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Taking profits out before an exit: dividends, deemed dividends and the 2026 change

Argentina. For full detail on Argentina, go to The Argentine Thread.

Last verified: 2026-10-27 · Status: Changing

Dividends paid abroad out of IRAE taxed profits bear 7 percent IRNR withheld by the company, and taxed profits left idle for more than three years are taxed at the same 7 percent as deemed dividends. Since 1 January 2026 dividends out of income not taxed by IRAE are also taxed when the foreign parent's country taxes them and credits the Uruguayan tax, while dividends on shares listed in Uruguay stay exempt. Before any distribution the company must have approved accounts, a funded legal reserve and DGI and BPS certificates, and the cash can then leave freely.

USD figures use UYU 40.214 per US dollar, the BCU quotation for DLS. USA BILLETE on 26 October 2026. UI amounts use UYU 6.6792 per UI, the BCU quotation for 27 October 2026. Both were retrieved from the BCU quotations service on the verification date; conversions are for orientation only.

Key facts

IRNR on dividends paid abroad by IRAE taxpayers	7 %T.O. 2023 Title 8 art. 18 literal B), as of 2026-10-27 · in force
IRNR on deemed dividends (IRAE income older than three years)	7 %T.O. 2023 Title 8 art. 14; Decreto 149/007 art. 35 BIS, as of 2026-10-27 · in force
Age of undistributed IRAE income that triggers a deemed dividend	3 fiscal years (more than)T.O. 2023 Title 8 art. 14, as of 2026-10-27 · in force
Annual allocation to legal reserve	5 % of net profitLey 16.060 art. 93, as of 2026-10-27 · in force
Legal reserve target	20 % of capitalLey 16.060 art. 93, as of 2026-10-27 · in force
Fine for distributing profits without the DGI certificate	50 % of unpaid taxT.O. 2023 Title 1 art. 149 literal B), as of 2026-10-27 · in force
Access to FX for dividends abroad	Free, no prior approval textLey 16.906 art. 5, as of 2026-10-27 · in force

The rule

1. Dividends and profits paid or credited abroad by IRAE taxpayers, and deemed dividends, bear IRNR at 7 percent. The paying company is the withholding agent for capital income paid to non residents, and the withholding is computed on the net amount remitted plus the tax withheld.
Cost to do it: 7 percent of the gross dividend, withheld at source.
Example: A dividend of UYU 4,021,400 out of IRAE taxed profits: IRNR UYU 281,498, net UYU 3,739,902. / US$100,000 gross, US$7,000 withheld, US$93,000 net.Texto Ordenado 2023 (DGI), Title 8 IRNR; Decreto Nº 149/007, Title 8 art. 10, art. 13 and art. 18 literal B); Decreto 149/007 art. 35 literal c), 2023-07-10 official text · verified 2026-10-27

2. Dividends distributed by resident entities and permanent establishments are exempt except (i) those paid by IRAE taxpayers out of income taxed by IRAE, including dividends passed up a chain of IRAE taxpayers from taxed income, and (ii) from 2026, those paid by Uruguayan companies, SAS, permanent establishments, trusts and the other entities in Title 4 art. 12 literal A) numerals 1 to 8, when the dividend is taxed in the beneficiary's country of residence and that country grants a credit for the Uruguayan tax; case (ii) does not apply if the beneficiary cannot use the credit because it has negative taxable income. Dividends paid by IRAE or IMEBA taxpayers on shares listed on an exchange authorized in Uruguay are exempt.
Cost to do it: 7 percent in the taxed cases; nil where exempt.
Example: A Uruguayan holding whose profit is foreign source dividends not taxed by IRAE pays UYU 4,021,400 to a parent whose country taxes the dividend with a foreign tax credit: from 2026 the 7 percent IRNR (UYU 281,498) applies. / US$100,000 of previously exempt flow now bears US$7,000 where the parent's country credits it.Texto Ordenado 2023 (DGI), Title 8 IRNR, art. 19 literal C) as substituted by Ley Nº 20.446 art. 657, Title 8 art. 19 literal C), 2026-01-08 official text · verified 2026-10-27 · changed: Ley Nº 20.446 art. 657, published 8 January 2026, substituted literal C) and added subparagraph ii), taxing dividends out of non IRAE income paid to foreign beneficiaries whose home country taxes them with a credit for the Uruguayan tax.

3. IRAE taxed net income older than three fiscal years at a year end is imputed as a deemed dividend in the third month of the following year, after deducting dividends actually paid, earlier deemed dividends, investments in shares of resident entities, fixed and intangible assets (with the seller identified) and part of the growth in working capital (capped at 80 percent of those investments). The company is designated responsible for the tax, which is 7 percent, paid in the month after the imputation; a lower treaty dividend rate applies if the company obtains a tax residence certificate from the holder's country. No withholding is due for shares actually listed on an authorized Uruguayan exchange or on internationally recognized exchanges.
Cost to do it: 7 percent of the deemed dividend, or the lower treaty rate.
Example: UYU 4,021,400 of IRAE taxed income left undistributed and uninvested for more than three years is taxed as if paid: UYU 281,498 due the month after imputation. / US$100,000 of idle taxed profit costs US$7,000 whether or not it is paid out.Texto Ordenado 2023 (DGI), Title 8 IRNR; Decreto Nº 149/007, Title 8 art. 14; Decreto 149/007 art. 34 BIS and art. 35 BIS, 2017-02-13 official text · verified 2026-10-27

4. Profits may be distributed only out of net profits shown in a duly prepared balance approved by the partners or competent body, after covering prior losses and restoring the legal reserve. Companies must allocate at least 5 percent of net profit each year to the legal reserve until it reaches 20 percent of capital. Distributions in breach must be repaid, except dividends received in good faith by shareholders of an S.A. or partnership limited by shares and partners of SRLs with 20 or more partners.
Cost to do it: No fee; the reserve reduces distributable profit.
Example: A company with capital of UYU 4,021,400 keeps at least 5 percent of yearly profit in reserve until the reserve reaches UYU 804,280. / US$100,000 of capital: reserve target US$20,000.Ley Nº 16.060, Art. 93 and art. 98 (art. 98 as worded by Ley Nº 19.924 art. 721), 2020-12-18 official text · verified 2026-10-27

5. Distributing profits, on a final or provisional basis, requires the DGI annual certificado único; distributing without it is fined 50 percent of the unpaid tax, and a repeat offence 100 percent. The BPS also requires its ordinary certificate of good standing to distribute profits and to submit balances for authorization.
Cost to do it: No fee is set in these articles; for comparison the DGI special certificate procedure carries a UYU 270 professional stamp in 2026.
Example: A company with an overdue VAT balance cannot lawfully declare a dividend until it regularizes. / Same at any amount.Texto Ordenado 2023 (DGI), Title 1; Ley Nº 16.170, Title 1 art. 149 literals A) and B); Ley 16.170 art. 663 numeral 4, 1990-12-28 official text · verified 2026-10-27

6. The State guarantees free transfer abroad of capital and profits in freely convertible currency, so dividends can be wired abroad without FX approval once taxes are withheld.
Cost to do it: Bank charges only.
Example: UYU 3,739,902 net dividend wired in US dollars. / US$93,000 net remitted.Ley Nº 16.906 (Investment Law), Art. 5, 1998-01-07 official text · verified 2026-10-27

Profit source and route	IRNR	Note
Dividend out of IRAE taxed income	7 percent	Withheld by the company
Deemed dividend: IRAE income older than three years	7 percent	Treaty rate if residence certificate obtained
Dividend out of income not taxed by IRAE, parent's country taxes with credit	7 percent from 2026	Ley 20.446 art. 657
Dividend out of income not taxed by IRAE, no foreign credit	Exempt	Title 8 art. 19 C)
Dividend on shares listed on an authorized Uruguayan exchange	Exempt	Title 8 art. 19 C), last paragraph

Uruguayan tax on profits leaving to a foreign parent (T.O. 2023 Title 8 art. 14, 18 and 19 C); Decreto 149/007 art. 35 BIS). UYU at 40.214 per US dollar.

Worked example

Pre exit cleanup: a subsidiary has UYU 12,064,200 (US$300,000) of IRAE taxed retained earnings. Paying them before a share sale costs UYU 844,494 (US$21,000) and lowers the price the buyer pays for cash in the company; leaving them in place means the buyer inherits a deemed dividend exposure on the older layers.
Combined burden: UYU 100 of pre tax profit bears IRAE of UYU 25 (Title 4 art. 23); paying out the remaining UYU 75 costs IRNR of UYU 5.25, so the Uruguayan tax on profit extracted is 30.25 percent before any treaty relief or home country credit.

Step by step

Close the annual accounts and have them approved by the meeting (Ley 16.060 art. 98).
Allocate the legal reserve and absorb prior losses first (art. 93 and 98).
Obtain the DGI annual certificate and BPS certificate (Title 1 art. 149; Ley 16.170 art. 663 numeral 4).
Check the source of the profit: IRAE taxed, untaxed with a foreign credit, or exempt (Title 8 art. 19 C)).
Withhold 7 percent (or the treaty rate with a residence certificate) and pay it to the DGI under the monthly calendar.
Wire the net abroad without FX approval (Ley 16.906 art. 5).

Common traps

The 2026 change can tax dividends that used to flow through tax free from holding or exempt income, if the parent's country credits the Uruguayan tax (Title 8 art. 19 literal C) ii)).
Deemed dividends are due even if no cash is paid and can surprise a buyer in due diligence (Title 8 art. 14).
Unlawful distributions can be clawed back from SRL partners and from shareholders who did not receive in good faith (Ley 16.060 art. 98).
Treaty rates require the residence certificate before the payment; without it the domestic 7 percent applies (Decreto 149/007 art. 35 BIS). For Argentina side treatment of Uruguayan dividends see The Argentine Thread.

Sources

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