The Uruguayan legal system allows you to incorporate different corporate entities based on your commercial needs. The most-commonly incorporated entity type is the Corporation (Sociedad Anónima – S.A.), which is a commercial company in which the capital is divided into shares and the liability of the shareholders is limited to their capital contribution.
What are the advantages of establishing / Forming a local company in Uruguay?
Uruguay’s macroeconomic framework gives foreign investors the opportunity to establish a local corporation to enable their business operations. A corporation has some valuable advantages over other entity types, with the most significant being the following:
- The responsibility of the company shareholders is limited. The partners are only liable up to the capital that they contribute to the company. This means that their personal assets are not at risk should there be legal problems with the company.
- In the case of open corporations, the partners can sell shares.
- The partners can be Uruguayan or foreign citizens and the company partners are able to reside outside of Uruguay.
What are the disadvantages of establishing a local company in Uruguay?
Nevertheless, there are some disadvantages associated with forming a corporation in Uruguay:
- The cost of opening a corporation in Uruguay can be costly when compared to other countries such as Peru, Ecuador or Colombia.
- A corporation in Uruguay is subject to a greater number of legal procedures for its incorporation. For this reason, the company incorporation process can be slower than expected, especially without local support.
- A corporation requires a more complex organizational form, including the need for a board of directors and to conduct yearly shareholder meetings.
What are the requirements for establishing a local company in Uruguay?
After having evaluated the advantages and disadvantages, an investor needs to be aware of several requirements that need to be fulfilled to establish a company in Uruguay. Below, we will summarize the most important requisites and formalities:
- There must be at least 1 shareholder, who must be over 18 years of age.
- All companies must have a local registered agent.
- The company must have a registered fiscal address.
- The company must file tax returns with the national tax authority.
- The founding partners must contribute a minimum of 25% at the time of the company incorporation.
To constitute a corporation, it is necessary to satisfy some mandatory requirements in the presence of a Public Notary. These include the following:
- Conduct the constituent assembly among the board members. In the assembly, the name of the company, the company share capital, the company registered address, the contributions of the partners and how the profits will be distributed will need to be defined.
- Review of the company bylaws.
- Registration of the company before the Uruguayan tax authority (DGI) and in the Social Security Institute BPS.
- Take out employment accident insurance in the state insurance bank (BSE) for employees of the company.
- Register the company in The Document Division of the General Inspection of Labor and The Ministry of Labor.
- Register the corporation before the Public Registry of Commerce.
- Publish an announcement in the Official Gazette.
If you are a citizen of a country that does not require a tourist visa to enter Uruguay, you should perform the following steps to legalize your situation by moving from temporary to permanent residency.
It is recommendable to change your temporary residence status to a permanent one in order to receive the benefits provided by Uruguayan legislation. To do so, entrepreneurs and shareholders must first present a notarial or public accountant certification containing all the company data (legal status, validity, social period, purpose, domicile established in the country, registration in the BPS and the DGI).
In order to fulfill all the requirements, you must present the following.
- Health Card issued by the Ministry of Public Health or by authorized medical institutions. In all cases, it must be stated that it is for legal residency in the country.
- The exact date of entry into the country with the entry-exit card.
- Criminal records duly legalized from the country where you have lived for the past five years before entering Uruguay. In the case of Brazil, the criminal record certificate must be issued by the state authority.
- If the interested party is over 15 years of age and resided the in the United States of America or Canada for the last five years before entering Uruguay, he/she must book an appointment at the INTERPOL office in Montevideo.
Don’t forget: All requirements must be complied with in order to begin the residency process.
As a complement to the requirements listed above, you will need to consider some factors before setting up a local business in Uruguay:
- If you do not speak Spanish, it is recommended to consult with an interpreter.
- Any foreign document that is submitted to a governmental institution must be legalized by the Uruguayan consulate and the Ministry of Foreign Affairs and translated into Spanish.
- A foreigner who starts his legal residency process will be able to receive a certificate to obtain the first provisional Uruguayan identity card – as a ‘resident in process’.
Do You Need Local Support?
Uruguay offers smart investors an attractive commercial environment to conduct business activities. Unfortunately, Uruguay often gets overlooked by companies looking to expand their businesses to Latin America, despite the fact that Uruguay has powerful annual economic growth, a highly-education population, and various free trade zones.
For further information on how to expand your operations to Uruguay, get in contact with Biz Latin Hub. We are local experts who can assist you to achieve your commercial dreams abroad. Reach out to Leo at [email protected] and see how we can support you and your business in Uruguay.