Are you aware of the news involving companies located in Uruguay?
Uruguay has implemented the concept of Economic Substance to comply with European Union directives. The legislation was passed in mid-December 2022 and took effect on January 1, 2023.
The main difference between Uruguay’s concept of Economic Substance and that of countries considered tax havens (such as BVI, Bahamas, Cayman Islands, etc) is that companies will be taxed like other Uruguayan companies, unless they establish substance in Uruguay (mainly directors individual sites with decision-making powers).
The scope of the legislation includes companies with financial or passive investments, holding companies or multi-company structures. In order for them to apply the principle of territoriality, it will be necessary to establish economic substance in the country.
For those who already have a Uruguayan company or a structure involving several companies, we recommend reviewing the alternatives for restructuring or re-domiciliation, in addition to carefully analyzing the cost of complying with this new legislation.
Please contact us for information on other jurisdictions with more favorable costs and legislation in line with your or your customers’ interests.
