Individual - Income determination

Last reviewed - 30 June 2020

Employment income

See the Taxes on personal income section for a description of the taxation of employment income.

Capital gains

Capital gains obtained by individuals (residents or non-residents) upon disposal of shares/quotas in Uruguayan CIT payers are subject to individual taxation at a 12% rate (IRPF or IRNR, respectively). From 1 January 2014, the elimination of the exemption of capital gains derived from the disposal of bearer shares has been eliminated. Thus, since 2014, bearer title transfers are subject to an effective capital gains tax rate of 2.4% on the transfer price (12% applied to a notional 20% of the transfer price or 20% of market value of the titles transferred if there is no price). The same tax treatment already applies to capital gains derived from the disposal of nominative shares. The aforementioned IRNR rate amounts to 7.5% on the transfer price when the transferor is resident, domiciled, or located in low or no tax jurisdictions (LNTJs) (25% applied to a notional 30% of the transfer price or 30% of market value of the titles transferred if there is no price).

Income derived from the transfer of shares or participations in entities from LNTJs whose assets located in Uruguay exceed 50% of their total investments is deemed to be Uruguayan sourced (thus taxable) for individual income tax purposes.

Dividend income

Dividends or profits paid or credited by CIT payers to non-resident shareholders are not subject to withholding IRNR when they derive from non-taxable income for CIT purposes (i.e. foreign-source income). In other cases, 7% withholding IRNR will be applicable. Under certain circumstances, non-distributed earnings will also be subject to 7% dividend withholding tax (WHT) after three years of being generated.

The same tax treatment is applicable to IRPF, except for dividends or profits paid out of foreign-source income derived from holding movable capital. In this last case, a 12% withholding IRPF rate is applicable.

Interest income

Loan interests are exempt from IRNR if at least 90% of the CIT payer (debtor) assets generate non-taxable income for CIT purposes. Therefore, interests paid or credited by local entities whose assets are located abroad and exceed 90% of their total assets are free of WHT.