Key Takeaways
- Non-coastal urban property now qualifies at roughly US$1,000,000 (a 100% uplift), down from about US$1.35 million under the previous decree.
- The same property used to obtain fiscal residency can now also be counted toward the Tax Holiday, reversing the earlier “hard separation” between the two.
- DGI Resolution 2.158/026 now sets the formal rules: how each option is exercised and how compliance is proven year after year, due by January 31.
The 2026 update, in context
Uruguay’s executive branch approved a new decree – not yet numbered – that refines the impatriate regime introduced by Law No. 20.446 and first regulated by Decree No. 188/026. The regime, commonly called the “Tax Holiday,” lets newly arrived fiscal residents exclude certain foreign-source capital income from personal income tax (IRPF) for up to eleven years.
Alongside the decree, the tax authority (DGI) issued Resolution No. 2.158/026, which regulates the formal side: how to exercise each option and how to prove, every year, that the conditions are met.
The update does not change the core architecture of the regime. What it does is broaden the pool of qualifying properties, improve the treatment of non-coastal investments, and remove a structural friction that previously required two separate assets.
What the Tax Holiday does
A person who acquires fiscal residency in Uruguay from 2026 – and who was not a Uruguayan fiscal resident during the two prior fiscal years – may opt once for the Tax Holiday. The benefit exempts from IRPF the returns on movable capital, real estate capital, and capital gains obtained abroad, with one important exception: income from derivative financial instruments does not qualify.
The exemption runs from the year residency is acquired and for the ten fiscal years that follow (eleven years in total). To keep it, the taxpayer must meet at least one of three conditions every calendar year.
The three routes
- Physical presence. More than 183 days in Uruguay per calendar year, with sporadic absences of less than 30 days counted as presence.
- Real estate investment. An investment in real estate – urban or rural – of more than UI 12,500,000, approximately US$2,000,000. Qualifying properties are those acquired from September 1, 2025. For urban properties in departments without a coast on the River Plate or the Atlantic Ocean, the fiscal cost is increased by 100%, so about US$1,000,000 is enough. The uplift applies only to urban properties, not rural ones.
- Fund capitalization. Annual capitalization of at least UI 625,000, approximately US$100,000, into investment funds that finance productive projects, research, or innovation applied to production. The Ministry of Economy and Finance has not yet issued the formalities for this route.
If a taxpayer stops meeting the conditions in a given year, the benefit is not permanently lost: it can be used again in any later year in which a condition is met, and the ten-year count remains anchored to the year the option was originally exercised.
The headline change: the 100% non-coastal uplift
Under Decree No. 188/026, non-coastal urban property received a 50% valuation uplift, meaning roughly US$1.35 million could satisfy the US$2 million threshold. The new decree doubles that uplift to 100%.
The practical effect: an urban property of about US$1,000,000 in a non-coastal department now meets the Tax Holiday’s real estate requirement, instead of the standard US$2,000,000. The same 100% uplift applies to the lower property threshold in the post-holiday 6% option.
This is the clearest signal in the update: the government is deliberately steering qualifying capital away from the saturated coastal corridor and toward the rest of the country.
The reversal: the residency property now counts
Decree No. 188/026 drew a hard line: the property used to obtain fiscal residency could not be counted toward the Tax Holiday, forcing investors into two distinct assets. The new decree reverses this.
The properties counted to satisfy the Tax Holiday’s investment requirement may now be the same ones used to configure fiscal residency. One qualifying property can serve both purposes, removing the need to structure a second, separate asset.
For completeness, the routes to fiscal residency themselves were not altered. They still include, among others: real estate above UI 15,000,000 (about US$2,500,000); real estate above UI 3,500,000 (about US$590,000) combined with 60 days of physical presence; and company investments tied to promoted projects or job creation.
After the eleven years: the two options
Once the Tax Holiday ends, the taxpayer returns to the general IRPF regime (currently 12%) or may choose one of two optional regimes. These options also apply to taxpayers who obtained the Tax Holiday before 2026, and may be exercised at any time after the original period ends.
Option A – half rate for five years. The taxpayer may elect, once, to pay IRPF at 50% of the applicable rate (currently 6%) on the covered capital income for the five fiscal years following the Tax Holiday. To qualify, the taxpayer must either invest in real estate above UI 6,250,000 (about US$1,000,000; roughly US$500,000 for non-coastal urban property thanks to the 100% uplift) or keep capitalizing qualifying funds at about US$100,000 per year.
The update adds a useful flexibility: the surplus of the real estate investment already used to obtain fiscal residency and/or the Tax Holiday may be credited toward this UI 6,250,000 requirement, provided it exceeds the minimums required for those regimes.
Option B – a fixed annual amount. Alternatively, the taxpayer may pay a fixed annual amount of UI 1,875,000 (about US$300,000) on all covered income, for up to twenty fiscal years. The amount drops to UI 1,250,000 (about US$200,000) if the taxpayer is present in Uruguay more than 183 days in the fiscal year, or makes a direct investment above UI 45,000,000 (about US$7,200,000) in a company to expand its productive capacity. A spouse may join by paying 15% of the corresponding fixed amount.
The new formal rules (DGI Resolution 2.158/026)
The resolution defines how each option is exercised and how compliance is accredited:
- Tax Holiday and Option A (6%): exercised once, by sworn declaration filed with the DGI, and cannot be modified once made.
- Option B (fixed annual amount): exercised annually through the IRPF Category I tax return, within the general filing deadlines. The same procedure applies to a spouse’s option.
- Annual accreditation: in all three cases, the taxpayer must prove to the DGI each fiscal year that the relevant investment or presence condition is met – including years in which no covered income was generated. This proof is due by January 31 of the following year.
- Pre-2026 residents: those who acquired fiscal residency before 2026 may exercise the Tax Holiday option until December 31, 2026.
What this means for international buyers
The 2026 update makes the regime more accessible in two specific ways: the non-coastal entry is now effectively half the standard threshold, and one property can now do the work that previously required two. It also sends a clear policy message – Uruguay is keeping its tax holiday, but directing capital toward non-coastal development and productive investment.
Two cautions remain. First, the Tax Holiday is a fiscal status, not an immigration permit: buying property does not by itself confer residency, and there is no dedicated retirement visa. Second, the fund-capitalization route still awaits implementing rules from the Ministry of Economy and Finance, so its practical mechanics remain open.
As always, these rules turn on individual circumstances. Investors should model the full lifecycle – the eleven-year holiday and the post-holiday options – with a qualified Uruguayan tax and legal advisor before committing capital.
Navigating Uruguay’s real estate market and tax laws is seamlessly handled with the right partner. Get in touch with Team Haverkate to start planning your relocation today.
Frequently Asked Questions
What is the most important change in the 2026 update?
Can the same property now be used for both fiscal residency and the Tax Holiday?
Do rural properties qualify for the Tax Holiday?
What are the tax options after the eleven-year holiday ends?
What formal steps did the DGI introduce?
Disclaimer: this article is for general information only and does not constitute tax or legal advice. The figures cited are approximations based on the Unidad Indexada (UI) and may vary with exchange rates; the new decree was still unnumbered at the time of writing. Consult a qualified Uruguayan tax or legal advisor for your specific situation.
