Uruguay's legal forms and tax regimes: the complete guide

Going self-employed in Uruguay means two decisions people often conflate: which legal form you adopt, and which tax regime you fall under. They're different and they combine. This guide is the full map: all the forms, all the regimes with their scales and caps, the taxes that cut across everything, the BPS contributions, typical profiles, and a step-by-step way to choose — always with the official source in view. It's a general guide; your case may have nuances.

Two distinct layers: legal form and tax regime

The legal form defines who the subject is (a person with a sole-trader business, a company with its own legal personality, etc.) and how they answer for debts. The tax regime defines how and how much you're taxed (a single quota, a minimum VAT, IRAE on profit…). The same form can be taxed under different regimes, so it's worth understanding them separately before choosing. First you pick a form; then, by your activity and income, you land in a regime.

1. The legal forms

The simplest, most common way to start alone is the sole trader (empresa unipersonal): not a company, but a person dedicating their assets to an activity. The flip side is that the owner answers with their personal wealth, without limit. The MEF defines it as:

The MEF defines the sole trader as:

«Mediante una Empresa Unipersonal una persona natural o jurídica, podrá destinar sus activos para la realización de una o varias actividades de carácter mercantil. Ésta no posee personería jurídica y el titular de la empresa responde personal e ilimitadamente por las obligaciones de la misma.»

In English: Through a sole-trader business a natural or legal person may dedicate their assets to one or several commercial activities. It has no legal personality, and the owner answers personally and without limit for its obligations.

If you're more than one person, or want to separate your personal wealth from the business's, you enter the realm of companies. The most used today are the SRL (limited liability, capital in quotas), the SA (capital in shares), and the SAS, a modern, flexible figure created by Law 19.820 that can have a single shareholder and limits their liability. The MEF defines it as:

Law 19.820 defines the SAS as:

«Las sociedades por acciones simplificadas (SAS) pueden ser constituidas por personas físicas o jurídicas, en forma individual o colectiva, para el desarrollo de actividades rurales, industriales o comerciales.»

In English: Simplified stock companies (SAS) may be formed by natural or legal persons, individually or collectively, to carry out rural, industrial or commercial activities.

SRL, SA and SAS, side by side

The three most-used limited-liability companies differ in how capital is split, how many members they allow, and how quick they are to set up:

2. The tax regimes

Once you've picked a form, comes the regime. There's a natural ladder by how much you bill. For the smallest there's monotributo: a single monthly quota to BPS replacing national taxes and contributions. Its contributions are based on a predetermined amount:

Per BPS, under monotributo:

«El titular, cónyuge o socio en el régimen de Monotributo, realizan sus aportes jubilatorios y el Fondo de Reconversión Laboral (FRL) sobre la base de un monto predeterminado que equivale a 5 BFC.»

In English: The owner, spouse or partner under the monotributo regime makes their pension and Labour Reconversion Fund (FRL) contributions on a predetermined amount equal to 5 BFC.

Monotributo is for the smallest: your annual income can't exceed 60% of the Literal E limit. It's ideal for its simplicity, but if you grow you fall outside it and must change regime.

The next rung is Literal E (Pequeña Empresa / IVA mínimo): you don't compute ordinary VAT but a fixed monthly minimum VAT, and you're exempt from IRAE, as long as you don't exceed 305,000 UI of annual income. It's the regime of most small sole traders. In exchange, you can't deduct the VAT on your purchases.

Above that cap you pay IRAE (tax on business income), the corporate-profit tax, at 25% on net income. There are two ways to determine that income: real (with sufficient accounting, on actual profit) or ficto (estimated as a percentage of income), depending on whether you're required to keep accounts:

The IRAE rate is set in Title 4:

«La tasa del impuesto será del 25% (veinticinco por ciento) sobre la renta neta fiscal.»

In English: The tax rate shall be 25% (twenty-five percent) on net fiscal income.

Decree 150/007 allows the ficto (estimated) determination:

«Los contribuyentes que no están obligados a llevar contabilidad suficiente podrán determinar sus rentas netas en forma ficta.»

In English: Taxpayers not required to keep sufficient accounting may determine their net income on an estimated (ficta) basis.

The IRAE ficto scale (by brackets)

Under IRAE ficto, your income isn't measured by your real profit but estimated as a percentage of your revenue, by brackets in UI (the scale in force for fiscal years from 2023). The 25% IRAE rate then applies to that notional income:

The caps that separate the regimes

The caps are set in UI, which adjusts with inflation, so the peso figures change each year. These are the key thresholds (verify the current UI value):

3. Your type of income also defines the regime

It's not only "how much" you bill: "what" kind of income you generate matters too. Business income (commerce, industry, capital + labour) goes under IRAE; pure personal-labour income may go under IRPF; rents are capital income; pensions, under IASS. This table sums up the map:

4. The taxes that cut across everything: IVA, IRPF, IASS, IRNR, IP

Beyond your activity's regime, there are taxes that apply by type of income or consumption. VAT taxes consumption; IRPF, the income of resident individuals. Let's start with VAT:

Per DGI, on the VAT rates:

«En principio todos los bienes y servicios están gravados a la tasa básica del 22%, salvo que estén exonerados o que se encuentren gravados a la tasa mínima del 10%»

In English: In principle all goods and services are taxed at the basic 22% rate, unless they are exempt or taxed at the minimum 10% rate.

Per BPS, on labour IRPF:

«El BPS, en su carácter de organismo colaborador con la DGI, recauda de sus afiliados activos el Impuesto a la Renta de las Personas Físicas (IRPF) derivadas del trabajo.»

In English: BPS, as a body collaborating with DGI, collects from its active members the Personal Income Tax (IRPF) on income derived from work.

And Title 7 allows a notional expense deduction in labour IRPF:

«Para determinar la renta computable, se deducirá del monto total de los ingresos un 30% (treinta por ciento) en concepto de gastos, más los créditos incobrables, en las condiciones que establezca la reglamentación.»

In English: To determine taxable income, 30% (thirty percent) of total income is deducted for expenses, plus bad debts, under the conditions set by the regulations.

The progressive scale of labour IRPF (Cat. II)

Labour IRPF is progressive: it's taxed by brackets measured in BPC, and the first slice — up to 7 BPC — pays nothing (tax-free minimum). Each bracket pays its own rate, not everything at the highest:

5. And separately, the BPS contributions

Watch a common confusion: taxes (DGI) and social-security contributions (BPS) are different things and coexist. Every sole trader contributes to BPS on top of paying their taxes (except monotributo, which unifies everything in one quota). BPS places you in a category — Servicios Personales or Industria y Comercio — by your activity, and that changes, above all, how your FONASA (health) contribution is computed. Keep it in mind when budgeting: your monthly cost is taxes + BPS.

6. How they combine: typical profiles

In practice, form and regime cross. Here are some common profiles so you see how the pieces fit (illustrative examples, not prescriptions):

7. How to choose: a step-by-step guide

There's no single right answer, but there is a logical order to reach yours. Follow these four steps, from form to regime.

Step 1 — Will you work alone or with partners, and how much do you want to risk? If you go solo and want the simplest setup, the sole trader is enough — but remember you answer with your personal wealth, without limit. If you want to protect your assets or add partners, a limited-liability company (SRL, SA or SAS) is better. In the SAS, for example, the law limits your liability:

In the SAS, Law 19.820 limits the shareholder's liability:

«El o los accionistas no serán responsables por las obligaciones laborales, tributarias o de cualquier otra naturaleza en que incurra la sociedad excepto en caso de declararse inoponible la personalidad jurídica»

In English: The shareholder(s) shall not be liable for the labour, tax or any other obligations the company incurs, except where the legal personality is declared unenforceable.

Step 2 — How much do you expect to bill a year? This sets your regime, as a ladder. If you bill little, monotributo is the simplest — but it has a cap: your income can't exceed 60% of the Literal E limit. The law puts it this way:

Law 18.083 sets the monotributo limit:

«Los ingresos derivados de la actividad no superen en el ejercicio el 60% (sesenta por ciento) del límite establecido en el literal E) del artículo 52 del Título 4 del Texto Ordenado 1996, para los sujetos comprendidos en el literal A) del artículo anterior.»

In English: Income from the activity must not exceed, in the fiscal year, 60% (sixty percent) of the limit set in literal E) of article 52 of Title 4 of the 1996 Ordered Text, for those covered by literal A) of the previous article.

If you exceed that cap, the next rung is Literal E (IVA mínimo), exempt from IRAE as long as you stay under 305,000 UI of annual income; higher up, you pay IRAE. The Literal E exemption is in Title 4:

Title 4 exempts small businesses from IRAE, in its literal E):

«Las obtenidas por los contribuyentes cuyos ingresos no superen anualmente el monto que establezca el Poder Ejecutivo.»

In English: Income obtained by taxpayers whose annual income does not exceed the amount set by the Executive.

Step 3 — What kind of income do you generate? If it's commercial or industrial, you go under IRAE (or Literal E if you're small). If it's pure personal services, you may be taxed under IRAE ficto or IRPF — and it's worth comparing which comes out lower. If it's capital income (a rental), it goes under IRPF Category I. Your type of activity also sets your BPS category (Servicios Personales or Industria y Comercio).

Step 4 — Do you keep accounts? Within IRAE, if you're not required to keep sufficient accounting you can use the ficto (estimated) basis — simpler, on a percentage of your income; if you do keep accounts, or exceed the cap, you go under IRAE real on your actual profit. With many real expenses, real usually wins; with few, ficto.

In practice, these four steps give you your combination: form + regime + taxes + BPS. No decision is irreversible — you can change regime or form as you grow. When in doubt, an accountant helps you choose well and stay in order.

Quick glossary

• UI (Indexed Unit): a value that rises with inflation; many tax caps are set in UI.
• BPC (Benefits and Contributions Base): the State's annual reference; IRPF brackets are measured in BPC.
• BFC (Notional Contribution Base): the base on which some BPS contributions are computed.
• RUT: the number that identifies your business to DGI.
• FONASA: the contribution that funds your health coverage (mutualista).
• Notional income (renta ficta): income estimated as a percentage of revenue, without accounting.
• Giro: the type of activity (commerce, industry, personal services).

In short: first you choose a legal form (how you answer for debts), then a tax regime (how you're taxed), and the two combine, with BPS always present separately. This guide is a general map; every situation has nuances, so verify your case in the official sources and consult an accountant before deciding.