Setting Up a Consulting Firm in Uruguay: Structure, VAT and IRAE
Uruguay offers very attractive conditions for consultants, whether working independently or through a company. A relatively clear tax framework, the ability to invoice clients abroad without VAT, good digital infrastructure and free movement of capital make the country an ideal base for local and international consultants seeking legal certainty. However, properly structuring a consulting firm in Uruguay — choosing the right company type, the most efficient tax regime and the correct way to invoice — requires informed decisions from the start.
In this guide we answer the most frequent questions from consultants and professionals who want to formalise their activity in Uruguay.
What Options Are There to Operate as a Consultant in Uruguay?
In Uruguay, a consultant can formalise their activity under different legal forms, each with its own tax and operational implications. The main ones are:
- Individual — IRPF taxpayer (Category II): a professional or consultant providing services independently, with no business structure, pays IRPF as an individual on their fees. It is the simplest form, with less room for tax optimisation and no separation between personal and business assets.
- Sole proprietorship paying IRAE: a professional who exceeds certain income thresholds or chooses to be taxed under the business regime can do so as an individual entrepreneur, paying IRAE and VAT on their activity.
- SRL (Limited Liability Company): a common form for consulting firms with two or more partners. It separates personal and business assets, allows real expenses to be deducted and offers a more professional structure for corporate clients.
- SA (Corporation) or SAS (Simplified Joint-Stock Company): for larger consulting firms, with several partners or plans to raise investment. The SAS — which can also have a single shareholder — is increasingly used for its flexibility and lower running costs than the SA.
Consulting in Uruguay: Sole Proprietorship vs. SRL
Choosing between operating as an individual or setting up a company for a consulting business in Uruguay is the most frequent decision for those starting out. The key factors are:
Operating as an individual (sole proprietorship):
- No incorporation or corporate running costs.
- Taxed under IRPF (progressive scale up to 36%) on net fees under the personal regime, or IRAE (25%) if the business regime is chosen.
- No separation of assets: the consultant is liable with all their personal assets for the activity’s debts.
- Suitable for consultants with low income or at the validation stage, or those working with few clients without needing a corporate image.
Setting up a company (SRL or SAS) for consulting:
- Separation of assets: partners are liable only up to the capital contributed.
- Taxed under IRAE at 25% on net income, with the ability to deduct all real business expenses (salaries, office rent, technology, travel, training, etc.).
- Greater credibility and professionalism with corporate clients, especially international ones.
- The option to combine partners’ remuneration and dividends more efficiently from a tax point of view.
- Additional incorporation and annual running costs (accountant, deed, registrations).
- Recommended once annual income exceeds a certain level or when clients require a legal entity as counterparty.
Company Type for a Consulting Firm in Uruguay
Choosing the company type for a consulting firm in Uruguay depends mainly on the number of partners, the expected turnover and the client profile:
- SRL: suits consulting firms of two to a handful of partners who know each other, with medium turnover and clients that do not require an SA as counterparty.
- SAS: the most modern and flexible option for digital, tech, marketing or specialised service consultancies planning to grow, and the usual option for a single founder. It allows bylaws to be customised more freely and has lower incorporation costs than an SA.
- SA: for larger consulting firms, with several partners or shareholders, a need for more formal governance or clients that require this company type.
Independent Consultants in Uruguay: Registering with DGI
Every independent consultant in Uruguay must register with DGI to work legally and issue tax receipts. The process varies depending on whether they operate as an individual or a company:
As an individual (IRPF or sole proprietorship):
- Registering with DGI as an IRPF taxpayer for self-employed income or as a sole proprietorship paying IRAE and VAT, depending on income and the option chosen.
- Obtaining a personal RUT (for individuals carrying out an economic activity).
- Enabling electronic tax receipts (CFE) to issue e-tickets or e-invoices depending on the client.
- Registering with BPS to pay social security contributions as a self-employed worker.
As a legal entity (SRL, SAS, SA):
- Obtaining the company’s RUT from DGI with the activity code for consulting or professional services.
- Enabling electronic invoicing in the company’s name.
- Registering with BPS as an employer from the first worker or partner receiving remuneration.
How to Invoice Professional Services in Uruguay
Invoicing professional services in Uruguay requires issuing DGI-authorised electronic tax receipts (CFE). Paper invoicing is no longer a legal option for active taxpayers. The most relevant types for a consulting firm are:
- e-Ticket: for services provided to final consumers (individuals) or when the client does not need VAT shown separately. VAT is included in the price but not itemised.
- e-Invoice (e-factura): for services provided to VAT-registered companies. It shows the net amount and VAT separately, allowing the client to credit the VAT.
- Export e-invoice: for services provided to clients abroad. It is exempt from VAT and has a specific format proving the export nature of the transaction.
- e-Remittance (e-remito): for sending documents or materials linked to the consulting service, where applicable.
Choosing the right type of receipt for each transaction matters: issuing the wrong type can lead to DGI objections or harm the client’s VAT credit.
Consulting Firms in Uruguay: VAT and IRAE
The taxation of a consulting firm in Uruguay revolves mainly around VAT and IRAE:
VAT:
- Consulting services provided in Uruguay are subject to VAT at the basic rate of 22%.
- VAT is charged to the client (output VAT) and the VAT paid on the company’s expenses (input VAT) is deducted. The difference is declared and paid monthly to DGI.
- Consulting services provided to clients abroad (export of services) are exempt from VAT, so they can be invoiced without that charge, improving price competitiveness with international buyers.
IRAE:
- Consulting firms operating as legal entities (SRL, SAS, SA) pay IRAE at 25% on their net income: revenue minus deductible expenses.
- Deductible expenses for a consulting firm include salaries and social charges, office rent, technology and software, training, project-related travel, subcontractors’ fees, advertising and other real business costs.
- Being able to deduct real expenses is a significant advantage of IRAE over IRPF, where deductions are more limited.
- Consulting businesses with low income may be able to use the simplified small business regime.
The Simplified Small Business Regime for Consultants in Uruguay
The simplified small business regime is an option for consulting firms and professionals with income below the thresholds set by DGI. Its main features are:
- Less administrative work: simplified filings, less frequently than under the general regime.
- Taxes paid as a fixed or simplified amount, without having to determine net income precisely.
- Limited or no credit for input VAT, which may not suit consultants with significant expenses.
- Suitable for consultants starting out or with low turnover, but it can become more costly than the general regime as income grows.
Whether the simplified or the general regime is better should be analysed with an accountant based on income, cost structure and client profile.
Consulting Firms in Uruguay: Invoicing Clients Abroad
Invoicing clients abroad from a Uruguayan consulting firm is one of the most attractive aspects of the business model for consultants working with international clients. The main advantages are:
- VAT exemption: consulting services invoiced to clients abroad are exempt from VAT in Uruguay, so the firm does not charge or pay 22% VAT on those transactions.
- IRAE on export services: services provided from Uruguay are, as a rule, Uruguayan-source income and subject to IRAE even when the client is abroad. Only income from activities genuinely carried out abroad, or covered by specific regimes (such as the software regime or free zones), may be exempt, so this should be analysed case by case.
- Free inflow of foreign currency: payments from foreign clients can be received in dollars, euros or other currencies without restrictions and held in foreign-currency accounts in Uruguay.
- Contracts in any currency: consulting contracts with foreign clients can be denominated and paid in whatever currency the parties agree, without converting to Uruguayan pesos.
To properly document exports of services to DGI, the firm must keep its contracts with foreign clients, the invoices issued and bank records of payments received.
Professional Fees in Uruguay: Tax Aspects
The tax treatment of professional fees in Uruguay depends on how the consultant or professional is organised:
- Fees received by an individual under IRPF: taxed as employment-type income (Category II) under IRPF, applying the progressive scale (from 10% to 36% depending on income). The taxable base is determined after deducting BPS contributions and certain other allowable items.
- Fees received by a company (SRL/SAS/SA): the company pays IRAE at 25% on net income. A partner or director drawing remuneration from the company pays IRPF on that personal income, and dividends are subject to 7%.
- Fees paid to non-residents: when a Uruguayan company pays fees to a non-resident consultant, it may have to withhold IRNR (generally 12%) if the income is Uruguayan-source — for example, services provided in Uruguay or certain technical services provided from abroad to IRAE taxpayers. Check each case with your accountant.
Consulting Firms in Uruguay for Foreigners
Uruguay is a very attractive destination for foreigners who want to set up a consulting firm based in the country, to serve local, regional or global clients. The specific advantages for foreign consultants are:
- No restrictions based on nationality: a foreigner can be a partner, shareholder or director of a Uruguayan consulting firm without being resident or meeting any nationality requirement.
- Operating without residence: the firm can operate with partners who do not live in Uruguay, appointing a local representative.
- Tax benefit for new residents: foreign consultants who become Uruguayan tax residents can opt, for a number of years and subject to the conditions in force (tightened from 2026), not to pay IRPF on their foreign capital income.
- VAT exemption on exported services: a foreign-owned Uruguayan consulting firm invoicing clients abroad does not charge VAT on those transactions.
- Free repatriation of profits: the firm’s profits can be distributed to foreign partners and sent abroad without exchange restrictions (dividends are subject to 7% IRNR).
- Access to international payment gateways: a Uruguayan company has good access to platforms such as PayPal Business, Payoneer and others, making it easier to collect from clients in any country.
Conclusion
A consulting firm in Uruguay can be structured in many ways — from the independent consultant operating as an individual to a simplified joint-stock company with several partners — and each option has its own tax and operational advantages. The key is choosing the structure that best fits turnover, client profile and growth goals.
For export-oriented consultants, Uruguay offers a particularly favourable regime: no VAT on services to clients abroad and complete freedom to receive and manage foreign currency, although IRAE must be properly planned. For consultants with local clients, the SRL or SAS offer the best combination of asset protection, tax efficiency and professional credibility.
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