'Tweak that tax law Lorenzo!' Retirement

Tweak that tax law Lorenzo!

The proposed law that extends the IRPF (Personal Income Tax) to rental income from foreign investments continues to be tweaked, according to the Minister of Economy Fernando Lorenzo. The Secretary of State indicated that the initiative created by the Executive Power will be sent to Parliament in the next few hours.

Lorenzo held a briefing about the proposed law at the beginning of yesterday’s Cabinet meeting, denying that there will be changes in Business Taxation. He also iterated that foreigners who come to retire in Uruguay will not be affected. Companies based outside Uruguay will not be affected, either. Lorenzo emphasized that taxation is only on physical people, other options are not being evaluated at this time, and there are no plans to tax businesses.

From viewpoints both inside and outside the government, the lack of communication about the proposed law is being pointed out, and several stockbrokers are also asking to receive information about the new taxes.

I know you are IRISH and I have a lot of respect for people from that Country, not because my Wife's Father was Irish but because my first year in the United States I worked and I got a lot of help from the Irish inmigrants at my job. I will never forget the John Mckenna, Brendan O'Keeffe etc.

But sometimes I think that you may have some "Vasco" in your blood.

My Mother's last name was Gorriz and you know what the Vascos are better known for.

My ancestors were in Spain from the 1680s to the 1830s and married local girls so you may well be right :-)

I visited the DGI to pay my IMEBA tax on the wheat crop and while I was there I had a chat with the manager about the current chaos.

He rolled his eyes and said that it was a mystery to him. He told me that at present, legal residents of the ROU pay taxes on income and assets within the ROU. Taxes are based on the concept of legal residency with some extension towards non-residents in certain cases... but that the nationality or citizenship of any resident had no bearing at all on tax liabilities.

A citizen who is also an ROU resident is liable to pay taxes but a citizen who legally resides elsewhere is not.

He added that there was no existing categories of "foreign resident, " "ex-pat resident" nor any other sort of resident. There is only one sort of legal resident and he is liable to pay taxes.

Lorenzo used the term "legal resident" in his proposals for taxing overseas assets and capital. As Minister of Finance, surely he understands what a legal resident is in law?

To exempt resident foreign retirees from the new taxes, he will have to create a new category of resident... either a Uruguayo Citizen Resident or a Uruguayo Foreign Resident in order to distinguish between the two.

At this moment I am Uruguayo legal resident number 660/08 plus cedula number.

Tabare's men used "legal resident" in the Returning Uruguayos incident and look what happened.

"Tabare's men used "legal resident" in the Returning Uruguayos incident and look what happened."

Here are the two documents you are referring to:

Law 18.250, "Artículo 76. - Todo uruguayo con más de dos años de residencia

en el exterior que decida retornar al país, podrá introducir libre de

todo trámite cambiario y exento de toda clase de derechos de

aduana, tributos o gravámenes conexos:"

translation (the best I could do :)):

"Art 76 - Every Uruguayan with more than two years of residence abroad who decides to return to the Country, will be able to introduce free of exchange tramit and whith the exception of any kind of related Custom duties, and taxes: ... continues to list the allowed goods..."

Note that it says "Uruguayos" not at all "residentes legales", wich does not appear in the whole law. For the Uruguayan legal system, the term "Uruguayan" is equivalent to "Citizen". There is a general principle in that "legal residents" have equal rights and obligation than citizens, but the general principle won't be applied in some particular cases. For example, you cannot vote. And if you are comming from abroad you are not considered a Uruguayan comming back after 2 years or more.

Now, laws are generally regulated ("reglamentadas") through Decrees (Decretos); that is, some implementative and interpretative details are done through Decrees. In this case, Law 18.250 was regulated by Decree 330/2008. And the Decree clears the concept to extend the scope to the children of those uruguayans, who to regain "citizenship" should before follow an administrative procedure (they are rightfully citizens in right but should effectively register to become lawfully citizens):

"Art 2 - A los efectos del presente Decreto, se entiende por uruguayo a toda persona hombre o mujer nacida en cualquier punto del territorio de la

República, así como los hijos de padre o madre orientales, cualquiera haya

sido el lugar de su nacimiento."

translation:

"Art 2 - As for the effects of the present Decree, the term "uruguayo" is to be understood as any person, man or woman, born in any place of the Republic's territory, as well as the children of uruguayan pather or mother, whichever place of birth."

So that's what Tabare's laws says about the matter. As you can see the term "residente legal" does not apper anywhere.

This franchises were not applicable to you, as you can see. You may have applied to some other exceptions to some particular personal items ("bienes de uso") that seem to be available to foreigners planning to reside here. That may have some rules about the moment in which you ask for the residence and for the introduction of your woods, and those rules may be the ones that have been applied to you. That is not to say that an error affecting you have been comitted by the Uruguayan authorities. That may have been the case. If there was some coordination applicable to your case between the moment you introduce your goods, and the moment you get your permanent residence status, they should have warn you, so you didn't have all the mess whith the shipping.

Now, the taxing law is a completely different matter, involving the DGI and not the Aduana's regulation. Here, again, the general concept of "legal resident" having the same rights and duties than citizens apply. And again, apply UNLESS, otherwise specified. The draft of the law, for IP, the text explicitly exclude the residency criteria by specifieng that the IP applies only to citizens ("Ciudadanos" in the text). If you don't become a citizen, then you are excluded from IP. Not so with the IRPF, which does not show the same clarification and thus should apply to any resident with income from foreing sources, unless there's a anti-double-tax agreement in place.

From there on, I understand, start the "matter of faith". And as Jorge points out, we'll see who was right when the law finally passes through the Parliament. If you were right about the IP, I promise to go help you pack for your move to Argentina. Though paraphrasing another forum, if you go to Kirchnerreich, you would be jumping out of the pan to end on the fire.

Personal Income Tax (IRPF)

The Personal Income Tax (IRPF) is a direct tax applied to resident individuals with Uruguayan sources of income. For the purposes of this tax, a resident is considered as a person who is in the country for 183 days during the year or who has Uruguay as the center of his or her vital or financial interests. The tax is applied under a dual system that distinguishes income derived from capital sources (taxed at proportional rates that range from 3% to 12%) and from labor sources (taxed at progressive rates from 0% to 25%). The tax is calculated and paid as of 31 December of each year. Regulations require withholding and retentions for various types of income.

• Brief description of the tax system in Uruguay

It must be because I'm bad at explaining things or maybe its because of the confusion which arises in differentiating between Uruguayan residents and Uruguayo citizens. Different rules and terms seem to apply to different applications and classes of law. In general Uruguayo residents (legal and temporary) have to pay Uruguayo taxes. Uruguayo (citizens) may or may not have to pay taxes depending on whether or not they are Uruguayo residents (legal or temporary.)

"Note that it says "Uruguayos" not at all "residentes legales", wich does not appear in the whole law. For the Uruguayan legal system, the term "Uruguayan" is equivalent to "Citizen"."

Absolutely... the term "Uruguayo" is the precise point of all the confusions, problems and worries.

The qualifier for the Returning Uruguayo law was that the Uruguayo (citizen) had to have been a Uruguayo (foreign resident) for at least two years. As a Uruguayo (citizen AND non resident) he could not have been a Uruguayo (resident or legal resident) by definition.

The subtle problems and unintended consequences in the Returning Uruguayos law involved both citizenship and residency.

To qualify for the extra freebie imports (like a used vehicle which had been owned for a qualifying period of time) the returnee had to be a "Uruguayo" citizen and not a "Uruguayo" resident.

The returning Uruguayo (citizen) to the ROU has an automatic entitlement to Uruguayo legal residency but before he could claim his container, he had to register or re-register with the Direccion Nacional de Identificacion Civil to obtain a cedula and establish himself as a Uruguayo (legal resident) rather than just a Uruguayo (citizen.) He couldn't just turn up at customs with his passport and obtain clearance on his container. He had to submit his passport to show that he was a Uruguayo (formerly with overseas residency for 2+ years) citizen entitled to import the extra freebies AND evidence of him now being a Uruguayo (resident) in order to put himself within the Uruguayan fiscal legal framework in order to qualify for the exoneration from paying import duties. Should the Uruguayo (citizen) still have been a non-resident Uruguayo (citizen) he could not have obtained customs clearance.

I fell foul of the Returning Uruguayos law because I was already a Uruguayo legal resident thus a Uruguayo resident (not a citizen) for tax purposes but not a Uruguayo (citizen) for purposes of importing the extra freebies. Thus I had to prove that I had been a Uruguayo (resident) resident overseas for the previous 2 years.

Are you with me so far? :-)

ROU tax law is based on residency and not on citizenshop. Residency is established by a person of any nationality who remains within the ROU for 183 days or more in any one year. Legal ROU residency is established by non-citizens by obtaining a Certificate of Arrival and a cedula. Citizens are automatically entitled to residency and can obtain or re-obtain a cedula by presenting evidence of their citizenship at the DNIC.

Bearing in mind that there is no such legal entity as a "foreign Uruguayan resident" or a "retired foreign resident" for fiscal purposes you can see why I get very worried when Lorenzo assures me that only "Uruguayo residents" which according to my tarjeta I am (number 660/08 plus cedula number) will be subject to the overseas taxation. He also says that the law will not affect "retired foreign residents" but that's no comfort as there is no such legal entity as a "retired foreign resident." There are only residents and non-residents.

When I visited the DGI recently to pay my taxes, the office was quiet so I had the chance to chat with the manager. He assured me that Uruguayo residents are liable to pay ROU taxes as well as certain classes of non-residents. Uruguayo citizenship has no bearing on tax liability at present.

By what he said, Lorenzo appears to be planning to create a new sort of Uruguayo... the Foreign Uruguayo Resident (not the Uruguayo Foreign Resident who exists already) who will have fewer tax liabilities than a Uruguayo Uruguayo resident but I can see this creating yet more complexity and problems. My neighbour Adriano was born in 1947 near Milano and came here that same year with his family. Adriano has spent his life farming and tells me that he has visited MVD twice in his life but didn't like it :-) He and many of his generation have foreign citizenship. Are these life-long Uruguayos to become "foreign retirees" or are they to be considered Uruguayos?

I hope you can understand why I'm so edgy about these proposals as there appears to be a very large number of holes and pitfalls around to catch the unwary... possibly on purpose or possibly by accident as in my case with the Returning Uruguayos.

In my view, what is needed is a clear legal definition within this tax law as to exactly who is liable to pay taxes on overseas income, taxes on overseas assets and who is not.

Also needed is a definition of exactly what an overseas asset is. If I were to buy Panamanian government bonds through my broker in MVD, would that be an overseas asset or would it not? At present it is an overseas investment and asset and is thus not liable for IRPF or IP but what will its status be after 1st January?

Don't for a moment imagine that I'd consider settling in Argentina... the reason I'd head for the place is that its the closest border to where I live. Its a nice place to visit but I wouldn't want to live there :-)

I love my life here and I really want to continue living here but the multiple complexities and uncertainties about whether or not I will be able to afford to live here (particularly after the Returning Uruguayos incident) are getting me down.

Not Uruguayo until you become a Citizen.

Translation: "In the case of physical persons only the assets which owners hold the Uruguayan Citizenship will be included". That is, in the case your houses in the UK are owned by you personally, and not at the name of a company, you won't pay IP.

I appreciate you patience and time to explain the situation to us, but let me tell you there's some point where I think you are mistaking terms. The term "Uruguayo" has ALWAYS a meaning related to nationality, not to residence. In Spanish "residente en Uruguay" means a completely different thing than "residente uruguayo". You, for example, are a residente en Uruguay, but not a residente uruguayo (at least as long as you don't get the legal citizenship). During your explanation you started mentioning the term resident, and correctly explained the tax and customs duty conditions relative to residence. That is just as you explained it. However, at some moment of your explanation you introduced the term Uruguayo, wich is an incorrect us as I explained above. From there, you interpreted that the term "uruguayo" used in the law and decree were confussing or ambiguous. But it is not. The term "uruguayo", wherever you read it, only means the person has the uruguayan nationality. To put this real clear let me try a resume:

Custom duties:

- Excemptions for returning emigrants after 2 year of residence abroad apply only to citizens.

- Foreing non-residents wanting to be residents apply to other exemptions. But then they have to be in sync with the residence process (which exact procedure I ignore), because... (see next statement)

- Residents (whichever the citizenship) don't apply.

IRPF tax:

Today it applies to residents in Uruguay (whichever the citizenship) for income from a local source.

After the law is passed, it will also apply to residents in Uruguay for income from a foreign source (as far as I know, only "rent", not labour income).

IP tax:

Today it applies to residents in Uruguay (whichever the citizenship) for assets in Uruguay.

After the law is passed, it will also apply to Uruguayan Citizens and resident companies for assets abroad.

It's all the opinion I can give you, ... without charging you. :-)))

Thank you both for the explanations.

From what you both say it seems that the customs, the customs agents, my lawyer, the London Uru-consul and the judge were all wrong in law to treat me as a returning uruguayo. On the other hand I doubt very much if I could reclaim the costs of travelling to England and back to create myself a pre-dated job, to fire myself and to pay the Uru-consul to certify my creative UK residency proof a few days before the container arrived in MVD.

I'm still puzzled about Lorenzo's assurances in his statement at the press conference before the cabinet meeting on May 31st that foreigners who come to retire in Uruguay will not be affected. I suppose we'll just have to wait and see what Lorenzo says next time :-)

I will not pay any Taxes etc. But I will have to promise that I will stay in Uruguay for a period of time (Don't know how long) I can't sell my car for 5 years and I need to get a Cedula of Identity that is required for all residents of Uruguay.

I can also bring everything I want to open a Business or a Farm etc. I have friends who brought all the heavy machinery needed for Farm operations and passed the Aduana and did not pay anything.

Cedula de Identidad for what I understand is only on ID with connection to your Criminal records and is provided by the Police.

Cedula will not make you Uruguayo just like the Resident Card (famous green card) never made me American.

You are not Uruguayo (only in heart), you are a resident of Uruguay and it's because you choose to do it and the Government of Uruguay authorize and give you a permanent resident status, unless you violated the Law and then the residency can be revoked (control your temper hahaha).

Patrick life is wonderful, we're famous for bringing the problems to us.

I know you are not moving from Uruguay and those few who are saying that now they will not move to Uruguay they were never intendent to do that anyway. How did you make that decision when nothing changed since last week and I promise you Patrick that all this talking is just that talking. I live surrounded by that in the USA. I know you know how to read between the lines, it could be from the left, right or the middle.

I don't have anything against the Blanco Party, but I can tell you that they don't have a Leader. Maybe in the future they will find some YOUNG and charismatic leader.

"Cedula de Identidad for what I understand is only on ID with connection to your Criminal records and is provided by the Police."

Cedulas come from the Direccion Nacional de Identidad Civil. You need one for almost every everything... funcionarios, customs, opening a bank account, the mutualista, the BPS, the DGI, the junta local, taking a driving test, appearing in court and heaven knows what else. I even use it for travelling to Argentina and considering our previous discussions, I find it humorous that the travel cards that immigration's machines spit out for the journey always describe me as "Uruguayo"... maybe its my face :-)

As you'd expect the residency application itself is done through immigration. Mine took much paperwork and about a year to complete. Immigration's seal of approval comes in the form of a Certificate of Arrival and its this that you take to DNIC to qualify for the cedula.

I will be doing my very best to remain here. I searched the world for 5 years before selecting Uruguay and spent another 3 months finding my spiritual nirvana in east Colonia so I know that there is nowhere else I would prefer to be. Whether I can or cannot stay will be determined by the actions of two politicians... Lorenzo and Osbourne (the new British Min of Finance.) The UK is currently running a public spending deficit of about 740.000.000 U$S a day so another tax disaster may fall on me as well. I will just have to wait and see what they do. We should know what Osbourne wants in about 3 weeks.

"I don't have anything against the Blanco Party, but I can tell you that they don't have a Leader. Maybe in the future they will find some YOUNG and charismatic leader."

Lacalle was embarrassing wasn't he?

The guy who impressed me most was Pedro Bordaberry but I still don't know enough about the nuances of politics here to make sensible choices. Anyway as a non-citizen resident I won't get the vote until 2023 and I'll probably be under the pasto by then.

I have met Pepe twice now and can't help liking him enormously even though his man Lorenzo wants to take away my money. Anyone who loves a 3 legged dog deserves my approval :-)

"MONTEVIDEO.- El gobierno uruguayo transmitió a firmas jurídicas y financieras que trabajan con clientes argentinos con ahorros en este país que no se firmará un acuerdo de cooperación tributaria con la administración de Cristina Kirchner.

Luego de que las autoridades anunciaran una flexibilización del secreto bancario, esos abogados o intermediarios financieros habían recibido consultas permanentes de ahorristas e inversores argentinos sobre lo que implicaba esa potencial medida.

La inquietud de la plaza financiera y de clientes porteños aumentó cuando el titular de la Administración Federal de Ingresos Públicos (AFIP), Ricardo Echegaray, expresó optimismo por la voluntad uruguaya de mostrar cuentas bancarias a autoridades tributarias."

I wonder if all those Portenos who were visiting our local banks last week with their Samsonites will return again next week to redeposit them?

We will see.

Our geographical position makes us the most convenient place for Portenos to hide their cash... and considering Cristina, who can blame them.

One thing that puzzles me though... when a Porteno removes a Samsonite of dollars from an ROU bank, where does he put it? Carrying it back to Bs As past customs and then back here again wouldn't be a safe or sensible thing to do.

As I read it world-wide income of resident citizens and ex-pat residents is to be taxed at 12%. World-wide capital taxes are only being applied to ROU resident citizens.

I am particularly cheered by...

"Los dividendos recibidos por un residente uruguayo de sociedades del exterior quedan gravados por IRPF a la tasa del 12%. El IRPF aplicará cualquiera sea la actividad o inversión que generó los dividendos, con

la única excepción de las rentas inmobiliarias."

Perhaps God and Lorenzo are showing mercy on this poor landlord and sinner :-)

>>>>>>

DEPARNEWSLETTER ESPECIAL // JUNIO 2010

TAMENTO DE BANCA Y FINANZAS

NEWSLETTER ESPECIAL // JUNIO 2010

DEPARTAMENTO DE BANCA Y FINANZAS

PROYECTO DE LEY SOBRE TRIBUTACIÓN DE INVERSIONES FINANCIERAS EN EL EXTERIOR

Y FLEXIBILIZACIÓN DEL SECRETO BANCARIO

Poder Ejecutivo remitió a la Asamblea General un proyecto de ley que, de aprobarse con su actual redacción, introduciría nuevos ajustes en el Sistema Tributario, gravando los préstamos efectuados a no residentes, y los depósitos, colocaciones y participaciones de capital en entidades no residentes. De ser aprobado, los cambios comenzarían a regir el 1º de enero de 2011.

Asimismo, se propone ampliar la posibilidad de acceso a la información en poder de los bancos, permitiendo a la DGI acceder a dicha información para cumplir con el cometido de contralor integral de la tributación.

A continuación detallamos los aspectos más relevantes del proyecto de ley.

I. LEVANTAMIENTO DEL SECRETO BANCARIO

El proyecto de ley incorpora las siguientes modificaciones en relación al levantamiento del secreto bancario.

Se elimina la restricción que limitaba el alcance del levantamiento del secreto bancario únicamente a las operaciones en cuenta corriente y cajas de ahorro. En este sentido, se amplía el levantamiento del secreto

bancario a todas las operaciones e informaciones que estén en poder de los bancos.

Se prevén dos nuevos supuestos en los cuales la DGI podrá solicitar el levantamiento del secreto bancario de una persona física o jurídica:

• Cuando actúe en ejercicio de sus facultades fiscalizadoras y respecto de obligaciones tributarias no prescriptas. La información solicitada por la DGI tiene que ser relativa a: operaciones bancarias de personas físicas o jurídicas determinadas, y resultar necesaria para verificar la veracidad e integridad de las declaraciones juradas o la falta de ellas.

• Cuando exista una solicitud expresa y fundada por parte de una autoridad competente de un Estado extranjero con el cual se tenga convenio en materia de intercambio de información. Se deberá en este caso indicar la entidad que requiere la información, así como los antecedentes que

existieran sobre la solicitud. El proyecto establece que en cualquiera de estos supuestos, la información alcanzada por el levantamiento del secreto bancario será la relativa a operaciones posteriores al 1º de enero de 2011.

En cualquiera de los nuevos supuestos en los cuales la DGI puede solicitar el levantamiento del secreto bancario, dicha solicitud debe ser presentada ante los Jueces Letrados de Primera Instancia de la materia Civil. Se prevé que la solicitud de levantamiento del secreto bancario tramite por un proceso con una estructura muy abreviada.

El expediente judicial en el cual se tramite la solicitud del levantamiento de secreto bancario se mantendrá reservado para los terceros distintos al solicitante y titular de la información.

El Juez tiene 60 días para pronunciarse sobre la admisión o el rechazo de la solicitud del levantamiento del secreto bancario y la sentencia que recaiga en ese proceso podrá ser apelada por ambas partes.

El Juez comunicará al BCU el levantamiento del secreto bancario y este a su vez lo pondrá en conocimiento de los bancos para que cumplan con lo ordenado por el juez. El BCU le tendrá que remitir a la DGI toda la información que haya recopilado de los bancos.

Los bancos quedarán relevados de su obligación de reserva sobre las operaciones e informaciones que estén en su poder cuando exista una orden expresa del Juez competente. Se prevé que los bancos puedan ser sancionados si no cumplen con lo ordenado por el Juez. En este sentido, las sanciones pueden ir desde una mera observación hasta la revocación para funcionar como Institución de Intermediación Financiera.

II. CAMBIOS TRIBUTARIOS

1. Tributación con IRPF de las inversiones en el exterior

¿Quiénes, cuánto y cómo pagan el IRPF sobre las

inversiones en el exterior?

Las personas físicas que sean residentes fiscales en Uruguay pasan a pagar IRPF a la tasa del 12% sobre las rentas derivadas de depósitos, préstamos y colocaciones de capital o de crédito en entidades del exterior.

Se consideran residentes aquellas personas que:

i) permanecen en territorio nacional por más de 183 días durante el año civil, o

ii) tienen aquí la base principal de sus actividades o de sus intereses (por ejemplo, cuando la familia (cónyuge e hijos) está radicada en nuestro país).

Para pagar el Impuesto las personas físicas deberán inscribirse en DGI.

¿Qué pasa con los dividendos de sociedades del exterior?

Los dividendos recibidos por un residente uruguayo de sociedades del exterior quedan gravados por IRPF a la tasa del 12%. El IRPF aplicará cualquiera sea la actividad o inversión que generó los dividendos, con

la única excepción de las rentas inmobiliarias.

Se excluye del gravamen el caso de que la entidad del exterior pague dividendos por inversiones de fuente uruguaya. Así por ejemplo, los dividendos de una sociedad panameña con un préstamo a una sociedad

en Uruguay, que recibe intereses no quedan alcanzados por el IRPF del accionista. Se evita de esta forma que las rentas tengan que pagar dos veces impuesto a la renta: en cabeza de la sociedad (Impuesto a la

Renta de los No Residentes) y en cabeza de la persona física (IRPF).

¿Cuándo surge la obligación de pagar el IRPF sobre

rentas del exterior?

La obligación de pago surge cuando las rentas se generan, sin importar si las mismas son o no repatriadas a Uruguay.

En el caso de los dividendos el proyecto anticipa la obligación de pagar el impuesto a la efectiva distribución de utilidades. El accionista persona física residente deberá pagar el impuesto aun cuando la sociedad

que lo genere no haya efectuado la distribución. Se hace la ficción de que la sociedad no existe y que el accionista recibe directamente la ganancia.

Sólo se respeta la existencia de la sociedad y se difiere el pago hasta la distribución cuando la sociedad que generó la ganancia pague en el exterior impuesto a la renta por una tasa igual o superior al IRPF

(12%).

¿Cómo se paga el IRPF de los dividendos de sociedades del exterior?

Las sociedades no residentes cuyos accionistas sean personas físicas uruguayas podrán designar una persona física o jurídica residente en el país para que los represente ante la DGI.

El representante será solidariamente responsable de las obligaciones tributarias de su representada. Cuando la entidad designó representante la misma es agente de retención del IRPF correspondiente a la persona física uruguaya. También es agente de retención la sociedad que deba fijar un representante por la normativa del Impuesto a la Renta de los No Residentes (IRNR). El IRNR también prevé casos en que un no residente debe designar un representante en Uruguay.

El contribuyente puede dar carácter definitivo a la retención, en cuyo caso no tiene que computar dichas rentas en su liquidación.

¿Qué pasa con los dividendos pagados por sociedades

uruguayas que tienen inversiones en el exterior?

Los dividendos distribuidos por sociedades uruguayas derivados de rentas generadas por cualquiera de las inversiones en el exterior gravadas también pagan el 12% de IRPF.

Los dividendos se consideran distribuidos con el devengamiento de las rentas que les den origen, salvo que la entidad tenga contabilidad suficiente de acuerdo a lo que establezca la reglamentación.

2. Aplicación del Impuesto al Patrimonio a los activos en el exterior

El proyecto grava con Impuesto al Patrimonio el 20% (se computa por el 10% hasta un monto equivalente a aprox. US$ 200.000) del valor de los depósitos, préstamos y colocaciones de capital o de crédito en entidades no residentes cuyos titulares sean personas físicas residentes y con ciudadanía uruguaya. Las tasas del impuesto son progresivas y van del 0, 7% al 2%.

Los residentes que no tengan la ciudadanía no son afectados por la modificación de este impuesto.

Cuando un residente ciudadano sea accionista de una sociedad del exterior que sea titular de depósitos, préstamos y colocaciones de capital en entidades no residentes, tendrá que computar directamente estos

activos de la sociedad por el 20%. En este caso es como si la sociedad no existiera y la persona física fuera directamente la dueña de los activos. Sólo se considerará que la sociedad existe y deberá computarse

su cuota parte cuando pague un impuesto a la renta igual o superior al 12%.

Las acciones o cuotas en sociedades locales deben computarse siempre que tenga depósitos, préstamoso colocaciones de capital o de crédito en entidades no residentes.

Federico Ferri

fferri@ferrere.com

URUGUAY | PARAGUAY | BOLIVIA

They never intended not to show you mercy, you were never involved in these changes.

Just somebody (now you know who) tweaked the situation way before anything happened, they call that politics.

I decided to try to be in the middle, because I need the choice to disagree, accept mistakes and refused to listen to Politicians being just that. That is the same for any Party. Here in the States and obviously in Uruguay.

Because I don't have commitments, I don't have any one pulling strings over my head so I feel free and Independent of all the propaganda around me.

I prefer the Democratic Party here and probably the Frente in Uruguay and that is because if you had to "Punch a Card to start working" and you vote Republican here or Blanco or Colorado in Uruguay it's like

" The Chicken VOTING for PERDUE "

Patrick keep volunteering, teaching English, the race track Motorcycle team and maybe start a "Baby Futbol team" and call them "Coloniaghan FC".

On May 31 Lorenzo assured us that retired foreign residents would be unaffected by his proposals.

Assuming that he really is exempting overseas pre-taxed rents from IRPF, myself and my SO will still be paying him 9, 620 U$S on our already taxed overseas income in 2011.

In my view that's a hell of a stretch to the meaning of "unaffected." :-)

On the other hand I appreciate his wonderful comic performances (he did a great one yesterday denying that he ever intended to increase the value of the dollar wrt the peso and amazing us with how quickly he can edit history after losing a few billions) and I applaud his determination to keep the ROU as free as possible from unsightly development, tacky enterprise, tiresome commerce and more ex-pat residents like me. :-)

Even his Communist coalition partners have asked him to explain his financial policies so I expect he's hard at work somewhere thinking some up for them at this very moment.

10k U$S a year is just about bearable to us on the grounds of our love for the place so long as we impose stringent economy measures on ourselves but 30k a year (the 20k IRPF due if pre-taxed overseas property rents are not excluded) isn't.

We're away to Argentina next week to check out houses for emergency relocation in case he changes his mind yet again or the legislature decides that we need to be punished further.

Nothing in the proposal appears to be encouraging to would be expats. I suspect that Uruguay will remain crossed off the list of relocation spots for many would be retirees and expats for quite some time.

If you happen to be from Canada, France, Germany, Andorra or from any country which has a tax treaty with the ROU then you are unlikely to be affected much except on previously untaxed income. I have even heard talk that all USA-ians might be viewed as resident in the USA for tax purposes because of their world-wide tax imposition.

The ones hurting are those of us who come from lands without a tax treaty or some form of tax agreement fudge.

Uruguay wants to be removed from the grey list of the OCDE, for this one of the formal requirements is to sign double taxation agreements with at least 12 countries, so all this thing about the taxation is being brough. The treaties are a joke, since there is not treaty with Argentina, neither with Brazil, but we are negotiating treaties with countries such as Litchenstein and South Korea...a total joke...

Along with this, some MPP guys probably would be happy to tax some rich Uruguayans ( People born here, from our bourgeous class :-) to put it in plain english..) not expats.

So what I would do is not too worry, forget the nordic custom of trying to follow laws in a consistent way... pay tax for your locally generated income..may be do not make direct bank transactions to your accounts here in Uruguay if you want to be extra carefull, use your debit card to extract money from your UK bank from a cash point or bring the cash or something like this...I bet the taxman will never hit your door...they are after other birds..

I hope this helps

Martin

This is the same message as I've been hearing from my neighbours.

If it was just about the OECD then all Lorenzo needed to do was to overturn the banking secrecy laws. The Gang of 20 doesn't care about domestic taxation here so I conclude that the FA wants to extract more money from the residents regardless of their nationality.

I suppose us northerners are so pre-programmed by experience of the tax spy systems and the vicious penalties imposed by our former tax authorities on tax evaders that we worry about such things. The ROU prison population has nearly doubled since I arrived 4 years ago so I suppose it would be difficult for the FA to lock up another few hundred thousands of people.

One wealthy neighbour of mine whose family has lived here since 1876 has retained his Italian nationality. He has decided to take up fishing as a hobby and has bought himself a "stealth" electric boat. He plans to officially leave the ROU for 183 days per year but to sneak back in at dead of night assisted only by his loyal peons. Our local prefectura only guards the river beaches from 8am to 5pm :-)

It reminds me of my youth in Ireland when the price of pigs was higher in the Northern Ireland than in the Republic. Surprisingly large numbers of pigs would walk across the border during the hours of darkness :-)

The real effect is extremely negative toward expats.

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