Corporate - Corporate residence

Last reviewed - 01 July 2020

Legal entities are deemed to be resident in Uruguay when they are incorporated according to the local legislation.

Permanent establishment (PE)

The concept of PE in the Uruguayan tax legislation follows, in general terms, the definition provided in the OECD Model Tax Convention, although it has some special clauses that may be found in the United Nations (UN) Model Tax Convention. From a Uruguayan law perspective, the term PE means a fixed place of business through which the business of an enterprise is wholly or partly carried on in Uruguay. The term PE especially includes: (i) places of management; (ii) branches; (iii) offices; (iv) factories; (v) workshops; (vi) mines, oil or gas wells, quarries, or any other place of extraction of natural resources; (vii) buildings, constructions, installation projects, or the management activities associated to them, when they last more than three months; and (viii) services, including consultancy services, rendered by a non-resident through employees or other hired personnel by the company for that purpose, to the extent that such activities are developed (in relation with the same or a connected project) during a period or periods exceeding, in total, six months within any 12-month period. Please note that item (viii) constitutes an exception to the OECD model and is based on the provisions of the UN model.

Rules in force expressly state that operations undertaken by taxpayers with, among others, branches or PEs will be subject to the transfer pricing regime. Head offices and their branches/PE must be considered as separate entities for tax purposes, and the transactions and balances between them must be recognised based on the arm's-length principle, with the exception of financial operations.