Law No. 20,191, (“the Law”) presents a compelling option for Information Technology (“IT”) professionals and technicians choosing to offer their services from within Uruguay.
They have the choice of either:
(i) Paying a Non-Resident Income Tax (“IRNR”) at a fixed rate of 12% based on their taxable monthly income; and
(ii) Opting out of social security contributions, which, in turn, excludes them from certain benefits within Uruguay’s social security system.
Recently, the enactment of the Executive Decree has further clarified these provisions.
To be eligible for these benefits, IT technicians and professionals must meet specific criteria:
(i) Fulfill the prerequisites outlined in the Law, including not having established tax residency in Uruguay within the past five years.
(ii) Decide to work within Uruguay’s borders as employees for companies situated in Uruguay that have been engaged in Research and Development (R&D) activities in various fields such as biotechnology, bioinformatics, and software production and development.
Employees are required to exercise this option at the commencement of their employment by providing a sworn statement. This statement should be communicated by the employer to the Tax and Social Security Office.
The Decree also outlines certain obligations for employers:
(i) Ensuring compliance with legal requirements.
(ii) Providing evidence that the employee’s salary is in exchange for services as specified by the Law.
(iii) Verifying the physical presence of the employee within Uruguay during the employment period.
The proof of physical presence in Uruguay is verified by obtaining a certificate of migratory movements from the National Migration Office. Employers are mandated to retain this documentation for a period of ten years.
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The above communication has been prepared just for information purposes. It cannot be construed as legal advice provided by Bergstein Abogados. Should you have any further questions, please feel free to contact Dra. Mariana Pisón (mpison@bergsteinlaw.com) and/or Dr. Rodrigo Felló (rfello@bergsteinlaw.com).