Uruguay is the smallest Spanish speaking country in South America with 3,5 million inhabitants and is sandwiched between its giant neighbours Brazil and Argentina. The country with its European heritage has traditionally been more affluent than other states in South America and is known for its advanced education and social security systems and liberal social laws.
The country has been known for decades as a beacon of stability and safety which earned it the sobriquet ‘The Switzerland of South America’. And, in recent times, it has been increasingly attracting Americans and Europeans seeking new alternatives for safe investments, residency and citizenship. Those who have chosen Uruguay as their new or second residence have either settled in the capital Montevideo or on the coastal areas with good infrastructure, the most prominent and well known being Punta del Este and its surrounding zones like Punta Ballena, Laguna del Sauce, la Barra, Manantiales or Jose Ignacio.
Uruguay produces the highest GDP per capita in Latin America; it has a broad middle-class, modern infrastructure and solid institutions. Foreign and local investors receive equal treatment, private property is strongly respected and there are no restrictions on the movement of capital in and out of the country. Transparency International has consistently labelled Uruguay as the least corrupt country in Latin America throughout the years. The Economist Intelligence Unit rates Uruguay as the most democratic country on the continent and Mercer lists Uruguay as no 1 in Latin America in the quality of life index. Furthermore, the country shines with the highest fibre optic cable/top speed internet and PC penetration in Latin America
Uruguay’s favourable legal framework, high democracy index and one of the best economic climates in the region provide for an ideal business environment. The country is considered a gateway to Latin America. Stable and long-term macroeconomic policies help the promotion of foreign capital investment and foster the free zone regime. The country´s high standards of living and the availability of competitive and highly skilled human resources are also key for the maintenance and growth of business in the region. Uruguay has leapt ahead of its neighbours by being the first to understand the global interlocking business requirements with favourable investment laws and initiatives that bode well for this decade and beyond:
The new conservative government of Lacalle Pou not only has a 78 % approval rating for its positive handling of the COVID19 pandemic, but is also receiving considerable attention from abroad regarding major changes in the investment climate of Uruguay:
The Uruguayan parliament has just passed changes in laws and decrees for which the government is pressing ahead with an omnibus “law of urgency”, that has a total of 476 measures to shrink the government payroll, strengthen the police, reform education, and weaken trade unions.
The other most recent economic measure receiving prominent international attention was a degree signed by the Uruguayan President to lower the threshold for REAL ESTATE investments to qualify for FISCAL residency in Uruguay by a hooping 77% from 1st July 2020. The degree will therefore make Uruguay now even more welcoming to wealthy foreigners looking for a new home or office and make it considerably cheaper to obtain tax residency in the South American country.
As of 1st July 2020, foreigners who live at least 60 days (before it was 183 days) a year in Uruguay and buy real estate valued at the equivalent of US$380,000 — will qualify for tax residency. Foreigners with Uruguayan tax residency currently pay 12% on dividends and interest earned from offshore assets — Uruguay credits taxes paid overseas on that income — after a five-year tax holiday which will now be extended to 10 years. Real estate for individuals or families that meet the investment criteria and offering good infrastructure, international schools and quality of life are the following examples: http://prueba.uruguayproperty.com/property/buying-portunity-of-splendid-chalet-near-mansa-beach/?lang=en
Investors aiming to establish a business in Uruguay can also obtain fiscal residency by investing a minimum of (US$ 1.600.000) in a business/commercial activity which creates at least 15 full-time jobs. Increasing demand for property in this sector are estates which can convert to boutique hotel/wellness centres, country homes with attached vineyards, farms with olive or fruit plantations or rural land for cattle breeding and forestation. The following properties have a good p/e ratio in that respect:
The decree will help Uruguay compete with countries such as Portugal, Spain and Italy that are also aiming to attract wealthy foreigners. On the one hand, the new investment decree targets individuals and families looking for fiscal residency in Uruguay, but is also likely to generate increased interest from companies aiming to establish a presence in Uruguay with its generous tax incentives to investment projects, large and small. Commercial sectors with great potential include agri-food, pharma & life sciences, forestry and timber, creative industries, business services & logistics, IT and free trade zones. After all, Uruguay is the seat of the MERCOSUR with access to a US$ 2 trillion GDP, free tariffs trade zone that also includes Argentina, Brazil and Paraguay.
The World Bank and IMF estimate a contraction of 3,7 % of GDP for Uruguay in 2020 which should rebound 3,5% in 2021. That is considerably more benign than the 8-10% drop in GDP forecasted for the US and Europe due to the pandemic. The economic rebound in Uruguay next year will be greatly helped by the new tax incentives for individuals and companies, put in place right now. No doubt, they will bear fruit in the medium term.