through the same routes as always, including real estate investment from about USD 580,000 with 60 days of presence. But the Tax Holiday must now be earned year by year: by living here more than 183 days, with urban real estate worth more than UI 12,500,000 bought since 2026, or by investing in funds.

As always in tax matters, every situation is different: your country of origin, applicable double taxation treaties and the structure of your assets all shape the analysis. This article is for information purposes and does not replace professional advice — and if you are thinking about buying in Uruguay, that is where we can help.

If you'd like to explore your options, message us on WhatsApp or send us an email. We're here to help.

For a complete guide, see Tax Residency in Uruguay: What Every Foreigner Should Know.

Sources: Law 20.446, art. 648 · Decree 188/026 · Decree 148/007. Dollar amounts are approximate, based on the October 2026 UI (about UYU 6.66) and a dollar of about UYU 40.