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. And there is good news: the regime remains one of the most attractive in the world for those relocating to Uruguay. 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 less 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 590,000), combined with at least 60 days of physical presence during the year. Yes: this route is still in force — it did not disappear, despite what has been said.

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. 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 million). 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 approximately USD 1,350,000 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.

Contributing to venture capital funds. At least UI 625,000 per year (around USD 100,000) in funds financing productive, research or innovation projects.

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, real estate worth around USD 1,000,000 or annual contributions of USD 100,000 to venture capital 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 300,000) covering all income under the regime, for up to 20 fiscal years. The amount drops to UI 1,250,000 (around USD 200,000) 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, a fixed, predictable amount for two decades is a level of tax certainty very few countries can offer.

What about those who were already tax residents?

Nothing changes. Those who established their tax residency before December 31, 2025 keep the conditions under which they entered the system.

In summary

The reform did not close any doors: it reorganized the incentives. Becoming a Uruguayan tax resident is still possible through the same routes as always — including real estate investment starting at USD 590,000 — and the Tax Holiday remains one of the most generous benefits in the world. It simply now rewards those who maintain a real connection with the country: by living here or by investing consistently.

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 — but the first step, finding the property that makes Uruguay your new center of life, is exactly what we do.

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