Real estate investments in Punta del Este, Uruguay

For several decades, the City of Punta del Este has established itself as an international vacation center and a high-level business environment. Since its foundation in 1907 the city has not stopped growing and appreciating itself. Investments in real estate have been the engine of its sustained development supported by Uruguay´s solid banking system and by its consolidated legal security that supports investments and development. In 1986, the City of Punta del Este hosted the "Uruguay Round", a meeting that is considered a founding milestone of the WTO (World Trade Organization).

There are currently, in different stages of development, numerous real estate developments ranging from high-class residential towers to private neighborhoods that take advantage of the exceptionally beautiful natural environments that distinguish this place.

All this makes investments in Punta del Este a safe and highly profitable business. Because it is an international tourist area, investment in housing units for vacation rentals, for example, allows generating direct profits, as well as consolidating the capital invested in real estate that constantly improves its price.

Investments in Uruguay were formally declared "Of National Interest" by the state authorities. Foreign investors enjoy the same incentives as local investors, with no discrimination from the tax point of view or restrictions on the transfer of profits abroad. There are general and automatic incentives for investment.

For the tourism industry, VAT exemptions are applied to purchases of goods and services (national or imported) destined for the construction, improvement, expansion and equipment of tourist complexes and the exemption from the Patrimonial Tax for 10 years.

Regulatory Decree No. 138 of 2020 establishes for real estate investments, among other points, the benefits and exemptions for the construction of office buildings, for sale or rent. Construction of residential buildings, for sale or rent. Urban development projects (private initiative), suburban or rural area, which include: development and subdivision of infrastructure, subdivision and construction of housing units on this land.

How to obtain Tax Residence in Uruguay
The new regulations approved in 2020 indicate that tax residence in Uruguay can be obtained when any of the following situations occur:
The person remains in Uruguay for more than 60 days in a calendar year or the person resides in Uruguayan territory "the main nucleus or the base of their activities or of their economic or vital interests".
For them it is required to have real estate in Uruguay with a value higher than US $ 380,000 or a direct or indirect investment in Uruguayan companies for more than 1.6 million dollars dedicated to activities of national interest.

Text of Law 16.906

(Source: parlamento.gub.uy)

ATTENTION: This document has been translated into English for guidance purposes only and using automated means that may misinterpret its contextual meaning.
The original version is valid only in Spanish language. (https://www.puntadelesteinvest.com/es/inversiones-inmobiliarias/)

Law No. 16,906






The Senate and the House of Representatives of the Republica Oriental del Uruguay, meeting in General Assembly,




Article 1º.- (National interest) .- The promotion and protection of investments made by national and foreign investors in the national territory is declared of national interest.

Article 2º.- (Equality) .- The regime of admission and treatment of investments made by foreign investors will be the same as that accorded to domestic investors.

Article 3º.- (Requirements) .- Investments will be admitted without the need for prior authorization or registration.

Article 4º.- (Treatment) .- The State will grant fair treatment to investments, committing itself not to harm their installation, management, maintenance, use, enjoyment or disposal through unjustified or discriminatory measures.

Article 5º.-  (Free transfer of capital) .- The State guarantees the free transfer abroad of capital and profits, as well as other amounts related to the investment, which will be made in freely convertible currency.



Section I

Area of ​​application

Article 6º.- (Subjective Scope) .- The beneficiaries of the exemptions set forth in this Chapter, the taxpayers of the Income Tax Industry and Commerce of the Income Tax Agricultural and Tax on the Alienation of Agricultural Goods, which carry out industrial or agricultural activities.

The benefits established in this Chapter and those granted by the Executive Power, in application of the legal powers conferred on it, will operate in a general and automatic way for all the subjects referred to in the previous paragraph .

Article 7º.- (target range) .- The term investment for the purposes of this Chapter, the acquisition of the following goods intended to integrate the fixed asset or intangible asset:

  A) Movable assets destined directly to the productive cycle.

  B) Equipment for electronic data processing.

  C) Fixed improvements affected to industrial and agricultural activities.

  D) Intangible assets such as trademarks, patents, industrial models, privileges, copyrights, key values, trade names and concessions granted for the prospecting, cultivation, extraction or exploitation of natural resources.

  E) Other goods, procedures, inventions or creations that incorporate technological innovation and involve technology transfer, at the discretion of the Executive Power.

Section II

Fiscal benefits

Article 8º.- (Tax benefits) .- Grant to the subjects referred to in Article 6 , the following benefits:

  A) Exemption from the Tax on Equity of fixed assets included in literals A) and B) of Article 7 , acquired from the effective date of this law. The aforementioned assets will be considered as taxed assets for the purposes of deducting liabilities.

  This exemption will not operate in the event that the aforementioned assets must be valued fictitiously.

  B) Exemption from Value Added and Specific Internal Taxes, corresponding to the importation of the goods referred to in the previous literal , and refund of the Value Added Tax included in the purchases in place thereof.

Article 9º.- (Tax benefits) .- The Executive Power is empowered to grant in general, for the subjects defined in Article 6 , the following benefits:

  A) Exemption from the Property Tax, under the conditions established in paragraph A) of the previous article, to the goods included in literals C) to E) of article 7.

  B) Establishment, for the purposes of Taxes on Industry and Commerce Income, Agricultural Income and Patrimony, of an accelerated depreciation regime, for the assets included in literals A) to E) of article 7.

Article 10.- Without prejudice to the provisions of Article 25 of Law No. 16,697 , of April 25, 1995, the Executive Power is empowered to reduce the aliquot of employer contributions to social security to the manufacturing industry by up to three points.



Section I

Scope of application and competent organism

Article 11.- (Promoted activities and companies) .- Companies whose investment projects are declared promoted by the Executive Power, in accordance with the provisions of this law, may access the benefits regime established in this Chapter.

Likewise, the promotional declaration may fall on a specific sector activity, understood as the set of undertakings conducive to producing, marketing or providing, as appropriate, certain assets or services.

For the purposes of granting benefits, investments that:

  A) Incorporate technical progress to improve competitiveness.

  B) Facilitate the increase and diversification of exports, especially those that incorporate greater national added value.

  C) Generate productive employment directly or indirectly.

  D) Facilitate productive integration, incorporating national added value in the different links of the productive chain.

  E) Promote the activities of micro, small and medium-sized enterprises, due to their effective capacity for technological innovation and the generation of productive employment.

  F) Contribute to geographic decentralization and are oriented to industrial, agro-industrial and service activities, with a significant use of labor and local inputs.

Article 12.- (Advice) .- For the purposes of granting the franchises provided for in this Chapter, the Executive Power will act advised by an Enforcement Commission, made up of a representative of the Ministry of Economy and Finance, which will coordinate it, as well as well as representatives of the Ministry of Industry, Energy and Mining, the Ministry of Livestock, Agriculture and Fisheries, the Ministry of Labor and Social Security, the Planning and Budget Office and the Decentralization Commission provided for in Article 230 of the Constitution of the Republic , being able, in special cases, to integrate with members of other Ministries or organisms with competence in the applicant's sector of activity.

In the case of investment projects, they will be presented to the Enforcement Commission, which will determine the Ministry or body to which their evaluation corresponds, depending on the nature of the project and the activity to which it corresponds.

The aforementioned evaluation, together with a report detailing the benefits that is understood to be granted, will be submitted by the Ministry or designated body to the Commission referred to in the first paragraph . The regulations will set the procedures and the maximum terms in which the Ministry and the referred body must be issued.

The Enforcement Commission will establish the corresponding recommendations regarding the case in question. In the aforementioned recommendation, if applicable, the Ministry or body in charge of monitoring the granting, total or partial, of the exemption established in this Chapter will also be stated.

Article 13.- (Uniformity of procedures) .- The administrative procedures provided for in the previous article will also be applicable to the benefits that are granted within the framework of Decree-Laws No. 14,178 , of March 28, 1974, and No. 14,335 , of December 23, 1974, and its amending and complementary regulations. For such purposes, the Executive Power is empowered to modify the duties and functions or to suppress the Advisory Commissions created by virtue of the aforementioned provisions.

Article 14.- (Non-compliance) .- In all cases, the Executive Power may require the guarantees that it deems pertinent, in relation to the effective compliance by the beneficiaries of the obligations related to the granting of the franchises, without prejudice to the reliquidation of taxes, fines and surcharges that may correspond in the event of non-compliance.

Section II

Fiscal benefits

Article 15.- (Tax benefits) .- It is understood applicable to activities or investment projects covered by the provisions of Article 11 , the powers conferred on the Executive Branch to grant the tax benefits set out in Decree-Law No. 14,178 , of March 28, 1974, and its amending and complementary regulations.

Not included in the aforementioned extension of powers is the granting of tariff exemptions that contravene the commitments assumed by the country within the framework of the MERCOSUR agreements.

Article 16.- (Situations especially benefited) .- In the case of declared projects or activities promoted by virtue of the importance of their contribution to the process of geographical decentralization of economic activity, the benefits to be granted in accordance with the provisions of article above will be higher in term than the amount granted to equivalent projects or similar activities located in the department of Montevideo.

Likewise, special benefits may be granted regarding the determination of the taxes to be exonerated and the term and amount of the franchises to investments that, being included in the definition of the third paragraph of article 11 , reach an amount of $ 500,000,000 (five hundred million Uruguayan pesos) within the term provided in the respective investment plan. This figure will be updated annually by the Executive Power based on the variation in the Consumer Price Index set by the National Institute of Statistics.

Article 17.- (Patrimonial tax) .- If application of the provisions of this Chapter, exemptions from the tax will be awarded to the Heritage property subject to the exemption be considered taxable assets for the purpose of calculating the computable liability for determination of taxed assets.

Section III

Productive specialization regime

Article 18.- Create an adaptation acceleration regime, designed to facilitate the reconversion of companies within the framework of the regional integration process.

According to said regime, companies may import, exempt from the Single Customs Tax on Import and surcharges, goods originating in the Member States of MERCOSUR, of the same nature and with the same economic destination as those whose production is discontinued or reduced. Said exemption will be subject to compliance with an export program by the beneficiaries.

The Executive Power shall be entrusted with the regulation of the regime that is created and the granting, in whole or in part, of the exemption established in this article, according to the following bases:

  A) The benefit may be granted to those companies that, discontinuing or reducing the production of goods covered by the adjustment regime to the MERCOSUR customs union, present a project to increase exports of other goods that they produce.

  B) The Executive Power may grant partial or total exoneration of taxes on the importation of goods originating in the MERCOSUR member states for a good or goods of the same nature and with the same economic destination as those whose production is reduced and with maximum amount of imports determined by said reduction.

  The industrialists benefited by this exemption may not, during the validity of the same, increase the volume of imports of the goods mentioned by the common tax regime that they carry out as of January 1, 1998.

  C) The beneficiaries of this regime must submit the Project of Productive Reconversion for consideration of the Enforcement Commission created by article 12 of this law, which, after consulting with the chambers of the business sector, will give the corresponding advice to the Executive Power for its approval.

  It will be taken into account especially for the purposes of the referred advice, among other criteria, the stability in the workforce.

Section IV

Legal Stability

Article 19.- (State Guarantee) .- The State, under responsibility for damages, insures investors covered by the regimes established in this law and for the terms established in each case, tax exemptions, benefits and rights that the present law agrees to them.



Section I

Use credit agreement

Article 20.-  Replaced Article 45 of Law No. 16.072 , of October 9, 1989, with the wording provided by Article 5 of Law No. 16,205 of 6 September 1991 by the following:

ARTICLE 45.- The considerations resulting from use credit contracts will be exempt from Value Added Tax, provided that the following conditions are simultaneously met:

  A) That the contract has a term of no less than three years.

  B) That the goods that are the object of the contract are not non-utility vehicles or personal property intended for the house-room.

  C) That the user is liable for the Industry and Commerce Income Tax, Agricultural Income Tax or Tax on the Disposal of Agricultural Assets.

  In the event that any of the conditions established in the previous sections are not met, the Value Added Tax will be applied on the financial amortization of the placement, unless the asset object of the operation is exonerated by other provisions.

  The difference between the agreed benefits and the financial amortization of the placement and the price readjustments will be exempt from the Value Added Tax, unless the operation was agreed with whoever is not a taxpayer of the Industry and Commerce Income Tax, of the Tax on Agricultural Income or Tax on the Alienation of Agricultural Assets ".

Article 21.- Replace the Article 46 of Law No. 16.072 , of October 9, 1989, with the wording provided by Article 5 of Law No. 16,205 of 6 September 1991 by the following:

  ARTICLE 46.- Accrediting institutions are given a credit for the Value Added Tax included in the acquisitions of the goods that are the subject of use credit contracts, provided that the aforementioned contracts comply with the conditions established in the first paragraph of the article previous.

  The credit will be canceled when the contract loses the exemption from Value Added Tax. The Executive Power will establish the form and conditions in which the accrediting institutions will make the previously indicated credit effective or its loss when appropriate. In the event of early cancellations that reduce the term to less than three years, the Value Added Tax must be settled in accordance with the provisions of article 45 of this law.
In such cases, said tax must be paid plus the monthly compensatory surcharge referred to in the second paragraph of article 94 of the Tax Code

  In the event of judicial and judicially approved rescissions that mean a reduction of the agreed term to periods of less than three years, the exemption from Value Added Tax will be maintained, applicable to contracts with a term of more than three years ".

Article 22.- Replace the Article 27 of Law No. 16.072 , of October 9, 1989, by the following:

ARTICLE 27.- The forced restitution of the thing due to lack of payment of the stipulated periodic fees, may not be required except when the user falls in arrears in the payment of two consecutive installments, if they are for periods not exceeding one month and one fee in all other cases ".

Article 23.-  Replace the Article 32 of Law No. 16.072 , of October 9, 1989, with the wording provided by Article 4 of Law No. 16,205 of 6 September 1991 by the following:

"ARTICLE 32.- The procedure to obtain forced restitution in the cases provided for in articles 27 and 29 of this law, will be the process of delivery of the thing. Only the following will be admitted as exceptions: the falsity of the instrument in which the action is founded; the lack of some of the essential requirements for the validity of the contracts; payment or compensation of liquid and enforceable credit that are proven by public deed or by private document emanating from the actor; prescription; expiration; waiting or withdrawal granted by the plaintiff that are proven by public deed or by a private document issued by the actor and the exception of having validly exercised any of the options provided for in article 29 of this law.
Inadmissible exceptions will be rejected without substantiation ( article 355.2 of the General Code of the Process ).

  If the writings in which the exceptions are deduced are not accompanied by the respective evidential documents, we will proceed with conform to the provisions of article 355.2 of the General Process Code".

Article 24.- The standards referred to in Articles 20 to 23 shall apply to contracts entered into after the effective date of this law.

Section II

Various provisions

Article 25.- (Dispute Settlement) .- Any dispute concerning the interpretation or application of this law arising between the State and an investor who has obtained from the Executive the Promotional Declaration may be submitted, at the choice of either of the same, to any of the following procedures:

  A) To the competent court.

  B) That of the Arbitral Tribunal, which will always rule in accordance with the law, in accordance with the provisions of articles 480 to 502 of the General Code of Procedure.

When it has been chosen to submit the controversy to one of the procedures foreseen above, the election will be final.

The provisions of the preceding paragraphs will be applicable in relation to foreign investors in the absence of an international treaty, protocol or convention on dispute settlement, in force on the date of their occurrence.

Article 26.- (mergers and demergers) .- To authorize to the Executive authority to exempt from the Income Tax Industry and Commerce, the Tax Value Added and the Tax Trasmisiones Patrimoniales levied on mergers, divisions and transformations of companies , provided that they allow to expand or strengthen the applicant company.

In the event that the Executive Power exercises the power referred to in the preceding paragraph , the public deed for the transfer of assets, rights, obligations or encumbrances included in the transfer of assets carried out as a consequence of the aforementioned acts will not be enforceable ( Article 122 of Law No. 16,060 , of December 5, 1989).

Article 27.- (Tax mortgages) .- Repealed Tax on mortgages set up by Article 7 of Law No. 10,976 , of December 4, 1947, as amended wording by Law No. 12011 , dated 16 October of 1953, and by Article 200 of Law No. 13,728 , of December 17, 1968.

Article 28.- (Garments without displacement) .- The garments without displacement provided in Laws No. 5,649 , of March 21, 1918, No. 8292 of 24 September 1928 and No. 12,367 , of January 8, 1957, and in articles 58 and following of Law No. 15,939 , of December 28, 1987, they may be constituted in favor of any creditor to guarantee all kinds of obligations of the owner of the asset that is pledged or of third parties.

Article 29.-  (Prescription and applicability of the same) .- The actions originated in the employment relationships prescribe one year, from the day following the one on which the employment relationship on which they are founded has ceased.

The conciliation attempt hearing, in the presence of the summons, will interrupt the prescription, provided that it is followed by a legal action filed within the thirty calendar days following the date of the record or of the testimony of the non-appearance of the aforementioned

In no case may credits or labor benefits be claimed that have become enforceable with more than two years prior to the date on which the corresponding legal claim is filed.

The foregoing provisions will be applicable to credits or benefits existing on the date of promulgation of this law, unless a valid legal claim has been filed within a period of sixty calendar days from said date.

Article 30.-  (Transfer of securities and facilitation of the circulation of the guarantees that access them) .- Add to Article 10 of Decree-Law No. 14,701 , of September 12, 1977:

"The emergent rights of the real or personal guarantees that access a security, will be transferred of full right by the sole transmission of the security in which the security that accesses it is recorded, without the need for any registration. For the transmission of guarantees that support securities that are the object of public offering, the specific legislation on the matter will be subject to the provisions of the specific legislation on the matter.

  The real guarantees that are constituted to ensure compliance with the corresponding obligations will be registered in the corresponding Public Registry, identifying the guaranteed security, its issuer, object, amount, expiration date and other elements that correspond to its nature. For the purposes of the aforementioned registration, it will not be necessary to identify the successive holders of the guaranteed title.

  The guarantees will be canceled by unilateral declaration of the debtor and the exhibition of the security. In the absence of the display of the title, to obtain the cancellation of the ga rantia must be accredited before the Registry, or before the depositary, where appropriate, the judicial consignment of the amounts".

Article 31.- The Executive Branch shall report annually to the General Assembly on the implementation of this law.

Article 32.- (Repeals) .- Repeal Law No. 15,837 , of October 28, 1986, and Decree-Laws No. 14,179 , of March 28, 1974, and No. 14,244 , of July 26, 1974.

     Room of Sessions of the House of Representatives, in Montevideo, on December 22, 1997.










Montevideo, January 7, 1998

Comply, acknowledge receipt, communicate, publish and be inserted in the National Registry of Laws and Decrees.








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