Uruguay is a very politically stable country with high legal security. It has a non-discriminatory investment policy with no restrictions on the participation of foreign capital. However, as you establish your business, you must be aware of corporate compliance requirements in Uruguay.
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Legal structures in Uruguay
Once a legal entity is duly incorporated in Uruguay, it must meet the necessary corporate compliance requirements to freely operate in the country. These legal obligations are not very complex or difficult to comply with as long as you understand them or seek the support of a local expert.
Uruguay offers companies several legal structures to establish their business, from non-profit organizations to stock corporations. A foreign company may incorporate a legal entity in one of the following structures:
- Corporation (Sociedad Anónima- S.A.)
- Simplified Share Companies (Sociedad por Acciones Simplificadas- S.A.S.)
- Limited Liability Company (Sociedad de Responsabilidad Limitada- S.R.L.)
- Branch Office of a Foreign Company (Sucursal)
Legal representation in Uruguay
All established companies in Uruguay must appoint a legal representative, who will be in charge of representing the organization before third parties. Note that businesses expanding in the country must also appoint a legal representative during the company incorporation process.
Some of the responsibilities of a legal representative include:
- Legally representing the company by expressing the will of the company.
- Following procedures with public and/or private entities.
- Attending trails with an attorney on behalf of the company if necessary.
- Being responsible for the tax authority and social security authority in case of non-compliance.
- Informing the Central Bank of Uruguay (BCU) who the Board of Directors are.
Foreign executives expanding in Uruguay must also register a fiscal address to successfully incorporate a local legal entity in the country. This is the official registered address of the company used for all official communications and correspondence. Likewise, note that the fiscal address needs to be stated in the company bylaws for it to be legally registered during the company incorporation process.
Labor and social security compliance
Executives of companies doing business in Uruguay must be aware of all the legal payments that must be made to employees. This may include salary, social security contributions, payroll taxes, and severance payments to employees.
Business owners must also pay workers compensation insurance and a premium -a bonus -known as the ‘thirteenth salary’- that is usually paid every 6 months or at the end of June and December. The amount of the bonus is one month’s salary, divided into two payments. Furthermore, employees are also entitled to 20 days of paid vacation.
The required social benefits for employees in Uruguay include:
- Health contribution
- Retirement contribution
- Occupational risk contribution
Accounting and taxation compliance
When incorporating a company in Uruguay, you must consider the local accounting and tax system to understand your tax obligations.
To comply with accounting a taxation corporate requirements in Uruguay, you must:
- Submit monthly and annual tax returns.
- Pay taxes every month.
- Submit tax statements at the closure of the fiscal period.
- Renew certificates and policies, 1 year from the due date.
- Prepare financial statements, 4 months from the date of closure of the fiscal period.
- Submit balance sheets with the bank at the closure of the fiscal period.
Engage with our specialists to meet your corporate compliance requirements in Uruguay
Before expanding your operations to Uruguay, it is vital to have a thorough understanding of your corporate obligations in the country. While opportunities to do business in Uruguay are numerous, so are the risks for those who do not comply with local law. Therefore, working with a trusted legal and accounting firm is the fittest option.
At Biz Latin Hub, our team of legal specialists provides comprehensive company formation advice and guidance to support your expansion. With our full suite of bilingual market entry and back-office services, we are your single point of contact in Uruguay and Latin America. Reach out to us now to make the most of our market-leading services, and get a customized quote from our team.
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