If you need assistance in setting up or managing your sole proprietorship in Uruguay, our team is here to help you. We facilitate all the procedures in an efficient and fast way, taking care of every step of the process and providing continuous support at all stages.
We have a team of expert accountants and lawyers specialized in tax, accounting and legal areas. You can entrust all formalities to our professionals and focus on the commercial aspects of your business.
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Advantages of opening a Sole Proprietorship in Uruguay:
- Fast incorporation and low registration costs.
- No minimum initial capital is required.
- It allows a wide range of commercial activities.
- Possibility of benefiting from a lower tax burden by complying with certain regulations.
- Diversity of types of sole proprietorships adapted to the specific characteristics of your project, providing personalized advice to choose the best option.
Sole proprietorships are widely used by Entrepreneurs and/or SMEs.
Services we offer for sole proprietorships:
- Opening of a sole proprietorship.
- Legal and tax advice.
- Registration with agencies such as DGI, BPS, MTSS.
- Business administration under Section E.
- Tax liquidation and filing of affidavits.
- Personalized legal and tax advice.
- Preparation of income certificates.
Key characteristics of a sole proprietorship in Uruguay:
- They do not have separate legal personality and the holder is liable with his personal assets.
- Variety of contributions according to the type of sole proprietorship: Monotax, Literal E, and General Regime.
- Ownership cannot be transferred.
- Faster incorporation than other types of companies, with a low registration fee.
- There is no minimum initial capital requirement or activity limitations.
- Possibility of accessing a lower tax burden.
- Different regimes available: Monotributo, Empresa Literal E, and General Regime, each with its own characteristics and limitations.
What is required to open a sole proprietorship?
- Be over 18 years of age.
- Have a BPS user.
- Present 2 photocopies of the holder’s identity card.
- Provide proof of tax domicile.
In addition, it is possible to open a sole proprietorship for a construction site, following a process similar to that of other types of sole proprietorships with some additional requirements.
There are three sole proprietorship regimes in Uruguay.
1- Monotax: Ideal for micro-entrepreneurs and SMEs that only sell to final consumers, excluding invoicing to other companies. This regime is especially designed for small businesses such as fair stands, handicrafts, kiosks, tour guide services, private tutoring (with restrictions), photography, car care, pet walking, among others. Operations must be carried out in premises of no more than 15 square meters. The Monotributo simplifies contributions by merging them into a single tax, payable to the Banco de Previsión Social (BPS) instead of the Dirección General Impositiva (DGI). For the year 2024, an annual turnover cap of 1,074,998 is established and the hiring of up to one employee is allowed.
2- Literal E or Minimum VAT Company: This regime allows annual income up to $ 1,791,662 by 2024. Under this regime, companies can invoice both other companies and final consumers, but do not make VAT deductions, paying a fictitious VAT instead. There are no limitations on the number of employees or the size of the commercial space. Tax obligations include monthly payments to the DGI. Tax exemptions are offered during the first two years of operation. This regime is common among delivery and cab app operators, as well as businesses with premises larger than 15 square meters, such as salons, hairdressers, bakeries and clothing stores.
3- General Regime: Sole proprietorships under this regime do not have a turnover limit. It is usually chosen by independent professionals, service providers to companies or small businesses with revenues higher than those of Literal E, such as general businesses and importers. Under this regime, the company may be subject to the payment of IRPF (Personal Income Tax) or IRAE (Tax on Income from Economic Activities), in addition to Wealth Tax. VAT is calculated based on the difference between the VAT charged on sales and the VAT paid on purchases.
De Facto Partnership
Another common modality is the de facto partnership, where two or more persons contribute capital to undertake a specific activity, sharing both profits and losses. They can operate under any of the above-mentioned regimes: Monotax, Literal E or General Regime.
Tax registration and the tax system
As regards tax registration and the tax system, it is necessary to register the sole proprietorship with both the General Tax Directorate (DGI) and the Social Security Bank (BPS), by completing forms 351 and 205 and presenting them at the respective offices.
Applicable taxes include 22% VAT on the sale of goods and services, 12% income tax and up to 8% health contribution. The maximum annual turnover allowed is 641,946 Uruguayan pesos, equivalent to approximately US$22,000.
For sole proprietorships in Uruguay, corporate income tax is 25% of taxable income.
For small and medium-sized companies, there is the option of joining the Simplified Tax Regime, basing the payment of taxes only on sales. The effective tax rate under this regime varies between 3.3% and 18%, depending on the type of activity carried out by the company.
For more information, do not hesitate to contact our specialists and arrange a virtual meeting free of charge.
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