1. Fiscal costs associated with the acquisition of property
Our legislation, although it does contain some provisions to encourage investment by foreigners, the species does not provide exemptions or tax incentives to encourage the purchase or possession of property such as houses or apartments .
Value Added Tax
The first sale of new buildings and brand new buildings or significantly refurbished recycled by the companies that promote or construction is achieved by Value Added Tax at the rate of 10% applicable on the sale price. Are not reached by the subsequent tax sales that are made on the same property.
the taxpayer of this tax is not abroad but the vendor, who should check in, retain and turn over the tax to the Treasury. Nevertheless, the tax being included in the price of the property is abroad, "resident" or "nonresident" who ultimately will bear the fiscal costs as the result of not having "sales tax" that be discounted, thus neutralizing the amount.
The acquisition of a property transaction, therefore, in regard to VAT, have effect only in an indirect tax on foreign acquirer.
Property Transfer Tax
The operation of the transfer of property, rights of usufruct, use and habitation, and the promise of sale and assignments of promises are hit by the tax on transfers of assets the rate of 4%.
The tax is levied on the rateable value of property as of the date of the transaction and must be paid equally by both the foreign buyer is resident or not (2%) and the seller (2%).
case of property constructed or under construction, the value on which the tax is to be determined for that purpose by the General Directorate of Cadastre written application by the builder or buyer.
The silence of the authorities regarding the application of appraisal will determine the tax payable on the corresponding share of the real value of the property Seat existing or future buildings. The difference is reassessments at the time of the final deed of sale.
2. TENURE fiscal costs of real estate by foreign individuals
Tax Incidence
Heritage
tenure estate by foreign natural persons, residents or nonresidents, it is fiscally important to the Inheritance Tax purposes. Recycling is considered "significant" if: a) increases by at least 25% of the meters built and b) increase the property value by 50%. VAT, in this case, is applied to the difference between the sale price and acquisition cost.
The fact that the purchaser of property is not VAT taxpayer does not relieve the seller from the obligation to check it.
tax rates vary in the case of rural property and that in some cases, buyers pay an additional 5% in respect of the Property Transfer Tax. The incidence of this tax, though minor, should be taken into account by the alien not only to the time of acquisition of property but also the subsequent sale, promise of sale or transfer is made from same.
Indeed, this tax is levied on an annual basis, inter alia, the assets located, placed or economically used in Uruguay, regardless of the domicile of their owners and provided their value for tax purposes in excess of U.S. $ 76,000 (seventy-six thousand U.S. dollars).
The tax is calculated at 31 December each year based on rates or infinitely progresionales which vary the rateable value of property.
The legislation provides for a gradual reduction of 0.25% per annum on the rates applicable to properties whose values \u200b\u200bfor tax purposes in excess of U.S. $ 648,001. From 2011, meanwhile, provides a progressive reduction of 0.20% per annum on the fees for properties with values \u200b\u200bexceeding U.S. $ 72,001. Finally, it provides an overall reduction of 0.10% per annum on all rates from 2016.
Tax applies in all cases, the rateable value of property. The determination of the value done "case by case" since many factors influence, namely the age of the property, the constructed area, the location of the blocks, the type of construction, the shape of the lot, the reference values \u200b\u200bfor taxation of land and improvements the authorities have in advance, etc. Cadastral values \u200b\u200bare generally slightly lower than market values, but this mismatch is generally lower in the case of property located in Punta del Este.
If the property is aimed at "home" room "from abroad the property should be valued for the purposes of capital tax by 50% of its value with a minimum of $ 76,000. This means that if the assessed value of the property is $ 450,000 and is also effective for the foreign household, then the applicable rate is 1.9% but 1.4%.
tax rate, if the property is acquired by a legal person or foreign entity, shall in all cases of 1.5% irrespective of the value of the property and is calculated on the higher value between the cost of acquiring land adjusted for inflation and the assessed value.
Consequently, if the taxable value of property purchased in excess of U.S. $ 304,001 could be economically more convenient, for the purposes of this tax, which the holder is a foreign entity and not an individual. Nevertheless, it should be noted that NO can be applied to legal persons outside the 50% deduction for property under "house-room."
Wealth Tax Neutralization of
The fiscal cost is the tenure of a property in Uruguay can be neutralized if the foreign owner himself is married, with no interest to do so, the venue of marriage.
In this case, the taxpayer's tax is not the individual but the family that the person in accordance with their spouse. Under tax law, it determines that the alien only have to pay this tax to the extent that the property tax value exceeds U.S. $ 152,000.
Registration of foreign
the estate tax should be paid directly by the foreign property owner or his representative (natural person or legal resident) since there is no legal designation of a withholding agent for these cases .
For this purpose, the foreigner must register with the tax authorities claiming to be owner of a property in Uruguay, reporting to the Treasury its value, identifying a fiscal home and one formed by registering as a taxpayer the tax in question and obtaining an NIE (Foreigner Identification Number).
3. Fiscal costs associated with LEASE or operation of buildings
The lease or transfer of use and enjoyment of the property acquired will generate revenue or profit at the head of the foreign owners, the effect of tax legislation is subject to the payment of New Income Tax Uruguay.
Indeed, the income tax rests, inter alia, on income or gains that individuals receive as a result of the exploitation of real estate capital, eg. rent or similar income. There
in If tax reliefs or exemptions to encourage such operations on lavish buildings. Nonresident aliens are exempt only in respect of income to obtain, among others, debt securities, sale of shares, exchange differences on foreign currency transfers for amounts less equity and more. Properties
foreign "residents"
Rents and other income paid to the foreign "residents" owners of properties leased or transferred to third parties will be achieved by the income tax to non-residents annual rate of 10.5% to be settled December 31 each year.
Foreigners must pay this tax through withholding must implement the company or entity that manages the property and make the collection of rents.
The property manager shall implement withholding on amounts of rents collected over the retention and pay this amount to the Treasury on the occasion of the payment or credit to the foreign owner.
Obtaining capital income does not, by itself, to foreign natural person is considered a "permanent establishment" for tax purposes and thus not be required to settle or pay the remaining taxes and comply with tax requirements applicable to domestic enterprises. Properties
foreign "residents"
Aliens as Residents who receive income as a result of the lease or transfer of use or enjoyment of their property must pay the income tax of natural persons on such income to an annual rate of 10.5%.
The tax is payable via check to be made by the administrator who manages the property and earn third the price of leases or disposals of use.
The foreign owner is entitled to confer the status of final payment the deduction from the Treasury or request a reassessment in which deducting fees from the property manager, professional fees related to the signing and renewal of contracts and local taxes. Registration
nonbinding
Foreigners, "residents" and "non-resident" shall not be required to register with the Treasury and taxpayers of the Income Tax and Non-Resident Income Tax of Individuals or appoint a representative to this effect as 100% paid via withholding thereof.
4. Tax treatment of gain on subsequent DISPOSITION
The capital gains for foreigners to obtain as a result of any sale or disposition of the promise of property acquired FINEVA will be made by the Income Tax Uruguay, both the Income Tax of Individuals as Income tax for non-residents.
Aliens "residents" and "residents" to the Treasury must pay 12% on account of Income Tax of Individuals and Income Tax for non-residents, respectively.
The tax rate is applied to the profit generated by the operation understood as the difference between the sale price or promise of sale (which shall not be lower than the assessed value) and the current tax cost of property sold or pledged for sale over the Property Transfer Tax charged to the seller.
taxes are withheld and paid to the Treasury in these cases by the clerk or notary involved in the operation.
5. Disadvantages of using a corporate vehicle
Uruguayan foreign
NOT recommend using an Uruguayan corporate vehicle to acquire, possess and then dispose of a local property. This is because:
a) the profits of such companies are subject to Income Tax Activities Business at a rate of 25%, which would be increased foreign tax costs associated with leasing the property and its sale or disposition and
promise
b) dividends or profits that Uruguayan society eventually turn to the shareholder or partner from abroad are subject to payment of a withholding tax or 7%.
The Property Transfer Tax, albeit minor, is a fiscal cost to be considered by the alien, both at the time of purchase and the subsequent sale.
________________________ Dr. Miguel Angel Gallegos
Legal Consultant and Attorney at Law Master
Tax Technical and
Beverly Hills, Punta del Este, Phone: (598) (42) 49 61 78
Montevideo, Phone: (598) (2) 710 18 85
Cell: (598) (99) 26 93 98 E
Email: mykaelg@gmail.com
http://drmiguelgallegos.blogspot.com/
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