Uruguay: new binding ruling on the tax implications of redomiciliation

December 11, 2013

On 2 October 2013, Binding Ruling No. 5,743, issued by the tax authority, was published in the Official Journal.

The ruling explains the tax implications of a redomiciliation abroad.

The requesting company is a real estate business, which owns exclusively real estate assets in Uruguay.

According to the ruling, once a company is redomiciled abroad, it becomes a non-resident entity for corporate income tax (IRAE ) purposes, regardless of whether the assets are located in Uruguay.

Once redomiciled, the company is subject to the non-residents income tax on sourced income, except if it has a permanent establishment in the country.

Under Decree No. 150/007, deriving exclusively capital gains from real estate located in Uruguay is not sufficient to constitute a permanent establishment.

With respect to corporate control tax (Impuesto al Control de las Sociedades Anónimas – ICOSA), which is levied on the creation or liquidation of a company, the redomiciliation has no impact.

The tax is due when transfering the domicile abroad.


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