Setting Up a Startup in Uruguay: SAS, ANII Funding and Tax Advantages
In recent years Uruguay has positioned itself as one of the most solid and attractive entrepreneurial ecosystems in Latin America. Institutional stability, quality of life, international connectivity, available public funding and a competitive tax framework for tech companies make the country a first-rate destination for founding a startup in Uruguay or relocating ventures seeking a reliable legal base in the region.
In this guide we explain how to set up a startup in Uruguay, which company type to adopt, how to access ANII funding, the tax advantages available and why Uruguay is a competitive option compared with its regional neighbours.
The Entrepreneurial Ecosystem in Uruguay
The Uruguayan entrepreneurial ecosystem has grown considerably since the 2000s, driven by a combination of active public policies, private investment and an increasingly established community of founders and mentors. Montevideo concentrates most of the activity, but the ecosystem has national reach thanks to digital connectivity and decentralisation programmes.
Its pillars include:
- ANII (National Agency for Research and Innovation): the main public funder of innovation and tech entrepreneurship in Uruguay, with grants, soft loans and seed capital instruments for startups at different stages.
- ANDE (National Development Agency): promotes business development with financing instruments, guarantees and technical support for larger ventures.
- Accelerators and incubators: organisations such as Endeavor Uruguay, Ingenio (the LATU incubator), university innovation centres, the Parque Tecnológico Industrial del Cerro and other institutions provide mentoring, workspaces and access to investment networks.
- Regional venture capital funds: Latin American funds with a local presence that invest in Uruguayan startups at seed and Series A stages.
- Founder community: an active network of serial entrepreneurs, many with international experience, who contribute to the ecosystem as mentors, angel investors and co-founders.
Company Type for a Startup in Uruguay
Choosing the company type for a startup in Uruguay is one of the founder’s first legal decisions and affects how easily they can raise investment, the governance structure and running costs. The three most relevant options are:
The SAS for Startups in Uruguay
The SAS (Simplified Joint-Stock Company) in Uruguay is currently the most recommended company type for most Uruguayan startups. Introduced by Law No. 19,820 in 2019, the SAS was designed specifically to make it easier to create and run innovative, fast-growing companies. Its main advantages for startups are:
- Simpler, cheaper incorporation: it can be incorporated by private instrument (no mandatory public deed) with fewer formal requirements than an SA or SRL, reducing incorporation cost and time.
- Flexible bylaws: the SAS bylaws can customise almost every aspect of how the company works, including classes of shares with different economic and voting rights, vesting, drag-along, tag-along and other clauses common in venture capital.
- Single administrator possible: an SAS can be run by a single director or manager, without a multi-member board or other formal bodies, which greatly simplifies early-stage management.
- Easy issuance of different classes of shares: the SAS can issue ordinary and preferred shares, with or without votes, with different liquidation preferences and other features venture capital investors usually require.
- Lower running costs: compared with an SA, the SAS has fewer formal requirements, lower annual running costs and does not pay ICOSA.
The SA for Startups in Uruguay
The SA remains a preferred option for startups seeking institutional investment of a certain size or planning structures with many classes of shareholders. International investors and venture capital funds with global experience recognise the SA as the most familiar structure, best tested in litigation and complex transactions. For startups planning a significant funding round or an eventual sale to an international player, the SA may offer more legal certainty than the SAS, which is still relatively new in the Uruguayan legal system. Bear in mind that the SAS cannot make public offerings of its shares.
The SRL for Startups in Uruguay
The SRL is generally less recommended for high-growth startups because its quotas have more transfer restrictions than SA or SAS shares, which complicates bringing in new investors and exit processes. It requires at least two partners. For smaller ventures with few founders and no plans to raise outside investment in the short term, it can be a valid option.
How to Set Up a Startup in Uruguay
The process to set up a startup in Uruguay varies slightly depending on the company type, but generally follows these steps:
- Defining the corporate structure: number of founders, capital split, vesting if applicable, and the most suitable company type (SAS, SA or SRL).
- Drafting the bylaws or articles: by private instrument (SAS) or by public deed before a notary (SA or SRL), including all the clauses relevant to startups: classes of shares, quorums, transfer restrictions and exit mechanisms.
- Registration with the DGR: registering the company with the General Registry Office of the Ministry of Education and Culture.
- Obtaining the RUT from DGI: with the taxpayer category suited to the planned activity.
- Opening a business bank account: a practical but essential step to operate and receive investment.
- Intellectual property registration: if the startup has IP assets — software, brand, patents — their registration with the National Directorate of Industrial Property (DNPI) or the Literary and Artistic Property Registry should be handled from the outset.
One of the most important aspects of setting up a startup is the founders’ agreement, which governs each co-founder’s rights and obligations, vesting of shares or quotas, exit clauses in case of disagreement and ownership of the intellectual property created. It should be drafted by a lawyer experienced with startups and can be built into the SAS bylaws or signed as a separate contract.
Startups in Uruguay and ANII Funding
ANII (National Agency for Research and Innovation) is the main engine of public funding for tech startups in Uruguay. Its instruments for entrepreneurship include:
- Sector funds: non-refundable grants for R&D and innovation projects in priority sectors, with amounts depending on each call.
- Entrepreneurship programmes: seed funding and support for early-stage innovative ventures, with grants to validate business models and develop prototypes.
- Seed capital instruments: funding at pre-seed or seed stage for startups with high growth potential and a technological component.
- Certifications for tax benefits: ANII is involved in certifying R&D and innovation projects that can access specific tax benefits.
- Collaborative projects with universities: programmes linking startups with research centres to develop technology jointly.
Access to ANII instruments requires submitting projects that meet its evaluation criteria, which value innovation, the scalability of the business model and the founding team. Advice on structuring the application properly can make the difference in competitive calls.
The Legal Regime for Tech Startups in Uruguay
There is no unified legal regime for startups in Uruguay — no specific “startup law” like in some other countries — but rather a combination of different legal frameworks:
- Law No. 19,820 (SAS): the most suitable company type for startups, with its flexibility and simple incorporation.
- Investment Promotion Law (No. 16,906) and its regulatory decrees (currently Decree 143/018): access to IRAE and VAT exemptions for investment projects in fixed assets, including technological components.
- Software regime: companies developing software and related activities have specific tax treatment that can exempt from IRAE the income from software used abroad, in proportion to the development carried out in Uruguay.
- Free zones: tech startups providing services abroad may consider operating from a Uruguayan free zone, with full exemption from IRAE and other national taxes.
- Intellectual property law: protection of software, trademarks, patents and other intangible assets central to tech startups.
Tax Advantages for Startups in Uruguay
The tax advantages for startups in Uruguay are a differentiating factor that foreign founders considering the country do not always know about:
- IRAE exemption for exported software and tech services: income from software and related services used abroad can be fully or partly exempt from IRAE under the software regime, subject to the substance rule.
- Tax holiday for new residents: foreign founders who move to Uruguay can opt, for a number of years and subject to the conditions in force (tightened from 2026), not to pay IRPF on their foreign-source capital income — especially relevant for founders with income or assets in other countries.
- Access to the COMAP regime: startups investing in tech fixed assets can submit projects to COMAP to obtain IRAE and VAT exemptions proportional to the project’s impact.
- Operating from a free zone: with full exemption from IRAE and other national taxes for service export activities.
- VAT on exported services: exports of tech services are exempt from VAT in Uruguay, improving price competitiveness with international clients.
Startups in Uruguay: Foreign Investment and Fundraising
Uruguay offers very favourable conditions for a Uruguayan startup to raise foreign investment. Free movement of capital, no exchange restrictions and the ability to denominate share capital in dollars make it easier to structure funding rounds with international participants.
To properly structure the entry of a foreign investor into a Uruguayan startup, the most relevant aspects are:
- Using investment instruments familiar to the international ecosystem: SAFEs (Simple Agreement for Future Equity), convertible notes or preferred share rounds with a standard term sheet.
- Making sure the SAS or SA bylaws provide for the classes of shares, liquidation preferences and anti-dilution mechanisms venture capital investors usually require.
- Planning the taxation of the investor’s gain on an eventual exit: IRNR on the capital gain for non-resident investors.
- Checking beneficial owner reporting obligations with the BCU, which apply to all Uruguayan SAs and SAS regardless of their shareholders’ nationality.
Startups in Uruguay vs. Argentina and Chile: A Regional Comparison
Comparing Uruguay, Argentina and Chile as startup destinations is common among Latin American founders deciding where to set up their base company. Uruguay’s differentiating factors are:
- Macroeconomic stability: Uruguay has no exchange restrictions or capital controls. Unlike Argentina’s historical situation, founders and investors can operate in dollars with complete freedom.
- A predictable legal framework: the rules of the game in Uruguay are stable and the judiciary is independent, giving legal certainty to contracts, investments and intellectual property rights.
- Competitive tax burden for technology: the software regime and available exemptions mean the effective tax burden of an exporting tech startup can be very low in Uruguay.
- First-class digital infrastructure: Uruguay has some of the highest fibre-optic and broadband penetration in Latin America, with the state operator ANTEL and a connectivity ecosystem that makes remote and distributed work easier.
- Versus Chile: Chile has a more mature ecosystem in terms of investment volume, with Santiago as a more established regional hub. However, Uruguay offers lower operating costs, a more favourable tax framework for service exports and simpler regulation for small and medium-sized companies.
- Market size: Uruguay’s limitation is its small domestic market. Successful Uruguayan startups design their business models with an export orientation from day one, which often turns out to be a strength: it forces them to be globally competitive from very early on.
Conclusion
Uruguay offers a combination that is hard to match in the region for founding and scaling a startup: institutional stability, a competitive tax framework for technology, public funding through ANII, a modern and flexible company type such as the SAS, and a growing entrepreneurial ecosystem with strong international connections.
To make the most of these advantages, the key is to structure the company correctly from the outset: choose the right company type, draft bylaws that anticipate future growth, protect intellectual property and plan the tax strategy with a long-term view. At sociedadesanonimas.uy we support founders at every stage, from incorporating the SAS or SA to structuring funding rounds with international participants.
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