Business Opportunities in Uruguay
There are various business opportunities for foreign investors who are considering starting a business in Uruguay. One of the significant competitive advantages of Uruguay is its trade regimes; free trade zones, free airport and free port regimes, and bonded warehouses make it a distribution hub for regional services and logistics.
Uruguay’s strategic location between Argentina and Brazil is a gateway to these larger markets, accessible through its port and airport infrastructure.
The country has established itself as a business and innovation hub with a favorable investment climate, political stability, and a well-educated workforce. The level of foreign direct investment (FDI) in Uruguay reflects the international community’s confidence in the country’s economic policies and regulatory framework.
The agricultural sector forms the backbone of Uruguay’s economy, with more than 60% of its total exports comprising agricultural-based products. Agricultural export products include meat, grains, dairy, cellulose, pharmaceuticals, wood, and services. In addition, about half of Uruguay’s industrial production involves agricultural product refinement and food processing.
Foreign investors setting up a company in Uruguay can also leverage opportunities in the renewable energy, tech, and extractives sectors.
Benefits of Starting a Business in Uruguay
The advantages of doing business in Uruguay are many, from a favorable business environment to its proximity to regional markets.
- Favorable business environment: Uruguay is the second-best country in Latin America to do business, according to the World Bank’s Doing Business report. The country has a stable political and economic environment, which is favorable for setting up a company in Uruguay.
- Access to regional markets: Uruguay’s strategic location in South America makes the MERCOSUR trade bloc easily accessible to those setting up a company in Uruguay. It means businesses can access the consumer markets of Brazil, Argentina, and Paraguay apart from Uruguay’s domestic market.
- Tax incentives: Foreign investors doing business in Uruguay can benefit from corporate income tax and other exemptions depending on fulfilling specific requirements.
- Variety of business options: Uruguay offers a range of business options ranging from online businesses to small business startups. Thus, entrepreneurs who want to start a business in Uruguay can explore many opportunities to find a niche that suits their interests and expertise.
- Highly educated workforce: Uruguay’s strong education system and high literacy rate have created a highly skilled workforce, which is attractive to foreign investors. A skilled staff can be a valuable asset for setting up a company in Uruguay as it can help to drive innovation and growth.
Requirements for Starting a Business in Uruguay
Foreign investors intent on setting up a company in Uruguay must ensure compliance with the legal and regulatory requirements around company incorporation.
Here are the minimum statutory requirements to do business in Uruguay:
- Founding members: Setting up a company in Uruguay typically requires at least two founding members who can be either residents or foreigners.
- Legal representative/local director: The type of business determines whether the company should have a Board of Directors or a Company Administrator. The board of directors is responsible for governing the company and overseeing management. It can be comprise individuals of any nationality, including foreigners who are residents or non-residents.
- Legal address: All companies must register a fiscal or legal address during company incorporation in Uruguay. This registered address is the official address for all official correspondence and communication related to the company. The registered address must be in Uruguay and cannot be outside the country.
- Approval of company bylaws: The National Audit Office (AIN) of Uruguay must approve the company bylaws, and it is one of the essential requirements to do business in Uruguay.
- Registration with the National Trade Register: One must register the company’s bylaws with the National Trade Register (RNC) during company incorporation in Uruguay.
- Tax declarations: The national tax authority of Uruguay requires Uruguayan corporations to prepare and submit monthly and yearly declarations. Having a local expert handle these declarations is a good practice to ensure accuracy.
Types of Business Structures in Uruguay
The Uruguayan law regulates the business entities in Uruguay can take different forms, and all possible legal and organizational structures are regulated. Foreign nationals setting up a company in Uruguay typically choose from one of the following usual business structures:
Stock Corporation (SA)
The stock corporation or “sociedad anónima” (SA) is a business entity used for conducting commercial or industrial activities in general. Large companies commonly use stock corporation.
The company has no operational limitations and can participate in any activity except for certain activities that require state authorization, such as banking. Investors’ liability is limited to the capital they have committed to contribute, and there are no maximum or minimum capital requirements. The only requirement is to express the corporate capital in the local currency.
Limited Liability Company (SRL)
The Limited Liability Company (“Sociedad de Responsabilidad Limitada” or S.R.L in Spanish) is a common registration type used by small and medium-sized companies.
There are no operating limitations except for financial and insurance activities. Each partner’s liability is limited to the amount of their capital contribution, except for debts related to salaries and Corporate Income Tax. There are no maximum or minimum capital requirements for an LLC.
Simplified Stock Corporation (SAS)
The simplified stock corporation is a for-profit organization where registered shares represent capital. In Uruguay, a company can engage in any type of activity, except for those exclusively reserved for SAS.
There are no specific minimum or maximum capital requirements for incorporating a company in Uruguay, it is essential that the capital stock is fully subscribed or integrated into the act of incorporation Shareholders are liable only for the capital they have committed to contribute. If the contribution is in cash, the business owner must integrate at least 10% of the capital stock; if it is in kind, 100% is mandatory. The business owner must integrate the capital within 24 months.
Branch of Foreign Corporation
Registering a foreign corporation as a branch involves designating a person or group to manage or represent. The branch must maintain the same line of business as its parent corporation.
The branch has no operating limitations but is not a separate legal entity from its parent corporation. The parent corporation is liable for local obligations, and the branch’s assets are considered inseparable from the parent corporation’s.
Company Registration Process
The company registration process in Uruguay involves several steps and fulfillment of minimum legal and statutory requirements. Investors and business owners must methodically follow the steps to incorporate a company in Uruguay to comply with the laws and regulations.
Step 1: Choose a legal business entity
Foreign investors and business owners can choose from four primary legal entities when setting up a company in Uruguay. These include a Stock Corporation (SA), a Limited Liability Company (SRL), a Simplified Stock Corporation (SAS), and a branch of a foreign corporation.
Step 2: Appoint a legal representative
One of the key steps in the company registration process in Uruguay is to appoint an agent or legal representative to conduct the business registration.
Step 3: Get approval for company bylaws
The company’s bylaws must get Uruguay’s National Audit Office (AIN) approval.
Step 4: Register the bylaws
After the National Audit Office approves the bylaws, the company owner must register it with the National Trade Register (RNC).
Step 5: Confirmation of the bylaws’ registration
The Uruguayan Official Gazette and a newspaper publishes them in the form of an excerpt, marking the acceptance and registration of the company bylaws.
Step 6: Obtain a unique taxpayer number
Setting up a company in Uruguay involves registration with the National Tax Administration Office (DGI) to obtain the taxpayer number (RUT) and start commercial operations in compliance with the country’s tax regulations.
Step 7: Register to hire personnel
For companies intending to hire personnel, the company registration process in Uruguay is complete after registering with the Social Security Administration (BPS), the Ministry of Work and Social Security (MTSS), and the State Insurance Bank (BSE).
Step 8: Open a corporate bank account
The business must open a corporate bank account in Uruguay to deposit the required capital and start business operations. Banks may have restrictions for companies with foreign shareholders. It is a good practice to research and choose a bank that meets the specific needs and requirements of the company during company incorporation in Uruguay.
The requirements and process for registering a company in Uruguay may depend on the type of business and legal structure chosen. It is advisable to seek guidance from a local legal and tax advisor to determine the specific requirements.
How Much Does it Cost to Incorporate a Company in Uruguay?
The cost of incorporating a company in Uruguay can vary depending on the company’s legal structure, the type of business, and other requirements.
The approximate cost of incorporating a company in Uruguay is US$10,660 in the first year and US$3,800 from the second year onwards. The average total fee for company incorporation in Uruguay is US$22,105. The mentioned cost includes bank account opening and government fees.
Are Foreigners in Uruguay on Certain Passes Allowed to Start a Business in Uruguay?
Foreigners can start a business in Uruguay quickly, by setting up a permanent establishment or establishing a local entity or a branch of a foreign enterprise.
If their purpose is not to conduct business in Uruguay regularly, they are still recognized by law, can carry out isolated acts, and appear before the court. However, this does not involve any administrative procedures.
Government Assistance for Foreign-owned Businesses
The government of Uruguay welcomes foreign investment and does not discriminate against foreign investors.
There are several tax incentives available for foreign investors who are interested in establishing a company in Uruguay. These incentives include exemptions from corporate income tax on up to 40% of income reinvested in certain assets such as vehicles and installations, industrial and agricultural machinery, telecommunications equipment, computers, and certain assets for the tourism industry.
Additionally, foreign investors can enjoy a 90% income exemption derived from promoted activities. It includes an exemption of NWT on the assets involved in these activities for five or ten fiscal years, depending on specific requirements. The government aims to encourage foreign investment by offering tax exemptions and establishing an investment promotion agency called Uruguay XXI.
How Multiplier Can Help?
Incorporating a company in Uruguay is a simple process, but it must be carried out with precise adherence to both national and local laws and regulations.
Multiplier can assist you by offering a robust, reliable, and secure infrastructure to start a business in Uruguay. Not just that, you can avoid the hassles of incorporating a new entity and let our skilled experts manage the nitty-gritty of your business – from hiring to payroll management.
Our integrated SaaS-based platform will assist you in onboarding, paying, and managing your cross-border teams with 100% compliance. Multiplier allows you to streamline payroll management, ESOPs for startups, and employment contract generation. These features with our contingent workforce management are available at affordable costs.