How can an Umbrella Company Help with Contracting in Uruguay?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Uruguay. Even better, most are experts in Uruguayan and expat tax law, meaning they’ll also help you optimise your earnings in Uruguay.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Uruguay.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Uruguay, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Uruguay and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Uruguay
One of the most consistently challenging aspects of contracting in Uruguay is complying with the country’s tax system. As well as paying tax in Uruguay, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Uruguay
If you’re working in Uruguay under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Uruguay for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Uruguay, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Uruguay through PAYE is left with the prospect doing everything themselves.
Do you know much about Uruguayan Tax Law? Does Uruguay have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Uruguay can range from 10 to 36 percent, and you need to be sure you are placed in the correct tax brackets.
Tax Filing as a Contractor in Uruguay
| When Do You Need to Lodge Your Tax Return? | 30 April (of the year following the income tax year) |
| Tax Filing Deadline | 30 April (of the year following the income tax year) |
| Can you file it online? | Yes, https://servicios.dgi.gub.uy/ServiciosEnLinea/PrincipalServiciosEnLinea |
How to File Taxes in Uruguay as a Contractor
An individual is only required to file taxes if they have more than 1 source of employment income.
You can file taxes on the Uruguayan tax authority (Dirección General Impositiva) website.
Step 1: Register
Register here(link is external) for a Username and Password to access online services.
Step 2: Sign In
Access online services by signing in here(link is external). Alternatively, you can sign in using an Electronic Identity Card.
Step 3: File Taxes Online
You will now be able to file your taxes online.
Tax Figures in Uruguay
| Currency | Uruguayan Peso (UYU) | ||||||||||||||||||||||||||||||||||
| Tax-free Threshold in Uruguay | UYU323,232 | ||||||||||||||||||||||||||||||||||
| Income Tax Rates |
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| Notes | The tax rates included in the table above apply to resident taxpayers only. Calculating Income Tax as a Family Unit: Income tax can also be levied according to the gross income of a family unit. If each member earns more than 12 minimal salaries (1 minimal salary = UYU13,430), the following tax rates apply to the total gross taxable income of that family.
If each member earns less than 12 minimal salaries, the following tax rates apply to the total gross taxable income of that family.
Income Tax on Non-Resident Individuals: Non-resident individuals are subject to a 12% tax rate on employment income. |
Tax Residency in Uruguay
When do you become a tax resident in Uruguay
You become a tax resident in Uruguay when:
- You are present in Uruguay for at least 183 days;
- Your centre of economic or vital interests is in Uruguay (which is met when your spouse and dependent underage children habitually reside in Uruguay);
- Your centre of economic interests is in Uruguay (which is met when you derive more income from Uruguay than any other country, excluding passive income); or
- You have an investment in Uruguay which complies with 1 of the following requirements:
- More than 15 million ‘index units’ (approx. UYU173,943,000) in Uruguayan properties;
- More than 45 million ‘index units’ (approx. UYU173,943,000) in a company with projects or activities promoted by the Inversions Law, directly or indirectly.
Does the 183 day rule apply in Uruguay
Yes
Am I taxed on my global income in Uruguay
Both residents and non-residents are subject to Uruguay-source income only.
Residents are also taxed on holding income derived from loans, deposits and capital investments in non-resident entities (not including capital gains derived from the sale of an investment or rental income). A tax credit is available for taxes paid abroad on globally sourced holding income.
Can you set up your own Limited Company in Uruguay?
| How long does it take to set up | 6.5 days |
| How much does it cost | UYU88,780 + 0.5% of capital + notary tax (15.5%) + bank deposit (approx. USD200) |
| Is it easy? | Starting a Business Rank: 61/190 (Source: World Bank) |
Tax Calculator in Uruguay
If you are a contractor and want a calculation on your tax and net retention in Uruguay, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Uruguay
Contractors in Uruguay are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Uruguayan umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Uruguayan taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Uruguayan tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Uruguay
We work with numerous umbrella companies in Uruguay, many of whom are experts in tax and immigration laws. If you have any questions about tax in Uruguay, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Uruguayan work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Uruguay but without the overhead of directly dealing with the Uruguayan tax authorities. Get in touch with us today for some reliable advice on tax in Uruguay!
A Contractor’s Guide to Work Permits in Uruguay
Immigration is one of the primary concerns for any contractor hoping to start working in Uruguay. Permanent employees will find it easy to get their Uruguayan work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The Uruguayan work permit, known more commonly as the Visa de Trabajo, is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Uruguay is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Uruguay (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in Uruguay. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Uruguay and match contractors with the right company for them. If you’ve already secured a contract in Uruguay, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).
