Punta del Este - My Second Home


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Manual de Inversiones. Razones, explicaciones y métodos de como invertir en Punta del Este.

Emitido por: Destino Punta del Este, Institución de socios mixtos (público y privado) que promocionan Uruguay y Punta del Este, en el mundo, como destino de inversiones y de segunda residencia.

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Punta del Este - My Second Home

  1. 1. PROPeRtY GuIdePunta del este MY second hoMe best Quality of life, NaturallyPunta del este | my second home 1
  2. 2. CONTeNTs INTRODUCTION 3 INTRODUCTION the purpose of this work is to provide foreigners who are interested in making real estate investments in 4 INfORmaTION uruguay with a general introduction to the main fea- 4 Geography and weather conditions tures of the country’s legislation which may be of in- 4 Population and language terest to someone considering it for a real estate in- 5 Political system and Goverment vestment or for a second residence, as well as with a 5 living in uruguay guideline to the main legal aspects involved in select- 6 excellent Background ing, purchasing and utilizing real estate in uruguay. 7 combined with modern infrastructure for quality of living It is important to point out from the start that no limi- tations are imposed on foreigners for the purchase of 8 PROPeRTy RIghTs IN URUgUay real estate in uruguay and no requirements exist for 8 ownership of Real estate such foreigners to have any kind of domicile in the 8 leases country. any person or legal entity, regardless of its 8 apartment buildings nationality or place of domicile, may own real estate 9 country clubs in uruguay, whether in tourism or agricultural areas 9 land and Planning with no limitations of any kind and at any time when 9 trusts selling their property may repatriate the result of its investment as well as rents derived form their invest- 10 Real esTaTe TRaNsaCTIONs ment without the need for any kind if authorization or 10 Registration of real estate rights intervention by uruguayan authorities. 10 structure of the real estate operations 12 Financial real estate transactions In the last few years foreign investment in real estate 13 taxes applicable to real estate transactions has increased most significantly in the following main areas: a) Punta del este and its adjoining locations of la 14 fOReIgNeRs RIghTs TO ResIDeNCe aND Barra, manantiales and José Ignacio, the department CITIzeNshIP IN URUgUay of Rocha with its still underdeveloped oceanic beach- es, colonia del sacramento and the costal areas of the 15 legalIzaTION Of DOCUmeNTs COmINg Río uruguay, which have experienced the construction fROm abROaD of important tourism projects together with a constant flow of individuals in search of holiday retreats; and b) 15 INheRITaNCe laws agricultural lands spread out far and side across the country for all kinds of projects such as agriculture, 16 Taxes cattle grazing, forestry, viticulture and dairy projects. also the purchase of large rural estates to set up hunt- 18 INvesTmeNT PROmOTION ing reserves has become quite common. 18 General Regime 21 tourism sector www.destino-puntadeleste.com 23 General regime/tourism sector www.uruguayxxi.gub.uy 24 PUNTa fOR saleJose Ignacio’s lighthouse2 Punta del este | my second home 3
  3. 3. INfORmaTIONabOUT URUgUay there are no indigenous people; a high percentage of deo may be crossed from one end to another by car in uruguayans are descendants of european immigrants, a little more than an hour, at any time of day. mainly spanish and Italian. cities have large green spaces and thanks to the con- the rate of population growth is one of the lowest in tinuity of the winds and the absence of polluting indus- latin america: 3 per thousand per year, similar to that tries, there is no environmental pollution. this positive of most developed countries. statement is also valid for rivers and coastal sea, also facing montevideo. spanish is the official language and the one normally used. teaching english and French has been a tradition the benefits of the climate and the absence of environ- in the country, and english is mostly used by the busi- mental pollution, the range of the sanitary and drinking ness community. currently, the study of Portuguese is water networks and the scope of medical care, provide also consolidating as a consequence of the integration a high level of healthfulness to the people. epidemics process in meRcosuR. of any type are practically inexistent. Political system and government due to its territorial extension, the distances to travel in order to access to recreational areas (for example the uruguay is politically organized as a democratic republic countryside, beaches and river shores) are reduced. with a presidential system. the state is organized in three the most popular beaches extend over a distance of independent Powers: executive, legislative and Judicial. almost 300 km between montevideo and the border with Brazil. the national sport par excellence is foot- living in Uruguay ball, which attracts the vast majority of the populationaN OUTlINe Of URUgUay of all social levels. there are several private clubs with In uruguay life can be safe, placid, healthy and pleas- sports fields, particularly excellent golf courses, as wellgeography and weather conditions the most densely populated city is montevideo, the ant. the country offers the highest security level in as state sports facilities, which can be acceded at very capital city, which has the most important port, fol- south america in a broad sense. crime rate is very low low costs or also for free. there also is an importanturuguay is located in south america, on the atlantic lowed by Paysandú and salto (on the shore of the River in comparison with the other countries of the region. cultural activity which is translated into a wide range ofcoast, between Brazil on the north and argentina on uruguay) and las Piedras (near montevideo). there are no racial, religious or other types of con- theatrical, musical and cinematographic shows.the West. flicts, and political meetings are held peacefully. Punta del este, on the atlantic coast and 130 kilome- the uruguayan market offers vehicles, electrical ap-It has an area of approximately 176,000 km (68,000 2 ters from montevideo, is one of the most popular bath- the movement of vehicles is smooth, even in city cen- pliances, beverages, food and other consumer goodssquare miles) excluding territorial waters. ing resorts in south america, highly active during the ters. time spent on commuting is reduced; montevi- of any origin and quality. summer season (January and February).there are no remarkable topographical features. most of maldonadothe surface consists on rolling hills crossed by long rivers. Population and language josé ignacioWeather conditions are enjoyable and healthy throughout uruguay’s population, according to the census car- manantiales punta ballenathe year. summer temperatures average between 21 ºc ried out in 2004, is 3.3 million, of which near 1.3 mil- la barraand 27º c (70º F and 80º F), Winter temperatures vary be- lion live in montevideo and its surroundings. For thetween 10º c and 16º c (50º F and 60º F) and there are some whole country, approximately 89% of the population punta del estecold days occasionally. Rainfall may occur on any season, is urban. maldonadobut it is usually heavier during the months of autumn. montevideo4 Punta del este | my second home 5
  4. 4. INfORmaTIONexcellent background RaNkINg URUgUay IN URUgUay IN QUalITy Of eleCTRICITy sUPPly bROaDbaND PeNeTRaTION glObal PeaCe INDex sOUTh ameRICa The wORlD (RaNkINg) (RaNkINg) (RaNkINg)uRuGuay has a stRonG democRatIc tRadItIon,chaRacteRIzed By PolItIcal and socIal staBIlIty. Us 23 Uruguay 46 New zealand 1 low Corruption 2 24 (transparency InternationaloPen, staBle and RaPIdly develoPInG econo- 2010) Ireland 25 Chile 47 Ireland 6my WIth RelIaBle and hIGh level InstItutIons. Chile 30 argentina 48 Uruguay 24 Democracy Index 1 21one oF latIn ameRIca’s hIGhest GdP GRoWth (the economist Intelligence spain 36 brazil 54 spain 25Rates. unit 2010) Uruguay 37 Panama 57 Chile 28modeRn and attRactIve Investment ReGIme. economic freedom Index 2 33 hungary 46 Colombia 61 Italy 40 (heritage Foundation 2011)theRe aRe no RacIal oR RelIGIous conFlIcts. Italy 47 Costa Rica 63 argentina 71uRuGuay Is FRee FRom ePIdemIcs and natuRal Quality of living 1 70dIsasteRs. New zealand 56 brazil 83 (mercer eco-city Ranking 2010) brazil 63 Us 85nIce WeatheR and aBsence oF natuRal low cost of living 4 13dIsasteRs Plus aBundance oF WateR. argentina 93 (mercer cost of living city Ranking 2010) World economic Forum’s Global World economic Forum’s Global economist Intelligence unit 2010 competitiveness Report 2010-2011 competitiveness Report 2009-2010Combined with modern Infrastructurefor quality of livingWoRld-class PoRt FacIlItIes In montevIdeo, health caRe and hIGhly sPecIalIzed medIcInea ReGIonal huB PaR excellence FoR south InstItutes, WIdely coveRed By aFFoRdaBleameRIca’s southeRn cone ReGIon. PRIvate local and InteRnatIonal health In- suRance comPanIes.latIn ameRIca’s most dense hIGhWay netWoRk. hIGh qualIty GolF couRses WIth modeRn ame-2009: neW teRmInal at montevIdeo aIRPoRt, nItIes stRateGIcally located thRouGhout theneW colonIa FeRRy PoRt and neW montevIdeo countRy WIthIn shoRt dIstance FRom maJoRRInG Road. cItIes.hIGhest InteRnet, BRoadBand, Pc and tele- Polo FIelds hostInG InteRnatIonal touR-Phone PenetRatIon In latIn ameRIca (e.G. 123 naments WIthIn shoRt dIstance FRom maInmoBIle lInes PeR 100 ResIdents In 2009). InteRnatIonal aIRPoRts.98% oF teRRItoRy WIth access to loW-costelectRIcIty (mostly FRom ReneWaBle souRc- Punta del este’s shorees) and dRInkInG WateR.6 Punta del este | my second home 7
  5. 5. PROPeRTy RIghTs IN URUgUayTerramar Christie’sthe following, is a summary of the general principals ment. at the expiration of the term of the lease agree- during the construction phase however, the execution Pursuant to lot, the municipal Governments are em-governing real estate property rights in uruguay. ment, possession returns to the lessor and lessee and registration of promises of sale with respect of powered to issue land use instruments to regulate all loses all rights to the property. the future apartments is admitted by law, granting the aspects relating the construction and future develop-Ownership of real estate purchaser the rights described below. ments of urban communities such as -among others- the legislation in force limits the term of lease agree- the categorization of lands as belonging to urban, sub-Real estate property may be owned by one or more in- ments to a maximum of 15 years. Country Clubs urban or rural areas, the determination of the type ofdividuals, partnerships and corporations, or a combi- construction and activities admissible in each area, thenation of the same. apartment buildings housing in the form of private country clubs has be- minimum size of plots and the consecration of certain come increasingly common in uruguay. law 17,292 areas as of special environmental protection.the nationality or legal residence of such individuals, the legal existence and property rights over each regulates property rights of plots in country clubs aspartnerships or corporations is not relevant as far as apartment of a condominium, the administration of the well as the contribution of each plot to the common ex- Trustsacquiring the property is concerned. the transfer of building and the rights and obligations of the owners penses, the administration and use of the common ar-real estate from owner to purchaser and its require- of such units are governed by law 10,751. such law eas, the size of the plots and other matters pertaining under law 17,703 of 27 october 2003, trusts, so com-ments is addressed below. establishes the requirements for each apartment to to the premises to be built by the owner of each plot. mon in other legislations, were introduced in the uru- become independent real estate properties separate under this law the independent legal existence of each guayan legal regime. a trust is a legal vehicle to holdthe only current restriction in force refers strictly to from the building, the rights of the individual owners of plot will be the result of the granting of the municipal fiduciary property, as a separate patrimony from that ofagricultural land: law 18,092 of January 7, 2007 (as each apartment as well as their rights to use the com- approval of the infrastructure works carried out in the other persons. the fiduciary property consists of certainamended by law 18,172) imposes certain restrictions mon areas and amenities of the building. country club, the registration of the respective map assets or rights transferred by one or more persons,on the ownership and exploitation of rural or agrarian identifying plots and common areas and the execution (the trustor) to the trust in order for another person (theland in uruguay. Basically it establishes that agrarian as a general principle, each apartment is recognized by and registration of the Reglamento de copropiedad trustee) to dispose of or administrate, or exercise theland may be owned or exploited solely by individuals law as an independent real estate property only upon with similar characteristics to the those mentioned in rights in question, as the case may be, in accordanceor by certain types of companies, corporations or as- the completion of the building, the inspection and ap- the previous paragraph. with the instructions imparted in the trust agreementsociations. proval of construction by the municipal authorities, the and for certain pre-established purposes, for the ben- registration of the construction plans and the mandato- land Use Planning efit of a third party or parties (the Beneficiaries).leases ry execution of a deed (the Reglamento de copropiedad) which regulates the rights and obligations of the own- under law 18,308 dated 18 June 2008 (ley de orde- trusts may be constituted by an agreement enter into byunder a lease agreement (contrato de arrendamiento), ers of the units and establishes a mortgage over each of namiento territorial, or “lot”) a new legal frame- the parties or by means of a will or testament. all truststhe owner of the property (lessor) grants to another the apartments of the building in favor of the owners of work has been created regarding land use planning, must be executed by a written instrumented irrespectiveperson (lessee) the right to use and benefit from the all other apartments as security for the payment of said which purpose is to organize the use of land, improve of their purpose, and must be executed as a public deedproperty for an agreed period of time, subject to the common expenses. a special regime is created by law the quality of life of citizens and environmental use of when such formality is required by law (for example, iflimitations and conditions set forth in the lease agree- 16,760 for buildings which are financed by banks. natural resources. the fiduciary property consists of real property).8 Punta del este | my second home 9
  6. 6. Real esTaTe TRaNsaCTIONsRegistration of real estate rights structure of the real estate operations to the opinion of the asociación de escribanos del registration, shall grant full protection and preemp- uruguay (the uruguayan association of escribanos). tion to the rights of the buyer over the real estateuruguay has an excellent real estate regime in place a) the PRelImInaRy aGReement some preliminary agreements establish that the property over any other right subsequently createdunder which title to real estate and all rights pertain- It is customary that the parties, upon reaching an buyer may unilaterally desist of the operation if said regarding such property: attachments or encum-ing to real estate, in order to be valid before third par- agreement on the commercial terms for the pur- buyer’s escribano formulates duly grounded obser- brances, purchase and sale or lease agreementsties, must be registered before the pertinent public chase of any kind of real property (whether a house, vations. affecting the property or any other circumstanceregistry. the chronological order in which such rights an apartment or a ranch or agricultural land), exe- which could affect the property right of the seller orare registered grants precedence to the various rights cute a preliminary agreement (a Boleto de Reserva). since this preliminary agreement will contain all the its right to dispose of its property. additionally, theregistered with respect of a property. the system is so With the execution of such preliminary agreement, main negotiated aspects of the deal, it is advisable buyer is entitled to assign to third parties his o hersafe that title insurance is unheard of in the country. a percentage of the purchase price -usually 10%- is that the buyer –upon reaching a commercial agree- rights acquired in virtue of this promise of sale. deposited by the buyer with the acting escribano, to ment with the seller and/or the real estate agent-Further, all real estate transactions and most contracts be kept in escrow as security for the compliance of immediately contact his escribano to make sure this this law further stipulates that, if the seller werewhich create rights over real estate property (includ- the obligations of the buyer under the agreement agreement and all other contractual documentation to default in its obligation to execute the purchaseing security on real estate) must be executed before and released in the moment in which the agreed is correctly negotiated and prepared. agreement or were unable to do so for any reasona lawyer specialized in such matters (an escribano) in trasnacation is executed. (including death), the pertinent court, upon verifica-the form of a public deed and registered with the Real B) the ReGIsteRed PRomIse oF sale tion that the purchase price has been either paid inestate Public Registry. It is common practice that preliminary agreements uruguayan law contemplates, in case of real estate full or deposited with such court, shall execute the will establish a 30-day term for urban properties transactions where the purchase price is to be paid in purchase agreement in the name and on behalf ofIn the case of the purchase and sale of real estate, it or 60 day term for agricultural land to conduct due installments or where there are deferred obligations the seller and in favor of the buyer (or the succes-is the buyer who has the right to appoint the escribano diligence work and title search to confirm good and to be complied with by the parties, the execution of sors or assigns of the same).who is to act in the transaction and authorize the pur- clean title in the name of the seller. such terms are a promise of sale (compromiso de compraventa),chase agreement. said escribano shall conduct a due not mandatory and other may be agreed upon. It which principles are regulated by law 8,733. this structure is commonly used to purchase apart-diligence on the title deeds of the property, obtain in- is also common that the agreement provides that ments in buildings under construction, allowing theformation from the public registries and further check upon the existence of substantiated observations this promise of sale shall be executed before the es- buyer to obtain secure title to the property beingthat all the taxes and fiscal obligations have been paid to the title deeds with respect of which the parties cribano appointed by the buyer - substantially in the built and the seller to receive payment in install-and all other legal requirements complied with. do not reach an agreement the matter be deferred form of a definitive purchase agreement - and, upon ments during the construction period.Terramar Christie’s10 Punta del este | my second home 11
  7. 7. Real esTaTe TRaNsaCTIONsc) the PuRchase aGReement escribano who will be responsible for their subse- be in charge of carrying out the due diligence described tice the fiscal value of properties is considerably low-Real estate purchase agreements must be executed quent payment to the tax authorities. above and drafting a mortgage agreement over the er than their market value, and may be estimated atbefore an escribano in the form of a public deed which property in question (in the event of a purchase agree- about 50% of the market price or less even though ofis entered into said escribano´s book. Registration of the purchase agreement with the per- ment) or a pledge over the buyer’s rights (in the event course, this is only an estimation and in certain cases tinent registry will cause it to be valid and enforceable of a promise of sale). not applicable.as stated above, the role of the escribano is not only against third parties as of the date of registration. Iflimited to the drawing up of the agreement and its not registered, the agreement will only be valid be- mortgages must also be executed as a deed before an the ltt is deposited with the escribano upon the ex-authorization under his signature and seal; the said tween the parties thereto. escribano, who, in this case, is customarily appointed ecution either of the promise of sale or the purchaseprofessional further acts on behalf of the state as a by the creditor and registered with the Real estate agreement, who shall be in charge of making the cor-controlling agent that confirms that the seller is up to financing real estate transactions Public Registry. the security rights created by the responding payment before the fiscal authorities pri-date with the payment of certain taxes, that all pen- mortgage shall only rise and become enforceable as or to registration of the purchase deed together withsion funds contributions related to the construction of Financing for the purchase of real properties in uru- of the date of registration. other taxes.the premises which are part of the property have been guay is available through banks and financial institu-paid as per certain certifications issued by the pen- tions, even though such practice is far from as com- Taxes applicable to real estate transactions 2. stamP dutIession funds institution, that all necessary permits and mon as it is in europe and the united states, and many stamp duties, or montepíos notariales, are appli-authorizations have been obtained, etc. Reference to real estate transactions are carried out without such 1. land tRansFeR tax cable to all transactions in which an escribano par-such controls as well as the inclusion of other clauses financing on a cash on hand basis or with financing all real estate purchases are subject to a land trans- ticipates.in the purchase agreement is mandatory for the due provided by the seller. fer tax, or Impuesto a las trasmisiones Patrimoniales,registration of purchase agreement in the Real estate (the “ltt”) which amounts to four per cent (4%) of the In case of a real estate purchase agreement and mort-Public Registry. additionally certain taxes to be paid customarily, the lender will participate in the deal fiscal value of the property and is paid in equal parts gage agreements, stamp duties amount to approxi-at the execution of the agreement are collected by the through its own legal advisors and escribano who will by both the buyer and by seller (i.e, 2% each). In prac- mately 0,55% plus vat (22%) of the purchase price. Jose Ignacio’s lighthouse Punta del este’s Port12 Punta del este | my second home 13
  8. 8. fOReIgNeRs RIghTs legalIzaTION OfTO ResIDeNCe aND DOCUmeNTs COmINgCITIzeNshIP IN URUgUay fROm abROaD INheRITaNCe lawsobtaining a resident permit in uruguay does not pose 2. the granting of a common passport to the person uruguay is not a signatory to the hague convention under uruguay law, upon the demise of a person, the di-great difficulties. Foreigners are admitted to reside in question, his or her spouse and children under abolishing the Requirement for legalization for For- rect descendants of the deceased, whether legitimate orpermanently in the country if they comply with the fol- 18 years of age who have also obtained permanent eign Public documents and therefore does not accept natural, and in their absence, his or her ascendants to-lowing three general conditions: a) to be of good health, legal residence. legalization of documentation by means of the “apos- gether with the surviving spouse are considered as “force-b) to prove to be of good conduct and, c) to have enough tille”. all documents coming from abroad must be le- ful heirs” of the estate of the deceased. In the absencemeans to support themselves and their family. 3. maintenance within the uruguayan territory of galized before the uruguayan consulate of the place of both parents and spouse, the siblings of the deceased life insurance policies and those related with the in which the document was issued or before the uru- whether legitimate or natural shall be the heirs. the lawlegal citizenship may be obtained by non nationals if pension funds coverage which may have been con- guayan consulate with jurisdiction over such place. reserves for such forceful heirs a mandatory portion of thethey have resided in the country for a term of at least tracted abroad. estate. even by means of a will, a person who at the time ofthree years (if they have resided with their families) or In the event that there effectively is no uruguayan con- his death has forceful heirs may not dispose of more thanof five years (in case they have resided on thier own) these persons, in order to benefit from this regime, sulate with jurisdiction over such place, indirect legal- a certain percentage of his or her estate in the benefit ofand - in both cases - have been of good conduct. must either: (a) Purchase real estate to be destined ization is accepted. In this case, the document is legal- third parties or may not alter the percentage of the estate to their habitation within the uruguayan territory for ized before the consulate of any country in which there that corresponds to any one of such forceful heirs.Furthermore, foreigners who have retired or obtained a value of not less than 100,000 us dollars, which exists a uruguayan consulate and then legalization isa pension abroad and who wish to obtain permanent they will not be able to sell for a period of 10 years; completed before such uruguayan consulate. the percentage of the estate assigned to such heirsresidence in uruguay shall have the right to the fol- or (B) acquire bonds issued by the uruguayan gov- depends upon their number. In the case of one singlelowing benefits, as prescribed by law 16,340 and de- ernment for a minimal nominal value of 100,000 us It is advisable to consult with uruguayan counsel be- child, the percentage of the estate that can be freelycree number 119/2004: dollars, which will remain in deposit with the Banco fore embarking in legalization of documents since le- bequeathed to other individuals is 50%; if there are two de la República oriental del uruguay for a period galization requirements are observed quite strictly. children a person may dispose by means of a will of up to1. the introduction into uruguay, with the first 6 of not less than 10 years. Further, upon other re- 1/3 of his estate to others, other than his or her forcefulmonths of the obtaining of the permanent legal resi- quired documentation, these persons will need to heirs, and in the case of three or more, this percentagesdence, free of any and all customs duties and taxes of submit to the dirección nacional de migraciones is reduced to 25% of the estate. If there are no childrenthe following goods: (a) the furniture and household (the national Immigration agency) certifications is- and the forceful heir or heirs are one or both parents, theappliances of their residence, in reasonable quanti- sued by the entity or pension fund serving the re- testator may dispose freely of fifty per cent of his estate.ties as the customs authorities may estimate; and (b) tirement pension attesting to the existence of thea motor vehicle which they will not be authorized to same, which must exceed a minimum of 1,500 us the uruguayan civil code regulates the legal actionstransfer for a period of 4 years as from the moment of dollars a month and be of a permanent and periodi- forceful heirs have at hand in order to be compensatedits introduction into the country. cal nature. for the breach of their rights in the estate. fOReIgNeRs aRe aDmITTeD TO ResIDe PeRmaNeNTly IN The COUNTRy If They COmPly wITh The fOllOwINg ThRee geNeRal CONDITIONs: a) to Be oF Good health, B) to PRove to Be oF Good conduct, c) to have enouGh means to suPPoRt themselves and theIR FamIly. Punta del este’s Bay14 Punta del este | my second home 15
  9. 9. Taxesaside from spectacular landscapes, uruguay offers threshold below which the tax is not applied. For thevery interesting investment opportunities in the real year 2010, this threshold was of approximately usdestate market. 111,000 for single individuals and usd 222,000 for married couples who elect to be taxed as such.Investing in real estate in uruguay is becoming moreand more attractive, not only because the economic en- state PRoPeRty tax (“contRIBucIón InmoBIlIaRIa”):vironment is very favorable, but also because taxes do Real estate properties in urban and suburban areasnot substantially affect investor’s returns. taxes over are subject to a property tax, imposed by state Govern-real estate transactions and holding of real estate are ments. the tax base is the local cadastral value of thelower in uruguay than in most countries in the region. property. the tax rates vary depending on the state. In maldonado (state where Punta del este is located) thebuying Real estate: applicable taxes tax rate is 6.8%.land conveyance tax (“ItP”): Real estate properties in rural areas are subject to atransfer of real estate is subject to ItP, payable both similar tax, imposed by the national Government andby the seller and the buyer. the tax rate is 2%, appli- collected by the state Governments.cable over the fiscal value of the property duly adjusted Terramar Christie’sfor inflation. PRImaRy school PRoPeRty tax (“ImPuesto de PRImaRIa”):value added tax (“Iva”): a national tax is also levied on real estate properties inIf the house is bought to the construction company, the uruguay, destined to the financing of the public prima- out paying any other tax. this favorable tax treatment erty held by an individual or a foreign company, same willsale will be subject to Iva at a 10% rate. ry school system. the tax base is the cadastral value of is not applicable if three or more real estate properties pay income tax (IRPF / IRnR) at a 12% rate over the lease the property. the tax rates vary from 0.15% to 0.30%. are sold within one year. price. dividends remitted abroad by the foreign companyOwning Real estate: applicable taxes will not be subject to tax withholding in uruguay. selling Real estate: applicable taxes If the real estate is held through a uruguayan company,net WoRth tax (“IP”): income deriving from the sale of the property will be If the real estate is held through a uruguayan com-If you own real estate in uruguay you will have to pay land conveyance tax (“ItP”): subject to corporate income tax (IRae) at a 25% rate. pany, income deriving from the lease of the propertynet Worth tax every year. the tax will depend on the transfer of real estate is subject to ItP, payable both Profit on sale of the property is determined by the differ- will be subject to corporate income tax (IRae) at a 25%vehicle that you use as holder of the real estate. by the seller and the buyer. the tax rate is 2%, appli- ence between the sales price and the cost of acquisition, rate. also, dividends distributed by uruguayan compa- cable over the fiscal value of the property duly adjusted updated for inflation and amortized. also, dividends dis- nies are subject to withholding tax of 7%. PreferentialIf you decide to hold the real estate through a legal en- for inflation. tributed by uruguayan companies are subject to with- tax treatments may be available for certain type oftity (be it a local or foreign company), net Worth tax holding tax of 7%. Preferential tax treatments may be uruguayan companies.will apply at a 1.5% rate on the revalued purchase price Income tax (“IRae”, “IRPF” oR “IRnR”, dePendInG available for certain type of uruguayan companies.of the property. on the holdeR oF the PRoPeRty): If you are the tenant: the applicable income tax varies according to who the Renting Real estate: applicable taxes a recent law allows individual tenants who are uru-If you own the real estate in a personal capacity, net holder of the real estate is. guayan tax residents to deduct from their Income Per-Worth tax is applied at progressive rates ranging be- Income tax (“IRae”, “IRPF” oR “IRnR”, dePendInG sonal tax (“IRPF”), a 6% of the rental payments, if theytween 0.7% and 2%, applicable over the property’s fis- In the case of sale of property held by an individual or on the holdeR oF the PRoPeRty): report the identity of their landlord to the tax authority.cal value. a foreign company, same will pay income tax (IRPF / this may be extended in the future to holiday rentals. IRnR) at a 12% rate over the difference between the If you are the landlord:different deduction rules apply to companies and indi- sales price and the purchase price. once the property the applicable income tax varies according to who the value added tax (“Iva”):viduals. In the case of individuals, there is a net worth is sold the shareholder can repatriate the money with- holder of the real estate is. In the case of lease of prop- Iva does not apply to the lease of real estate.16 Punta del este | my second home 17
  10. 10. INvesTmeNT PROmOTIONgeneral Regime (Decree 455/007) benefits ObjeCTIve INDICaTOR POINTs (0 TO 10 POINTs)scoPe a. Income tax job creation Number of net jobs (annual average) One point for every 3 jobscommercial and service companies are eligible to ap- under the former regime companies could access anply for tax benefits for their projects. exemption on taxable income equivalent to 50% of the Decentralization human Development Index (hDI) for [(hDI max. –hDI Dept. / (hDI max. Department where project is located – hDI min.)] x 10 investment financed with own funds, or with or withthe highlights of the investment promotion regime are: funds generated by the project itself for three years, as Increase in exports variation in exported amount One point for every UsD 200 thousand in exports (with project – w/o project)1. direct exemption from business income tax (IRae). of submission of the benefit application. Increase in national value added Ratio of wages and local purchases {[(wages + local sales) / sales]w/p / to total sales with and w/o project [(wages + local sales) / sales]w-o/p} -1) x 102. does not require investments to be financed with In turn, they could defer the remaining nonexempt 50% Use of clean technologies Investment in cleaner production (CP) One point for every 10% of investment own funds in order to access IRae exemption. by self-channeling until the fifth year following that of with respect to total investment in project in CP as share in total investment the investment. Increase in research and (Investment in R&D+i / total investment), or One point for every 10% of investment3. Investments considered to be in the national development and innovation (number of employees in R&D+i / total employees) in R&D+i for chosen indicator interest include the acquisition of movable assets companies with qualified projects can access IRae ex- Project’s impact on economy Increase in gDP generated by project One point for every 0.003% of increase to be used directly in company activities, fixed emption of up to 100% of the eligible investment (re- in country’s annual gDP improvements and intangibles (to be determined gardless of source of financing), depending on the in- by the executive). vestment amount, which determines project category, and position within the category. depending on the points scored, projects will have ac- other projects will be rated based on their scores on4. Investments made as of six months prior to the cess to an IRae exemption ranging from 51% to 60% of the objectives and indicators matrix, weighted accord- application date can be included. a.1 Project rating the investment during a period of from 3 to 5 years, per ing to the investment amount. depending on scores, to determine the amount of the benefit and the period the following table. they may access the following exemption percentages:5. Rules classify projects, depending on the for IRae exemption, projects are rated based on the investment amount measured in indexed units (uI), matrix of objectives and indicators appearing in the IRae exemPTION amOUNTs aND TeRms fOR small PROjeCTs, PROjeCT IRae exemPTION as small, medium (tranches 1 and 2), large following table PeR POINTs sCOReD CaTegORy (tranches 1 to 3), and high economic impact. amOUNT TeRm For small projects, companies must select one of the POINTs IRae exemPTION following objectives: medium 70% of amount invested 25 years x matrix • Job creation % Of amOUNT INvesTeD TeRm (yeaRs) Tranche 1 x matrix score / 6 score / 10 PROjeCT amOUNT IN amOUNT IN • Increase in research and development 0 0% 3 CaTegORy mIllIONs Of UI mIllIONs Of UsD and innovation (R&d+i) medium 80% of amount invested 25 years x matrix 1 51% 3 • Increase in exports Tranche 2 x matrix score / 8 score / 10 small less than 3.5 less than 0.3 • Use of cleaner technologies 2 52% 3 medium – T.1 3.5 – 14 0.3 - 1.3 3 53% 3 large 90% of amount invested 25 years x matrix Tranches x matrix score / 10 score / 10 4 54% 3 1 and 2 medium – T.2 14 – 70 1.3 – 6.6 5 55% 4 large – T.1 70 – 140 6.6 - 13.2 6 56% 4 large 100% of amount invested 25 years x matrix Tranche 3 x matrix score / 10 score / 10 large – T.2 140 – 500 13.2 – 47.1 7 57% 4 large – T.3 500 – 7,000 47.1 – 660 8 58% 5 high 100% of amount invested 25 years 9 59% 5 economic high economic impact over 7,000 over 660 impact 10 60% 518 Punta del este | my second home 19
  11. 11. INvesTmeNT PROmOTIONProjects having high economic impact must score over c. ImPoRt dutIes and taxes In turn, if new investments are made during the period struction, improvement or expansion of the tourism60% on the matrix to access the exemption established. Regulations establish an exemption from import du- in which benefits are available, they will be considered Project, pursuant to the terms set forth in the promo- ties and taxes on fixed assets certified as not competi- in addition to the original investment, and the company tion declaration and to the conditions set forth in thea.2 matrix selection tive with uruguayan industry by the national office of may obtain reclassification and extension of terms. decree, may be amortized over fifteen years, and in-medium and large projects may opt for application of Industries (dnI) of the ministry of Industry, energy and vestments in equipment in five years.the matrix for their category or the matrix applicable mining (mIem). Tourism sectorto small projects. b. Net worth Tax (IP) d. ReImBuRsement oF value added tax on con- Decree 175/003 For purposes of computing IP, investments in infra-In this last case, requirements for generating points stRuctIon WoRk scoPe structure and building work for construction, improve-in the employment generation indicator depend on the eligible projects can benefit from reimbursement of vat tourism companies are eligible to apply for tax ben- ment or expansion of the tourism Project, pursuant totype of project and the amount of staff at the company, on local purchases of materials for construction and efits for their tourism projects. the procedures and the terms set forth in the promotion declaration and tobeing more demanding the larger the project or the services hired in connection with construction work. benefits under this system are applicable to: the conditions set forth in the decree, will be computedlarger the company. as exempt assets at the close of the year in which the e. Fees and WaGes FoR technoloGIcal devel- a) tourism activities providing lodging, cultural, com- works commenced and the ten following years. Invest-a.3 exemption ceilings oPment oF PRIoRIty aReas mercial, congress, sports, recreational, entertain- ments in fixed assets will be considered exempt at theexemptions cannot exceed the following percentages For income tax purposes, the regulation permit com- ment and health services, which constitute a complex close of the year in which the asset was acquired andof income tax payable: puting one and a half times the amount of fees and unit for the purpose of attracting tourists (hereinafter the four following years. wages for project work in scientific and technological called tourism Projects) approved pursuant to lawa) 90% - years included in the first 50% development in priority areas (per articles 49, 52 and 16,906 as regulated in the decree. c. value added Tax (Iva) of the maximum term granted. 55 of decree 150/007). credit for Iva included on local purchases of goodsb) 80% - subsequent years corresponding b) hotels, aparthotels, Inns, motels and vacation and services for use in construction, improvement or to 10% of the maximum term. FolloW-uP and contRol Ranches constructed or to be constructed. expansion (infrastructure and construction works) ofc) 60% - subsequent years corresponding Beneficiaries must file their Financial statements with the tourism Project. exemption from Iva on imports of to 10% of maximum term. comaP within four months following the close of each aPPlIcaBIlIty goods for the same purposes.d) 40% - subsequent years corresponding business year, accompanied by a public accountant’s a tourist activity will be declared to be promoted when to 10% of maximum term. report (audit in the case of large taxpayers, limited it contributes: For investments in fixed assets a credit for Iva will bee) 20% - subsequent years corresponding Review for companies categorized for tax purposes as • To the geographic and touristic development of granted for assets acquired locally and an exemption to 10% of maximum term. cede sector firms, and compilation in other cases) con- infrastructure in the area in which the project from tax on imports.f) 10% - subsequent years corresponding taining information permitting calculation of indicators. will be located. to 10% of maximum term. • To the total or partial coverage of specific needs d. Import taxes the regulation set tolerance margins for achieving the in the area’s tourist offering. exemption from 50% on all taxes on imports of materi-In all cases, exemption period is computed as of the year projected points. additionally, for exceptional reasons • To the generation and attraction of tourism. als and goods for construction, improvement or expan-in which taxable income is obtained, provided four years alien to the company, unforeseeable at the time of • To the creation of innovative tourist services. sion of fixed assets for furnishing the tourist Project.have not elapsed since qualification of the project. project submission, there is a possibility of obtaining Investments made under paragraph b above can only suspension of the time schedule for meeting project tax BeneFIts make use of benefits for net Worth tax, value addedB. net WoRth tax targets, and to recompute the terms and benefits. tax benefits will be applicable to tourism Projects pro- tax and Import taxes when they are made in furnish-companies can access net worth tax exemption for the moted under law 16.906, on a step basis, according ings and equipment.full useful life of movable assets applied to the project. neW Investments and ReclassIFIcatIon to progress on implementation of the works and theIn the case of investments in construction works, the If a company complies with the requirements set for schedule approved. they are as follows: oPtIon FoR InvestoRs:term is 8 years if located in montevideo, and 10 years if a higher category than the original one, it can request GeneRal oR sPecIal ReGImelocated in the interior. the benefits of such category. a. business Income Tax (IRae) Investors in hotels and tourism complexes have the For purposes of computing IRae, investments in con- possibility to choose between the general benefits20 Punta del este | my second home 21
  12. 12. INvesTmeNT PROmOTIONunder decree no. 455/007 and the specific benefits Operator: general regime/Tourism sector (including Condohotels)established by decree no. 175/003 for tourism promo- the furniture for the tourism Project’s furnishing,tion (investors can choose benefits for certain taxes which are incorporated by the operator, throughout RegIme beNefICIaRy IRae exONeRaTION NeT-wORTh Tax (IP) valUe aDDeD Tax (Iva) ImPORT Taxesunder one regime and benefits for other taxes under life. use and/or usufruct of the units given by the own- exONeRaTION exONeRaTION exONeRaTIONthe other). ers to the operator, for 11 years. General regime all enterprises • Small Projects: up • Moveable goods Iva exoneration on Import taxes exonera- decree nº 455/007 to 60% investment, for • Construction Works acquisition of construc- tion on imports of non-Decree 404/010 c. value added Tax (Iva) (*) (act. nº 16.906) up to 5 years tion materials and competitive moveable services to be used in goodsscoPe Developer: • Medium Projects: up construction works to 80% investment, forPromotion of tourism ventures operating under the Iva exoneration on goods imported for construction up to 20 yearscondominium hotels or “condohotels” regime. the works. Iva credit for purchase in the uruguayan market • Big Projects: up to 100%, for up to 25 yearspromotion affords benefits similar to those granted to of goods and services for use in the construction works.hotels operating under a traditional scheme. Below is tourist sector touristic complexes depreciation of invest- • Construction, im- credit for purchases 50% exoneration froma summary of the benefits which could be obtained by Operator: decree no. 175/003 ments made in: provement or expansion made in the uruguayan all taxes levied on (infrastructure or con- market and import imports of: • Construction, im-each of the parties involved in a “condohotel.” Iva exoneration on imports of fixed assets, for use as struction works), for a taxes exoneration on: provements or expan- • Construction materi- 10 year period (includes furnishing. Iva credit for purchase in the uruguayan sions (to be amortized properties where the • Goods for final use in als and goods for con- over 15 years) construction, improve- struction, improvementtax BeneFIts market of fixed assets to be used for furnishing works are located) ment or expansion or expansion • Equipment (to be am- • Fixed assets, for a 4 of (infrastructure ortax benefits will be applicable to condohotels accord- ortized over 5 years) year period • Fixed assets for use construction works) in furnishinging to the following description: d. Import taxes • Fixed assets for fur- developer: nishing or renovationa. business Income Tax (IRae) exoneration on construction materials and goods im- hotels, apart-hotels, • Only for equipment • Only for equipment • Only for equipmentDeveloper: ported as necessary for construction works. the de- lodging facilities, motelsthe IRae generated on the sale of units by the devel- veloper must choose one of the following options: and tourist ranchesoper is excluded from the exoneration. • 100% of the taxes levied on goods which are condohotels devolper the IRae generated on • The furniture for • IVA exoneration on exoneration on con- declared non-competitive with national industry. decree nº 404/010 the sale of units by the the tourism Project’s imports of fixed assets, struction materials andoperator: • 50% of the taxes levied on all imported goods. developer is excluded furnishing, which are for use as furnishing goods imported as nec- from the exoneration. incorporated by the op- essary for construction • IVA credit for purchase • Small Projects: up to 60% investment, erator, throughout life. in the uruguayan mar- works. the developer must choose one of the for up to 5 years Operator: • Use and/or usufruct ket of fixed assets to be following options: of the units given by the used for furnishing• Medium Projects: up to 80% investment, exoneration on imports of fixed assets for furnishing. owners to the operator, • 100% of the taxes lev- for 11 years ied on goods which are for up to 20 years the operator must choose one of the following options: declared non-com-• Big Projects: up to 100% investment, • 100% of the taxes levied on goods which are petitive with national industry. for up to 25 years(3) declared non-competitive with national industry. • 50% of the taxes levied • 50% of the taxes levied on all imported goods. on all imported goods.b. Net worth Tax (IP)Developer: operator • Small Projects: up to • The furniture for • IVA exoneration on exoneration on imports 60% investment, for up the tourism Project’s imports of fixed assets, of fixed assets for fur-IP exoneration on goods incorporated in construction to 5 years furnishing, which are for use as furnishing nishing. the operator incorporated by the op- must choose one of theworks, for the period they remain in the developer’s • Medium Projects: up erator, throughout life. • IVA credit for purchase following options: to 80% investment, for in the uruguayan mar-estate, for a term up to 11 years as of incorporation. up to 20 years • Use and/or usufruct ket of fixed assets to be used for furnishing • 100% of the taxes lev- • Big Projects: up to of the units given by the ied on goods which are 100% investment, for owners to the operator, declared non-com-this exoneration includes the property where the con- up to 25 years(3) for 11 years petitive with nationalstruction works take place. For the investments ex- industry. ecuted by the developer • 50% of the taxes levied and the operator. on all imported goods.22 Punta del este | my second home 23
  13. 13. PeRmaNeNT OR sUmmeR ResIDeNCe maRITIme faRmsPunta del este offers multiple options to enjoy in sum- include various houses and chalets of excellent con- maritime Farms are land properties with areas com- Private neighborhood modality is available, shar-mer, with a complete and improving infrastructure that struction, that generally have 2 or 4 bedrooms (1 or 2 prising approximately 4,000m2 up to 5 hectares with ing security and services such as swimming pools,brings an increasing number of persons to choose it as en suite), living room, fireplace, kitchen, service room, coast in the ocean or very near the beach that can sports fields and mini golf courses, spa, reception,the option for residence or second residence. For sum- bathroom, garden, barbecue and swimming pool. be found in different zones of Punta del este, from housekeeping, etc.mer vacations or for year round living, available options starting Price Us$ 250.000 laguna del sauce up to Jose Ignacio and Garzon. Parcels starting price Us$ 150,000 PRIvaTe NeIghbORhOODs faRmsPrivate neighborhoods or “countries” are an interest- such as the club house with pool, barbecue, play- It is possible to find along uruguay fertile lands with have old houses and others have modern edifications,ing home option: a closed residential area in which you grounds, sports fields and gymnasium are shared. stunning landscapes suitable for cattle breeding and with complete working facilities functioning with goodcan acquire a parcel of land from 500 to 2,000 m2 to agricultural activity. Particularly in maldonado, the return rates.build your desired house according to your personal starting Price of Parcels Us$ 80,000 farms are picturesque, undulated and have good ac-preferences or buy built ones. security and services houses from Us$ 200,000 cess, rivers, lakes and subterraneous waters. many starting price Us$ 3,500 per hectare24 Punta del este | my second home 25
  14. 14. TOweRs PRemIUm ResIDeNCesalong Punta del este´s coastline, at the zone of “Para- beautiful view. Five star hotel amenities are available: the sophistication of Punta del este can be appreci- ocean front, lake front or inside a large parcel, they alldas” in the “mansa” beach, in the Peninsula and up to concierge, security, housekeeping, beach service, out- ated in its entire splendor from one of the luxury resi- have a dreamed comfort and satisfy the most exqui-the first segment of the “Brava” beach, spectacular 20 door swimming pool, indoor heated swimming pool, dences that can be found in exclusive zones like “Bar- site clients. this unique type of properties, in front ofstories towers of buildings were erected with plenty of spa, gymnasium, sports fields, barbecues, event rooms, rio del Golf”, “Beverly hills”, “laguna del sauce”, “la the sea, with privacy, large spaces and incomparableservices and infrastructure. they are located mainly at business center, internet rooms, playrooms for adults Barra” or “José Ignacio”. at the glamorous level of the views, can be found for relatively lower values than inthe first row in front of the ocean or within a short dis- and kids, hairdressing, valet parking among others. most important sea side resorts, these spectacular other parts of the world.tance from the beach, with surrounding woods and a starting Price U$s 300,000 houses can be classic or have a vanguard style, with starting price: Us$ 1,500,000 bUIlDINgscharacterized for being constructions of approximately or premium, but generally all of them have reception,5 stories, they can be found in the woods zone as well security, housekeeping, beach service, swimming pool,as in front of the sea. they can be only one building or barbecue, gymnasium, business center, internet rooms,they can be built as condos in many blocks or in ter- and playrooms for adults and kids among others.races. the amount of services depends if they are basic starting price Us$ 200,00026 Punta del este | my second home 27
  15. 15. 28 Punta del este | my second home 29
  16. 16. 30 Punta del este | my second home 31