What specific investment requirements must new Uruguayan tax residents meet to keep their tax holiday benefits?
Executive summary
The Uruguayan “tax holiday” lets qualifying new tax residents obtain temporary relief from taxation of most foreign-sourced passive income, but retaining that benefit increasingly depends on meeting specific investment or presence tests—rules that differ by vintage of arrival and are in flux because of proposed 2026 reforms [1] [2]. Multiple distinct investment routes exist (real estate, business investment, government-backed vehicles) and the headline dollar thresholds reported vary across advisory firms and government summaries, so eligibility hinges on which pathway and which law/date applies [3] [4] [5].
1. What the tax holiday actually covers and who can claim it
New residents who opt for the tax holiday are commonly granted an exemption (described in many sources as 10–11 years) on foreign passive income such as dividends and interest for the year they become resident and the following ten fiscal years under the draft 2026 regime [2] [1]. Older cohorts (those who became residents before 2020) historically obtained a shorter window—commonly cited as six years, with extension options tied to specified investments—illustrating that benefits depend on the date residency was acquired [3].
2. The real-estate route: multiple thresholds reported and conditional stay requirements
One widely reported route to secure or extend the holiday is qualifying real‑estate investment, but the required amounts vary by source and by the year of arrival: guides cite amounts tied to indexed units (UI) such as a 3.5 million UI threshold noted for investments made as of July 1, 2020 (approximately USD 378k at one conversion), while other advisories and local-law summaries point to much larger thresholds—examples include proposals or firm guidance that raise the de facto minimum into the hundreds of thousands or millions of dollars for new residents [1] [3] [4]. Some older schemes allowed extension of a six‑year holiday to ten by investing roughly USD 400,000 in real estate and spending at least 60 days per year in Uruguay [3]. Because reporting diverges, the precise property value required depends on which statutory regime and effective date govern the claimant [6] [1].
3. Business and alternative investment routes: substantially higher sums or recurring commitments
Beyond property, business investment paths are prominent in the reporting: several sources list thresholds around USD 1.7M (expressed as 15 million UI) for investments in local companies that create jobs, or far larger sums—USD 2.4M or more—to qualify via local business investment with residency consequences noted separately from the holiday itself [5] [7]. KPMG and related alerts also report a new menu of options that would require multimillion-dollar investments or participation in government-backed innovation funds (including references to annual USD 100k contributions as an alternative over multiple years), showing the state’s intent to steer capital toward large-scale local projects and innovation rather than low‑value property purchases [4] [7].
4. Presence requirements, election of tax treatment, and the political aim behind changes
In parallel with investment thresholds, physical‑presence rules remain relevant: some routes require at least 60 days per year or the standard 183‑day test for tax residency, and commentators stress that the tax holiday is an elective regime (claimants typically choose between the exemption and a permanent reduced-rate option) [1] [3]. Reports from KPMG and government draft texts emphasize that proposed 2026 reforms aim to limit repeat claimants and channel capital toward startups and jobs—an implicit policy motive behind raising investment floors [4] [7].
5. Bottom line and caveats: know the vintage and watch legislation
The specific investment needed to “keep” tax‑holiday benefits is not a single universal dollar figure but depends on (a) when the resident acquired tax status, (b) which pathway they used (real estate, business, government fund, or presence/economic‑center tests), and (c) whether the draft 2026 measures are enacted—which would raise thresholds substantially [3] [4] [2]. Given divergent published thresholds (UI‑indexed amounts, USD 378k–USD 2.4M+ ranges, and recurring USD 100k fund options) and active legislative proposals, binding advice requires current legal review and confirmation of the applicable statutory text and effective date [6] [7].