Why Does the Legal Form Matter When You Want to Buy Farmland?

If you are thinking of acquiring rural land in Uruguay, the choice of legal structure is not a minor issue. Uruguay has a specific rule for rural property: under Law 18,092 and its amendments, companies that own rural land must have registered (nominative) shares whose holders are individuals. This requirement applies to any company wishing to own rural land and directly affects how flexible some types of companies in Uruguay are.

So the question is clear: can an SAS own a farm? The short answer is yes, but with two unavoidable conditions: its shares must be registered, and its shareholders must be natural persons (unless the Executive Branch grants an exception). In practice, this means that when you set up a company in Uruguay for an agricultural business, you must assess not only the structure that best suits your operation, but also the rules on transparency of land ownership.

This article is for those who have already decided to invest in agriculture and need to work out the “how”: which company type to choose, what procedures are involved, what tax and operational considerations exist and how to avoid mistakes that can complicate the purchase or future operation of the farm. We look in detail at the registered-share regime, the company types most used in the rural sector and what suits your particular situation.

The Registered-Share Regime for Rural Land

Uruguayan law requires every company that owns rural land to have registered shares held by individuals. Each share must be recorded in its holder’s name, identifying them clearly. The aim is for the State to know who the real owners of the land are, avoiding opacity in land tenure. If the shareholder is another legal entity (for example, a foreign holding company), the structure requires authorisation from the Executive Branch, granted only in specific cases.

This requirement applies to all company types: from the classic corporation (SA) to an SAS. The difference lies in how each form usually handles its shares. Since Law 19,288 bearer shares have had to be identified before the BCU, and a company that will own a farm must have all its shares registered in the names of individuals. The SAS issues registered shares by default, which makes compliance easier.

What Happens If I Do Not Comply?

If a company tries to register rural property without meeting this requirement, the transaction cannot be completed at the General Registry Office (DGR). In addition, during the life of the company, owning a farm without meeting the shareholding requirements is a breach that can lead to audit observations or make future transactions, such as selling shares or refinancing, more difficult.

Registering and Controlling Ownership

Once the shares are registered, the company must keep an up-to-date share register. This register is part of the mandatory corporate books and must accurately show who owns each share. This is especially relevant if you have foreign or non-resident partners, since the register ties in with the beneficial ownership obligations before the Central Bank of Uruguay (BCU), another transparency control that applies to all Uruguayan companies.

To simplify these procedures, it is advisable to work with a notary for companies in Uruguay who knows both company law and property registration, so that all documents are properly registered from the start.

SAS, SRL, SA or Sole Proprietorship: Which Suits a Farm?

Now that we know that any company can own rural land if it meets these requirements, the question is which structure is most convenient for an agricultural business. The answer depends on the size of the operation, the number of partners, growth expectations, tax burden and the operational flexibility you need.

SAS: Flexibility and Simplicity for Rural Ventures

The SAS is one of the options most chosen by investors seeking an agile, modern structure with lower running costs. The SAS does not pay the corporate control tax (ICOSA), a significant saving compared with the SA. Its shares are registered by default, so meeting the rural land requirement is straightforward, provided its shareholders are individuals.

The SAS can also be incorporated quickly —even through the “Empresa en el Día” system—, has simplified governance requirements (it does not need a board if the articles so provide) and can have a single shareholder. This makes it ideal for an individual producer or a small group of investors who do not need a complex corporate structure. If you are considering buying a ready-made SAS, you can speed up the farm purchase even further.

SRL: Tradition and Clarity for Families or Partners

The SRL is another company type widely used in agriculture, especially when there are several partners or the business is family-run. Unlike the SA, the SRL does not pay ICOSA and its governance is simpler (partners decide directly, without formal boards). SRL quotas are always registered in the partners’ names, so it naturally meets the rural land requirement if the partners are individuals.

The SRL is a solid option if you want a well-known structure, with clear procedures for partners joining and leaving and management without excessive formalities. It is especially useful for family succession or when partners are actively involved in running the farm.

Corporation (SA): A Corporate Structure for Large Operations

The SA is less common for small or medium farms because of its higher running costs (it pays ICOSA every year) and its governance requirements (board, ordinary shareholders’ meetings, mandatory books). However, it is a valid option for large producers, agribusinesses with multiple investors or when capital market financing is planned.

If you choose an SA that will own a farm, all its shares must be registered in the names of individuals before the property is registered. This involves an additional notarial and registry procedure if the company already existed with bearer shares.

Sole Proprietorship: Direct but with Unlimited Liability

A sole proprietorship lets an individual operate as a business without creating a company. Although it is the simplest and cheapest form, it has a critical drawback: the owner is liable with all their personal assets for the business’s obligations. In farming, where there may be significant labour, environmental, contractual or credit liabilities, this is a major risk. It is therefore generally not recommended for owning valuable rural property or for farms with employees.

If you are assessing which legal structure to choose, always consider the level of asset protection you need and the medium- and long-term outlook of your activity.

Tax and Operational Considerations for Agricultural Activities

Choosing the company type is not just a legal decision: it directly affects your tax burden, administrative obligations and operating efficiency. Uruguay has a favourable tax regime for agriculture, but knowing its details is key to planning correctly.

Taxes Applicable to Rural Activity

Agricultural companies pay IRAE (corporate income tax) at the general rate of 25% on profits. Agricultural activity in Uruguay is Uruguayan-source income. However, depending on the company type and revenue level, agricultural producers may be able to opt instead for IMEBA, a tax on the sale of agricultural goods with low rates that vary by product, which can be simpler and cheaper; check with your accountant whether your structure qualifies. Promoted investments and sector regimes can also grant IRAE exemptions.

Companies that own rural land are also subject to the Wealth Tax (IP) at 1.5% on net taxable assets; unlike individuals, companies have no non-taxable minimum. Rural property owners should also consider the property taxes on rural land (Contribución Inmobiliaria Rural, collected by each department) and the 2% property transfer tax (ITP) paid by each of buyer and seller on the purchase. The SAS and SRL do not pay ICOSA, which gives them a clear cost advantage over the SA.

As for VAT, many agricultural products in their natural state (livestock, grain, milk, wool, among others) fall under a “suspended VAT” regime in their first sales, while other goods and services are taxed at 22% or 10%. Companies can generally recover the VAT paid on inputs linked to those sales, which improves cash flow. Exports are VAT-relieved with the right to recover input VAT.

Managing Partners, Board and Corporate Books

With an SAS or SRL, internal management is relatively simple: you can do without a formal board, decisions are taken at shareholders’ or partners’ meetings and the mandatory books are manageable. An SA, by contrast, requires a broader set of records and corporate formalities that may be excessive if your operation is not that complex.

Whatever your choice, you must keep the corporate books up to date (minutes, share register) and file the annual returns with the DGI and BPS, as well as the beneficial ownership declaration to the BCU.

What If You Are a Foreigner or Non-Resident?

Uruguay allows foreign individuals and non-residents to own rural land, directly or through a company, with no nationality restriction. This means you can set up an SAS, SRL or SA as a foreigner and own a farm through that company, provided the shares are registered in the names of individuals. If the shareholder is a foreign company or fund, prior authorisation from the Executive Branch is required.

There are also some key practical points:

• Beneficial owner: every Uruguayan company must declare its beneficial owner (the individual who controls the company) to the BCU. If you are a foreigner, you must provide documents proving your identity and address, apostilled or legalised as appropriate.
• Bank account and local operations: to run a farm in Uruguay, you need a business bank account in Uruguay. This may require an initial in-person visit or can be handled with the help of a local representative, depending on the bank.
• RUT and registration with DGI and BPS: the company must be registered with the DGI and, if it has employees (farmhands, foreman, manager), registered as an employer with BPS. These procedures can be done online with the support of a local accountant and notary.

If you are interested in setting up a company in Uruguay as a foreigner, professional support from the start saves you time and registration errors and lets you start operating quickly in full compliance.

Frequently Asked Questions

Can an SAS own a farm in Uruguay?

Yes. An SAS can own rural land provided its shares are registered and belong to individuals. The SAS issues registered shares by default, which makes compliance easier. If a shareholder is a legal entity, authorisation from the Executive Branch is required.

Which company type is best for buying a farm?

It depends on the size of the operation and the number of partners. For individual ventures or small groups, the SAS is the fastest and most economical option (it does not pay ICOSA). For families or several partners, the SRL offers clarity and simplicity. The SA makes sense only for large operations with complex financing or multiple investors.

Can I buy a farm as a foreigner?

Yes. There is no nationality restriction on foreigners or non-residents owning rural land in Uruguay, either directly or through a local company whose shares belong to individuals. You must file the beneficial ownership declaration with the BCU and the company must have a RUT (tax ID) to complete the purchase.

Conclusion: Choosing the Right Structure from the Start

Buying a farm in Uruguay means assessing not only the land, location and profitability, but also choosing the right corporate structure to support that investment over time, with legal certainty, tax efficiency and operational simplicity. The SAS is today the most popular option for rural ventures thanks to its flexibility, low running costs and registered shares by default. The SRL remains solid for families or actively involved partners, and the SA is reserved for larger operations.

The most important thing is not to improvise: a poor choice at the start can create extra costs, corrective procedures and complications in daily operations or a future sale. That is why professional advice from incorporation onwards is the best investment you can make.

At sociedadesanonimas.uy we support you throughout the process: from choosing the company type to incorporation, registration of the farm, DGI and BPS registration, beneficial ownership declaration and bank account opening. With online procedures, we work to get your company operational quickly and compliant from day one.