Professional Partnerships in Uruguay: SRL or SAS, Taxes and Requirements
Professionals Who Work as a Team
Many professionals — accountants, lawyers, architects, psychologists, engineers, doctors, consultants — reach a point where they decide to work together: sharing costs, referring clients to each other, taking on larger projects or simply dividing risk and responsibilities. The question that immediately arises is how to do it properly from a legal, tax and operational point of view. Should they remain self-employed and invoice separately? Is it better to set up a company in Uruguay for the practice? Which legal structure is most suitable? What are the tax implications? This article is for professionals who have already decided to join forces and are working out the “how”: the options available, which one suits each case, the applicable taxes and the procedures to complete with DGI, BPS and other bodies. The right choice not only organises day-to-day operations but also prevents future disputes, optimises the tax burden within the law and makes it easier for the practice to grow.
Ways for Professionals to Join Forces and Invoice
In Uruguay, professionals can organise themselves in several ways to provide services and invoice. The simplest option is to remain self-employed: each professional invoices separately with their own RUT and pays tax on their professional income — generally IRPF, with the option of IRAE in certain cases — and the corresponding BPS contributions. This works as long as there is no formal corporate structure or shared assets. However, when the relationship becomes permanent, there is a shared trade name, income is divided or obligations are taken on jointly, it is advisable to formalise the association through a company.
The types of companies in Uruguay offer several structures. The ones professionals use most are the SRL (limited liability company), the SAS (simplified joint-stock company) and, to a lesser extent, the corporation (SA). There is also the sole proprietorship for those who work alone, although this article focuses on associations of two or more professionals.
Once the company is set up, invoicing is done in the name of the legal entity, which has its own RUT and pays IRAE and VAT. The professional partners can be paid in two ways: as directors or managers (remuneration for services, subject to IRPF and BPS contributions) or through profit distributions (dividends, subject to 7% IRPF withholding when they come from IRAE-taxed profits). The choice between them, or a combination of both, has tax and social security implications that must be analysed in each case.
Which Legal Structure Suits a Professional Practice?
The key question is which legal structure to choose for a professional practice. In most cases, the SRL and the SAS are the most suitable options. Both limit partners’ liability to the capital contributed and are perfectly adequate for the day-to-day running of a practice, clinic or professional services firm.
SRL: Flexibility and Proven Formality
The SRL is a traditional structure governed by Law 16,060, which offers flexibility in internal organisation and allows partners’ rights and obligations to be freely agreed in the articles of association. It requires at least two partners, is incorporated by public deed and registered with the General Registry Office (DGR), at a moderate cost. It has no minimum capital requirement, although it is common to contribute a nominal amount or the value of the assets used in the professional activity. Management can be carried out by one or more partners, and decisions are taken at partners’ meetings as set out in the contract. For medium-sized or large practices, or where new partners or outside investors are expected in future, the SRL offers solidity and institutional recognition.
SAS: Speed, Lower Cost and Simplicity
The SAS, created by Law 19,820, is a simplified joint-stock company that can have a single shareholder or several, can be incorporated online and can start operating very quickly. It has no minimum capital requirement, does not pay ICOSA (the tax on corporations) and its management is simpler: it can be run by a single director or a small board. The SAS can use standard bylaws or customised ones. It is ideal for small or newly formed practices seeking agility and low set-up and running costs. There is also the option of buying a ready-made SAS, a company ready to use where partners and directors are changed on the spot.
The choice between an SRL and an SAS depends on the profile of the practice, its growth plans, the partners and the need for contractual flexibility. Both work perfectly for a professional practice; the difference lies in time, cost and how far the partnership agreement is customised. There is no single answer: each case should be analysed with a practical approach and professional support.
Taxation of Professional Fees Invoiced by the Company
Once the company is set up, the income it receives for professional services is subject to IRAE (corporate income tax) at 25% on net income. Net income is calculated by deducting from revenue all the expenses needed to obtain and maintain it: rent, salaries, services, insurance, depreciation, among others. The company must keep proper accounts, prepare annual financial statements, file its annual IRAE return and make monthly advance payments to DGI.
In addition to IRAE, the company must charge VAT where applicable. The basic rate is 22% and there is a minimum rate of 10% for certain goods and services, while services exported abroad are generally exempt. Professionals providing services to final customers must issue electronic invoices with VAT, file VAT monthly and pay it net of input VAT. However, some professional services are exempt or outside the scope of VAT depending on their nature and recipient, so it is essential to check the rules for each activity.
Withholdings and Advance Payments
Fees invoiced to certain clients (public bodies, large companies designated as withholding agents) may be subject to withholdings on account of the company’s taxes. These withholdings are advances of tax that the company can credit when settling its taxes. The rate varies depending on the type of service and the client’s regime. The company must therefore keep track of withholdings suffered and credit them correctly in its returns.
Remuneration of the Professional Partners
Partners who actually work in the practice can receive income in two ways. The first is remuneration as directors or managers: payment for personal services, subject to IRPF and to pension and health contributions to BPS. The second is profit distribution: the net profits the company decides to share among the partners, which are dividends subject to 7% IRPF withholding when they come from IRAE-taxed profits. Many practices opt for a combination: a monthly payment as director and a profit distribution at year-end. This decision should be taken with accounting and tax advice, because it directly affects each partner’s tax and social security burden.
Procedures and Obligations to Operate as a Professional Company
Incorporating the company is only the first step. For the practice to operate properly, several procedures must be completed with public bodies. The most important is registration with DGI and BPS: the company obtains its RUT, declares its activity (the corresponding ISIC code), registers for its taxes (IRAE, VAT where applicable, IRPF withholdings) and enables electronic invoicing. This must be done before issuing the first invoice.
If the company will hire employees, it must also register as an employer, including with the Ministry of Labour and Social Security (MTSS). These registrations allow payslips to be issued, contributions to be paid and employment obligations to be met. In addition, if the company opens a bank account in its own name, the bank will require the incorporation documents, and the company must file its beneficial owner declaration with the Central Bank of Uruguay (BCU) under anti-money-laundering rules.
Finally, there are periodic obligations: monthly VAT returns and IRAE advance payments, annual financial statements and IRAE return, monthly BPS payments, keeping corporate books and minutes up to date, and renewing certificates where applicable. Failing to meet these obligations can lead to fines, objections from DGI or BPS and difficulty obtaining tax clearance certificates, which are essential to bid for contracts, export services or obtain tax benefits. That is why accounting and legal support from the outset is key to avoiding costly mistakes. If you are assessing how much it costs to run a company in Uruguay, remember that running costs include these professional services, not just taxes.
Frequently Asked Questions
Can I set up a professional company with a single partner?
It depends on the type. An SRL requires at least two partners, but an SAS can have a single shareholder, which makes it the usual option for a professional who wants to work alone through a company with limited liability. Another option is the sole proprietorship, which allows invoicing under your own RUT, but bear in mind that it does not limit liability: the owner’s personal assets are liable for the business’s debts.
Is it mandatory to register with a professional association when setting up the company?
It depends on the profession. Some regulated professions (law, accounting, architecture, medicine) require registration or qualification with the corresponding professional body or authority to practise legally. The company may need additional registration if sector rules require it, and in some cases the partners must be individually qualified. It is essential to check the specific requirements of each profession before starting operations, to avoid penalties or disqualifications.
What happens if one of the partners leaves the practice?
The articles of association or bylaws should provide for the procedure for a partner leaving: purchase of their stake by the remaining partners, sale to third parties, or dissolution of the company if there is no agreement. It is essential to agree these clauses at incorporation, including valuation, method of payment and notice period. Clear drafting avoids future disputes and allows these situations to be resolved in an orderly way, without affecting the practice’s operations or its obligations to clients and suppliers.
Conclusion: Join Forces with Legal and Tax Order
Setting up a company to invoice professional services jointly is not just a formality: it is a strategic decision that organises operations, defines responsibilities, optimises taxation and plans for the practice’s growth. Choosing the company type, drafting the agreement, registering with DGI and BPS, and defining how partners will be paid are steps that require careful analysis and specialised advice. It is not about evading taxes or looking for loopholes, but about properly structuring professional activity within the Uruguayan legal framework, choosing the most efficient and suitable option for each case. At sociedadesanonimas.uy we have incorporated more than 500 companies, handle procedures 100% online and can get you operating very quickly. If you are thinking of joining forces with other professionals and want to do it right from the start, book a consultation with our team. We will advise you on the choice of company type, draft the agreement, handle all the procedures and support you with your tax and corporate obligations so your practice runs smoothly and you can focus on what you do best: your profession.
Note: The information in this article is general in nature and does not constitute legal or tax advice.
You may also find these guides useful: