A Uruguay Limited Liability Company (LLC) is the only totally tax exempt corporation entity in all of South America. Most foreigners creating new companies in Uruguay prefer the private limited liability company because they can be 100% foreign owned.
The Sociedad Anónima Uruguay (SAU) is a private limited liability company. Normally, a SAU is used to possess assets, engage in trading operations, and act as a holding company.
Uruguay has been an independent republic in South America since 1825. It is located between Argentina and Brazil. For the past 20 years, Uruguay has been a growing international financial center. Political stability, strong banking structure, good communication infrastructure, and a favorable tax regime all make Uruguay appealable to foreign investors.
Its political system consists of three branches: executive, legislative, and judicial. Free elections are held every five years where the President is chosen who maintains a cabinet of 12 members. The General Assembly is similar to many Parliaments with a Lower Chamber of Representatives and an Upper Chamber of Senators. Its Supreme Court oversees all lower courts.
With a population of around 3.4 million, nearly half live in its capitol city of Montevideo. Unlike other Latin American countries, wealth and income are evenly distributed amongst its population enjoying one of the highest GNP per capita in the region. Their educational system reaches 95% of all children over 10 years old providing free and secular schools.
Uruguay is a founding member of the Southern Common Market (Mercado Común del Sur or MERCOSUR).
A Uruguay Limited Liability Company (LLC) has the following benefits:
• Tax Free: All income earned outside of Uruguay is tax free. However, American taxpayers along with residents in every country taxing worldwide income must declare all income to their tax authorities.
• 100% Foreign Shareholders: Foreigners can own 100% of the shares in a LLC in Uruguay.
• Limited Liability: Shareholders’ liabilities are limited to their share of the company’s capital.
• Two Shareholders: The minimum number of shareholders is two to create a LLC.
• One Director: A minimum of one director is required to form an LLC.
• Low Minimum Share Capital: The required minimum share capital is $1 USD.
The LLC must select a unique name not resembling any other Uruguay legal entity name. Names can be reserved before registration.
Every LLC must include the words “Sociedad Anónima Uruguay” or its abbreviation “SAU” at the end of their company name.
LLC’s must register with the National Chamber of Commerce and Services of Uruguay to become incorporated. Before then, a bank account needs to be opened with the minimum share capital deposited.
An operating company regulations document must be prepared with notarized signatures.
Then, the LLC can be registered online with the government’s Empresa en el Día website.
Finally, the required registration fees must be paid at a licensed payment agency and a notice must be published in the Official Gazette announcing the formation of a new company.
Shareholders’ liability is limited to their contribution to the company’s capital.
Types of Business Activities
LLC’s can import and export goods, however, that will impose a corporate tax as it entails conducting business within Uruguay’s borders. This is why a LLC is better suited for conducting global business outside of Uruguay’s borders to avoid all taxation.
The LLC will be able to purchase real estate in Uruguay. However, that will subject it to capital gains tax when selling the properties.
LLC’s can also own equity in other Uruguay companies, but this may also lead to corporate and capital gains taxes.
A minimum of two shareholders are required to form a LLC. The shareholders can be natural persons or corporations. They can also be citizens and reside in any country.
Only one director needs to be appointed to manage the company. Directors can be citizens and reside in any country. They can also be either natural persons or corporations.
No annual financial statements are required to be filed with the government. In addition, no statutory auditing requirements exist.
Registered Office and Agent
LLC’s must have a registered office in Uruguay and appoint a local registered agent.
Minimum Share Capital
The minimum share capital for a LLC is only $1 USD (or equivalent in any currency) in order to be registered.
Annual General Meeting
An Annual General Meeting of the shareholders is required. However, the meeting can be held anywhere.
Uruguay does not tax global income. Only income earned within its borders are taxed. Therefore, a LLC not engaging in business with Uruguayans as customers or with anyone (residents and foreigners) inside Uruguay will be regarded as a tax exempt company. However, even if no taxes are due, a LLC is still required to file an annual tax return. Filing for a tax registration ID number is mandatory.
However, American taxpayers must declare all income, as well as, everyone residing in a country which taxes worldwide income to their taxation authorities.
If the payment of corporate taxes is imposed, the current rate is 25%.
Uruguay does not have names of shareholders in its public records.
Uruguay LLC’s can take a few weeks for approval.
Shelf companies are available for purchase in Uruguay.
A Uruguay Limited Liability Company (LLC) has these benefits: 100% foreign ownership, no taxation, limited liability, ownership privacy, two shareholders minimum, one director minimum, and low required minimum share capital.