When you run a simplified joint stock company (SAS) in Uruguay, you will often need to inject working capital or, conversely, take funds out of the company. Many entrepreneurs and business owners —especially foreigners and non-residents— use loans as a tool: you lend money to your company to fund operations, or the SAS lends money to you for a personal need. In both cases the transaction is legitimate and common, but it must be properly documented to avoid objections from the tax authority (DGI, Dirección General Impositiva), tax risks and questions about the real nature of the transfers. In this article we explain step by step how to document loans from the shareholder to the SAS and from the SAS to the shareholder, what the contract should include, how to handle interest and which mistakes to avoid so your company operates with transparency, security and full compliance with the oversight bodies.

Why loans between shareholder and SAS must be documented

The DGI checks that transactions between related parties —such as a shareholder and their own company— reflect market conditions and are properly supported. If you move funds without a contract, justification or records, the tax authority can reclassify the transaction: an undocumented loan from the shareholder to the SAS may be treated as an undeclared capital contribution, and an unsupported withdrawal may be treated as a dividend in kind or a taxable withdrawal, with the corresponding tax consequences.

Proper documentation protects you in several ways. First, it lets the SAS deduct the interest from its corporate income tax (IRAE) when the company borrows from the shareholder (subject to the proportional limit explained below). Second, it makes clear that this is a repayment obligation and not a distribution of profits, avoiding double taxation or the application of personal income tax (IRPF) on dividends. Third, it leaves a clear record of the origin and destination of the funds, which banks require under anti-money-laundering rules, especially when the money comes from or goes abroad —a critical point for anyone looking to open a company in Uruguay as a foreigner.

A lack of documentation also creates practical problems: it makes it harder to open bank accounts, complicates audits, undermines credibility with partners and investors and can trigger objections in tax inspections. In short, proper documentation is not a mere formality: it is asset, tax and operational protection.

Loan from the shareholder to the SAS: how to formalize it

This is the most common scenario when you are starting or expanding the business. The shareholder provides their own funds to finance operations without increasing share capital or giving up equity. From an accounting standpoint, the SAS records a liability (debt) and the shareholder holds an enforceable claim.

Essential elements of the loan agreement

The agreement must be in writing, with a certain date and signed by both parties. It should include full identification of the lending shareholder (name, ID document, address, status as shareholder) and of the borrowing SAS (company name, RUT tax ID, address). It is essential to specify the loan amount, the currency (Uruguayan pesos, US dollars or another currency), the disbursement date, the repayment term and the payment terms (installments, single maturity, renewals).

If the loan bears interest, you must specify the annual rate, the calculation method (simple or compound, on outstanding balance, in arrears or in advance) and the payment dates. The rate must be reasonable and comparable to market conditions; the DGI may challenge artificially low or zero rates between related parties if there is no economic justification. Conversely, excessively high rates also raise red flags, especially if they serve to shift profits out of the company without proper taxation.

The agreement must be signed before or at the time of disbursement, never afterwards. The transfer of funds must be supported by a bank transfer, a named check or a deposit slip. Do not use cash without supporting documents, and do not mix loan funds with other transactions without a clear audit trail.

Accounting and tax treatment

The SAS records the funds received as a liability on the balance sheet (“Shareholder loans” or similar). The interest paid is deductible from IRAE if it is properly documented and recorded and relates to a genuine transaction, but with a limit: for an individual shareholder, the interest is capital income taxed under IRPF (or under the Non-Resident Income Tax, IRNR, if they are not resident) at a 12% rate, so the SAS can only deduct 48% of that interest (12/25), unless a non-resident lender is taxed in their own country and that raises the percentage. In addition, when paying the interest the SAS generally acts as withholding agent for IRPF or IRNR and must pay it over to the DGI.

The SAS’s accountant should add the agreement to the company’s records and produce it in the event of audits or information requests. If you are considering options other than the SAS, it is worth reviewing which legal structure to choose based on your activity profile and your relationship with partners or outside investors.

Loan from the SAS to the shareholder: risks and special precautions

When the SAS lends money to the shareholder, the transaction is less common but equally legitimate. It may respond to a personal need of the shareholder or to an asset management strategy. However, this type of transaction receives greater scrutiny from the DGI, because it can conceal a distribution of profits without the corresponding tax.

The agreement must meet the same formal requirements: amount, term, collateral (if any), interest and repayment method. The key difference is that here the SAS is the creditor and the shareholder the debtor. The company should charge a reasonable, market interest rate. If it lends interest-free or below the average rate in the financial system, the DGI may consider that there is an undeclared economic benefit and reclassify the transaction as a dividend or taxable withdrawal.

The shareholder must repay the principal on the agreed terms. If there is no actual repayment within a reasonable time, or if the loan is renewed indefinitely without real amortization, the tax authority may presume that it is not a genuine loan but a way to avoid IRPF on distributed dividends. This risk is particularly relevant for non-resident shareholders, because reclassification would trigger IRNR on the disguised dividend; it is also worth reviewing how the transaction affects the SAS’s corporate Net Worth Tax in Uruguay and any applicable double taxation treaties.

Collateral and proportionality

For loans from the SAS to the shareholder, it is advisable to take collateral or personal guarantees, especially if the amount is significant. This reinforces the credit nature of the transaction and shows seriousness in any inspection. The loan amount should also be proportionate to the company’s equity and financial capacity: an SAS with low net equity cannot lend disproportionate sums without raising red flags.

If the SAS lends to its shareholder frequently or systematically, it should keep a detailed record of all transactions, with dates, amounts, interest actually collected and repayments received. Poor record-keeping can be as damaging as having no contract at all.

Interest, market rates and transfer pricing

One of the most sensitive points in loans between related parties is the interest rate. Uruguay applies the arm’s length principle: transactions between companies and their shareholders must reflect conditions that independent parties would agree on in the market. This means the loan’s interest rate must be comparable to the rates offered by the financial system or that independent lenders would apply in similar conditions.

If the shareholder’s loan to the SAS is interest-free, the DGI may not object if it can be shown to respond to a business strategy or temporary capitalization, but it may challenge deductions or indirect benefits arising from the transaction. On the other hand, if the SAS lends to the shareholder interest-free, a challenge is more likely: the implicit economic benefit may be treated as taxable income.

To set a reasonable rate, you can use as a benchmark the average rate on personal or commercial loans in the Uruguayan banking system at the contract date, adjusted for term, amount and risk. If the loan is in dollars, an international benchmark rate (such as SOFR or equivalents) plus a risk spread may be appropriate. What matters is being able to justify your choice if the DGI asks.

Interest received or paid must be recorded monthly or at the agreed frequency, and payment must be real and traceable. Accruing interest in the books is not enough: there must be actual transfers, recorded in the bank accounts of the SAS and the shareholder, with supporting receipts.

Common mistakes and how to avoid them

The most common mistake is operating without a contract. Many entrepreneurs think that, since it is their own company, they do not need to formalize the loan. That approach is risky: the SAS is a separate legal entity, and the shareholder–company relationship must be documented as if they were third parties. Another frequent mistake is signing the agreement after the transaction has taken place, or backdating it: this creates accounting inconsistencies and may be interpreted as a sham.

Another critical point is the lack of proper accounting records. The loan must appear on the SAS’s balance sheet, in the journal and in the financial statements submitted to the DGI. If the loan does not appear in the books, the transaction loses support and may be considered informal or undeclared. The omission can also affect the company’s valuation and complicate a sale or corporate restructuring.

Shareholders also often mix loans with capital contributions without clearly distinguishing between them. A capital contribution increases the company’s equity and creates no repayment obligation; a loan is an enforceable liability. Confusing the two can lead to disputes between partners, tax errors and problems if the company is sold or dissolved. If you are weighing different ways to set up a company in Uruguay, it is essential to understand these differences from the outset.

Another mistake is failing to update or renew expired agreements. If the loan reaches maturity and is neither repaid nor formally extended, the situation becomes ambiguous and may be interpreted as a deferred dividend or undeclared withdrawal.

Other company types: does anything change?

The general considerations on documentation, interest and formalities apply to all types of companies in Uruguay. However, there are nuances depending on the structure chosen.

In a limited liability company (SRL), loans between partners and the company follow the same principles. The advantage is that SRLs usually have few partners, which makes internal agreement and documentation easier. However, if there are minority partners, any loan from the company to a majority partner can create internal conflict unless it is duly approved at a partners’ meeting and recorded in minutes.

In a corporation (SA), it is advisable for the board of directors to approve transactions with shareholders, especially those involving significant amounts or special conditions. The formality is greater: the board minutes should record the approval of the loan, its amount, interest rate and collateral, and it should be reported to the next shareholders’ meeting. This protects the board from potential personal liability and reinforces the transparency of the transaction.

For a sole proprietorship, there is no separation of assets between the owner and the business: a sole proprietorship is not a separate legal entity, so legally there is no loan between the two. What does matter is recording the owner’s contributions and withdrawals in the books, since the DGI monitors transactions between the owner and the business to make sure they are not concealing untaxed profit withdrawals.

Frequently Asked Questions

Can I lend money to my SAS interest-free?

Yes, you can. However, the agreement should clearly state that the loan is interest-free and that this decision responds to a business strategy or temporary financing. The DGI does not usually challenge interest-free loans from the shareholder to the SAS if they are properly documented, but it may question indirect deductions or tax benefits arising from the transaction. On the other hand, if the SAS lends to the shareholder interest-free, the risk of reclassification as a dividend or taxable withdrawal is higher.

What happens if I don’t document the loan and the DGI audits me?

The DGI may reclassify the transaction according to its real nature. An undocumented loan from the shareholder to the SAS may be considered an unrecorded capital contribution, which can affect the company’s tax valuation, the calculation of its net worth and future tax obligations. A withdrawal of funds from the SAS to the shareholder without a contract may be treated as a distributed dividend, triggering IRPF or IRNR (Non-Resident Income Tax) as applicable, plus interest and fines. In addition, the company may face objections to its IRAE return if it tried to deduct interest without supporting documents.

Do I need a notary to formalize the loan agreement?

It is not mandatory for a loan agreement between a shareholder and an SAS to be executed before a notary, unless it involves collateral (mortgage, registrable pledge) that requires registration. In most cases, a private agreement signed by both parties is enough. However, for significant amounts or with non-resident shareholders, it may be advisable to get specialized legal advice and, where appropriate, formalize the agreement before a notary to give it a certain date and greater evidentiary weight. To size the scope of the operation and the support you may need, you can also review how much it costs to maintain a company in Uruguay.

Conclusion

Properly documenting loans between a shareholder and their SAS is not just a legal formality: it is a strategy for tax, asset and operational protection. A clear contract, a reasonable interest rate, complete accounting records and supporting documents for every transfer protect you in a DGI inspection and let you operate with transparency and security. While the transaction is legitimate and common, a lack of proper documentation can lead to tax reclassifications, penalties and disputes with partners or authorities.

Whether you are running an SAS, considering options such as a ready-made (shelf) SAS or planning to inject working capital, specialized advice makes the difference between doing it right and exposing yourself to unnecessary risks. At sociedadesanonimas.uy we support entrepreneurs and business owners —residents, foreigners and non-residents— at every stage of their company’s life, from incorporation to day-to-day operation and management, with fully online procedures. Book a consultation with our team to answer your questions, formalize your transactions and operate with peace of mind and full compliance.

Disclaimer: The information in this article is general and for guidance only. It does not constitute personalized legal, accounting or tax advice. For specific decisions about your situation, always consult a qualified professional.