Ola Uruguay Real Estate and Investments

For many years Uruguay has been quietly providing a haven for companies to operate under the radar, in terms of privacy and tax authorities. This came in the form of the SAFI (Sociedad Anonima Financiera de Inversiones, or, in English, Financial Investment Corporations). The SAFI-type corporation was launched back in 1948 to be used for offshore activity only, and for the purpose of making a variety of investments including bonds, notes, debentures, shares, goods, property, shares, and securities.

However, under pressure from Mercosur, Uruguay passed a new law in 2007, which meant you could no longer register a SAFI. Furthermore, the SAFI is to be phased out by 2010, when existing SAFIs will have to become SAs (Sociedad Anonima). So what does this mean for the future of Uruguay as an offshore jurisdiction?

Well, actually, not much has changed. You can no longer register a SAFI, but instead you can register a SA, the typical corporate vehicle used in Uruguay. The SA can be used for both onshore and offshore activity, and since Uruguay taxes on a territorial basis, i.e. Uruguay only taxes income generated inside Uruguay, and assets located inside the country, the SA can essentially operate offshore in the same way as an SAFI. As a matter of fact, well before the 2007 law, since 2003, SAs have been used as the offshore vehicle of choice.

Asset and Income Protection
The SA provides limited liability and anonynimity for shareholders. The director or members of the board of directors are not required to be owners/shareholders. Instead, they are often third parties appointed by owners/shareholders. There is no public record requirement, and shareholders do not have to be registered publically, even if they own nominal shares.

Other advantages of the SA include:

• An SA can be activated in a short amount of time. If you are incorporating from scratch, it will take two to three months to incorporate. However, if you buy a ready-incorporated SA (a very common way of acquiring an SA) you could be set up in a matter of days.
• There is a fee to set up an SA but no injection of capital is required.
• It can be owned by a sole owner, such as a person (of any nationality) or a company.
• Shares can function as either bearer shares (where the owner is not officially identified, and is deemed to be the person who physically has the share in their possession) or nominative shares (the share’s owner is identified and registered in the company’s books).
• Minimal taxes are imposed—If the SA is used for offshore business transactions only, the only tax you’ll pay is ICOSA, which is a tax imposed on the incorporation of corporations. This tax will amount to about $400 a year.
• An SA can have a bank account set up in Uruguay in any currency.
• Running costs are relatively low.

There are a number of steps involved in setting up an SA from scratch, which we won’t go into here, but once set up, the main requirements of the SA are the following:

• To appoint one person (or more than one) to become a director of the company. Again, this person does not have to be a shareholder or related to a shareholder.
• The director(s) must register with the tax authorities and the National Registry of Commerce (Registro Nacional de Comercio).
• Tax reports must be filed twice annually and yearly taxes due must be paid.

In addition to the anonymous nature of the SA, asset and income protection is further guaranteed by Uruguay’s private banking. Banking in Uruguay is protected by one of the world’s tightest banking secrecy regulations whereby banks cannot share information with any party, including the government of Uruguay, or the government of any country for that matter.

If you are serious about setting up an SA, we would recommend that you talk with a professional who can advise you on the nuts and bolts involved with getting started.

Fischer & Schickendantz Attorneys at Law is one of Uruguay´s leading law and foreign investment advice firms, based in Montevideo.

• Fischer & Schickendantz—Uruguayinvest Foreign Investment Advisors, (Managing Partner Juan Federico Fischer), Rincón 487, Piso 4, Montevideo 11000, Uruguay; tel. (+598)2-915-7468 ext. 130; cell (+598) 99 925-106; fax (+598) 2 916-1352; e-mail: jfischer@fs.com.uy; website: www.fs.com.uy.