Countries › Uruguay › Guide › 6. Taxes › Payroll taxes in Uruguay: employer and employee BPS contributions, FONASA health contributions, the labour credit guarantee fund and IRPF withholding on wages

Payroll taxes in Uruguay: employer and employee BPS contributions, FONASA health contributions, the labour credit guarantee fund and IRPF withholding on wages

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

Employers in Uruguay pay 7.5 percent of wages to the BPS for pensions, 5 percent to the national health fund (FONASA) and 0.025 percent to the labour credit guarantee fund, about 12.5 percent on top of salary. Employees contribute 15 percent for pensions and 3, 4.5 or 6 percent to FONASA depending on salary and dependent children, withheld by the employer, which also withholds IRPF on wages under a progressive scale from 10 to 36 percent above 84 BPC a year. Wages are deductible for IRAE only when the matching contributions have been paid, and almost all employer contribution exemptions were repealed in 2007.

USD figures use UYU 40.214 per US dollar, the BCU quotation for DLS. USA BILLETE on 26 October 2026; UI amounts use UYU 6.6780 per Unidad Indexada, the BCU quotation for 26 October 2026. Both were retrieved from the BCU quotations service on the verification date; conversions are for orientation only.

Key facts

Employer pension contribution (BPS)	7.5 %Ley Nº 18.083 art. 87, as of 2026-10-27 · in force
Employee pension contribution (BPS)	15 %Ley Nº 16.713 art. 181, as of 2026-10-27 · in force
Employer FONASA contribution	5 %Ley Nº 18.211 art. 61, as of 2026-10-27 · in force
Employee FONASA contribution range	3 to 6 %Ley Nº 18.211 art. 61, as of 2026-10-27 · in force
Labour credit guarantee fund contribution	0.025 %Ley Nº 19.690 art. 10, as of 2026-10-27 · in force
Top IRPF rate on employment income	36 %T.O. 2023 Title 7 art. 48, as of 2026-10-27 · in force
Base de Prestaciones y Contribuciones (BPC) for 2026	6864 UYUDecreto Nº 11/026, as of 2026-01-01 · in force
UYU per US dollar used for conversions (BCU, DLS. USA BILLETE, 26 October 2026)	40.214 UYUBCU quotations service, as of 2026-10-27 · in force

The rule

1. The employer pension contribution (aporte patronal jubilatorio) to the BPS is 7.5 percent of all remuneration subject to social security contributions.
Cost to do it: 7.5 percent of taxable remuneration.
Example: On a monthly salary of UYU 120,000 the employer pays UYU 9,000. / On a US$2,984 monthly salary, about US$224.Ley Nº 18.083, Art. 87, 2006-12-27 official text · verified 2026-10-27

2. The employee pension contribution (montepío) on all remuneration subject to contributions in BPS covered activities is 15 percent.
Cost to do it: 15 percent of taxable remuneration, withheld by the employer.
Example: UYU 18,000 withheld from a UYU 120,000 salary. / About US$448 a month on a US$2,984 salary.Ley Nº 16.713, Art. 181, 1995-09-03 official text · verified 2026-10-27

3. Employers contribute 5 percent of the remuneration subject to montepío to the national health fund (FONASA). Workers contribute 6 percent if their pay exceeds 2.5 BPC a month and they have dependent children under 18 or disabled, 4.5 percent if their pay exceeds 2.5 BPC and they have no such children, and 3 percent if their pay does not exceed 2.5 BPC.
Cost to do it: Employer 5 percent; worker 3, 4.5 or 6 percent. With the 2026 BPC of UYU 6,864 (Decreto Nº 11/026), 2.5 BPC is UYU 17,160 a month.
Example: On UYU 120,000: employer UYU 6,000; worker without children UYU 5,400. / On a US$2,984 salary: employer about US$149, worker about US$134.Ley Nº 18.211, Art. 61, 2007-12-05 official text · verified 2026-10-27

4. A special social security contribution of 0.025 percent of taxable remuneration finances the labour credit guarantee fund (Fondo de Garantía de Créditos Laborales) that pays workers when the employer is insolvent; the Executive Branch may reduce or suspend it.
Cost to do it: 0.025 percent of taxable remuneration.
Example: UYU 30 a month on a UYU 120,000 salary. / Less than US$1 a month on a US$2,984 salary.Ley Nº 19.690, Art. 10, 2018-10-29 official text · verified 2026-10-27

5. IRPF on employment income uses a progressive annual scale in BPC: exempt up to 84 BPC, 10 percent to 120 BPC, 15 percent to 180 BPC, 24 percent to 360 BPC, 25 percent to 600 BPC, 27 percent to 900 BPC, 31 percent to 1,380 BPC and 36 percent above. The tax is then reduced by 14 percent (income up to 180 BPC) or 8 percent (other cases) of deductible items such as pension and FONASA contributions and child allowances. The employer withholds it monthly.
Cost to do it: With the 2026 BPC of UYU 6,864, the exempt amount of 84 BPC is UYU 576,576 a year.
Example: A UYU 120,000 monthly salary (UYU 1,440,000 a year, excluding the aguinaldo and vacation bonus) gives IRPF of about UYU 113,098 a year after the 8 percent deduction credit. / About US$2,812 a year on US$35,808 of annual salary.Texto Ordenado 2023 (DGI), Title 7 IRPF, Title 7 art. 48 literal A) and art. 49, 2015-05-29 official text · verified 2026-10-27

6. All exemptions and reduced rates of employer contributions to the BPS were repealed from 2007, except those of institutions protected by art. 5 and 69 of the Constitution, those under international treaties approved by law, and those of cooperatives and rural development societies. In free zones, social security contributions remain due, but foreign staff who state in writing that they do not wish to join the Uruguayan system are not subject to contributions.
Cost to do it: No general payroll incentive; free zone foreign staff opt out saves employer and employee contributions.
Example: A foreign engineer earning UYU 120,000 in a free zone who opts out saves UYU 9,000 of employer pension contributions a month. / The written opt out removes the obligation to make the social security contributions for that free zone foreign employee.Ley Nº 18.083; Ley Nº 15.921, Ley Nº 18.083 art. 90; Ley Nº 15.921 art. 20, 2006-12-27 official text · verified 2026-10-27

7. Salaries are deductible for IRAE only if the corresponding pension contributions have been paid.
Cost to do it: Unpaid contributions also cost the IRAE deduction.
Example: Unpaid contributions on UYU 1,440,000 of wages disallow UYU 360,000 of IRAE saving. / About US$8,952 of IRAE at stake per year on one salary.Texto Ordenado 2023 (DGI), Title 4 IRAE, Title 4 art. 30 (fourth paragraph), 2006-12-27 official text · verified 2026-10-27

Item	Rate	UYU	Rule
Employer pension (BPS)	7.5 percent	9,000	Ley Nº 18.083 art. 87
Employer FONASA	5 percent	6,000	Ley Nº 18.211 art. 61
Labour credit guarantee fund	0.025 percent	30	Ley Nº 19.690 art. 10
Total employer	12.525 percent	15,030
Employee pension (withheld)	15 percent	18,000	Ley Nº 16.713 art. 181
Employee FONASA (withheld)	4.5 percent	5,400	Ley Nº 18.211 art. 61
Total employee	19.5 percent	23,400

Monthly payroll cost on a UYU 120,000 salary (about US$2,984), employee without dependent children, before IRPF.

Worked example

A Montevideo SAS hires an analyst at UYU 120,000 a month (US$2,984). The employer adds UYU 15,030 (US$374) of contributions a month, 12.525 percent.
It withholds UYU 23,400 (US$582) of employee pension and FONASA contributions.
On UYU 1,440,000 of annual salary the IRPF scale gives UYU 135,562; the 8 percent credit on UYU 280,800 of contributions cuts it by UYU 22,464, leaving about UYU 113,098 (US$2,812) a year, withheld monthly (Title 7 art. 48 and 49). The aguinaldo and vacation bonus are taxed separately at the top marginal rate that applies to the employee.
The SAS deducts the salary and its own contributions for IRAE once the contributions are paid (Title 4 art. 30).

Step by step

Register the company as an employer with the BPS and enrol each employee before work starts.
Compute contributions on all taxable remuneration, including the aguinaldo and vacation bonus where they are subject to contributions.
Withhold employee pension, FONASA and IRPF each month and pay them with the employer share.
Update the BPC each January for the IRPF scale and the FONASA 2.5 BPC test.
For free zone foreign staff, keep the written opt out from social security on file (Ley Nº 15.921 art. 20).

Common traps

Contributions not paid make the salary non deductible for IRAE (Title 4 art. 30).
There are no general employer contribution holidays: Ley Nº 18.083 art. 90 repealed almost all exemptions.
The FONASA rate rises from 3 to 4.5 or 6 percent once pay exceeds 2.5 BPC a month, which changes take home pay for small raises.
IRPF rates apply to annual income in BPC; the aguinaldo and vacation bonus are taxed at the top rate reached by the employee's scale, not added to it (Title 7 art. 47 and 48).

Sources

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