Uruguay (UY)

South America's most progressive and stable country — Uruguay consistently ranks first in Latin America for democracy, press freedom, and quality of life.

Capital: Montevideo

Region: Americas

Language: Spanish

Currency: UYU ($U)

Cost of living: Affordable (index 55)

Emergency: 911

Tax & Payslip Guide

Understanding your taxes in Uruguay — tax year Calendar year: 1 January to 31 December..

📅

Tax Year

Calendar year: 1 January to 31 December.

⏰

Filing Deadline

IRPF annual return: April of the following year (typically April 30). Most employees have IRPF withheld at source and may only need to reconcile (reliquidar) if they have multiple income sources. DGI online filing via gub.uy/dgi.

🧾

VAT (Standard)

22%

📊 Income Tax Brackets

Income from	Income to	Rate	Notes
0	576,576	0%	Tax-free threshold. Based on BPC (Base de Prestaciones y Contribuciones). 2026 BPC: $U 6,864/month ($U 82,368/year). Zero-rate band = 7 × annual BPC = $U 576,576/year. Adjusted annually by DGI.
576,577	823,680	10%	First taxable band. Applies to income from employment (Category II income) in excess of the tax-free threshold.
823,681	1,235,520	15%	Second band.
1,235,521	2,471,040	20%	Third band — moderate income range.
2,471,041	4,118,400	22%	Fourth band — upper-middle income.
4,118,401	6,177,600	25%	Fifth band.
6,177,601	9,472,320	27%	Sixth band. New bracket added effective 2026 (BPS Comunicado R 5/2026).
9,472,321	∞	36%	Top marginal rate. Applies to annual income above approximately $U 9,472,321 (2026). Uruguay's top rate of 36% applies to the highest earners.

🏛️ Social Contributions

BPS — Fondo de Reconversión Laboral (FRL)

Employee: 0.1%

Employer: 0.1% (employer contribution)

Worker reconversion fund contribution. Deducted at source from payroll.

BPS — Jubilaciones y Pensiones (Retirement)

Employee: 15%

Employer: 7.5%

Pension contribution. Employee 15% split: 50% to BPS solidarity pillar + 50% to AFAP (private fund) if earning above BPS threshold. Below threshold: entire 15% to BPS only.

FONASA — Fondo Nacional de Salud

Employee: 3% (no dependants) / 4.5% (with spouse) / 6% (with child) / 8% (spouse + child)

Employer: 5% standard employer FONASA contribution

Health fund contribution that finances access to the mutualista system (SNIS). Rates depend on family composition. Allows employee (and covered family) to choose a mutualista private health cooperative at no additional premium.

AFAP — Private Pension Fund

Employee: Approximately 50% of the 15% pension contribution for employees above BPS threshold

Mandatory private pension savings account. Workers choose from AFAP República, AFAP Sura, Unión Capital, or Integración AFAP. Contributions accumulate in individual accounts with investment returns.

🛒 VAT Rates

22%

Standard

10% (food basics, medicines, accommodation, certain professional services)

Reduced

IVA minimum: 0% on some exempt items including fresh fruit, vegetables, bread, water. Also: 0% on exports.

Super reduced

Debit card purchases at supermarkets and pharmacies under $U 4,000 qualify for a 2% IVA rebate (devolución de IVA). This incentive applies to all card payments under the DGI Devolución de IVA programme, including contactless and mobile payments.

🧾 Sample Payslip Decoder

Gross Salary $U 80,000/month

Gross salary (Salario bruto) + $U 80,000

BPS pension contribution (15% employee) - -$U 12,000

FONASA health contribution (3% — no dependants) - -$U 2,400

FRL fund contribution (0.1%) - -$U 80

IRPF — personal income tax (estimated monthly withholding) - -$U 3,200

Net Salary (Take-home) $U 62,320/month

Real net pay: approximately 78% of gross. BPS pension split: 50% to BPS solidarity pillar + 50% to AFAP (at this income level above the BPS threshold). IRPF is withheld at source by employer based on DGI withholding tables. Annual IRPF reconciliation (reliquidación) may result in a refund or additional payment. The aguinaldo (13th month salary — one monthly salary paid in two installments: June and December) is not included here. Vacaciones (20 working days annual leave) must be paid out on departure.

🌍 Special Expat Tax Rules

10-Year Foreign Income Exemption (Opción de IRPF): New Uruguayan tax residents can elect to be taxed only on Uruguayan-source income for 10 years under a 2023 law (extended from the original 5 years to 10 years). This effectively exempts foreign-source dividends, capital gains, rents, and professional income from IRPF and IRNR. The election must be made at DGI within the first year of establishing tax residence. A major incentive for wealthy individuals and remote workers relocating to Uruguay from high-tax jurisdictions.

📋 Double Tax Treaties

Uruguay has double tax treaties with Germany, Spain, Portugal, Switzerland, Liechtenstein, Mexico, Ecuador, Hungary, India, South Korea, UAE, Malta, and Andorra (as of 2026). The US-Uruguay tax treaty was signed in 2024 and pending ratification. No treaty with UK, France, Italy, or most of Latin America. OECD BEPS measures implemented from 2017 onwards. Consult a Uruguayan contador for multi-country income situations.

DGI — Dirección General Impositiva

https://www.dgi.gub.uy

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