Trusts (Fideicomisos) in Uruguay: Types, Uses and Taxation
The trust (fideicomiso) is an increasingly popular legal tool in Uruguay for structuring business deals, managing assets and providing greater security in financial and real estate transactions.
Its flexibility allows it to be adapted to different goals, from guaranteeing obligations to managing investments or developing complex business projects.
In this guide we explain what a trust is, how it works in Uruguay under Law No. 17,703, its main types and the advantages it can offer companies and investors.
What Is a Trust?
A trust is a contract by which a person or company transfers certain assets or rights to a trustee, who manages them for a specific purpose for the benefit of another person or entity.
One of its main features is the separation of assets: the assets placed in trust are kept separate from the personal assets of the parties involved, providing greater legal certainty and orderly management.
Thanks to this structure, the trust can be used for many business, financial and real estate purposes.
Business Trusts in Uruguay
The business trust is widely used by companies to organise projects, manage assets or structure transactions more securely and efficiently.
It is often used to:
- Manage investments
- Secure financial obligations
- Develop real estate projects
- Ring-fence strategic assets
- Organise complex business structures
Its flexibility allows it to be adapted to different business models and specific needs.
Guarantee Trust
The guarantee trust is one of the most common types in Uruguay.
Certain assets are transferred to the trust to secure a financial or commercial obligation, so the creditor has an additional guarantee in case the debtor defaults.
This structure is often used in:
- Business financing
- Credit transactions
- Commercial agreements
- Investment projects
The guarantee trust provides greater security and predictability for all parties.
Administration Trust
In an administration trust, a trustee manages certain assets according to the instructions set out in the contract.
It is used when the goal is to professionalise the management of resources, investments or specific projects.
It is often applied to manage estates, cash flows or business developments that require independent and orderly management.
Trusts for Real Estate Investment
One of the most frequent uses of trusts in Uruguay is real estate development.
In this model, several investors contribute capital to the trust and the trustee manages the funds to carry out the project, build, sell and distribute the results according to the agreed conditions.
This structure allows you to:
- Separate the project’s assets
- Organise the management of funds
- Reduce operational risks
- Increase transparency for investors
For these reasons, the real estate trust has become a widely used structure in construction and investment projects.
Trust vs. Corporation
Trusts and corporations (SA) are often compared, although they are different legal figures.
The corporation is a company with its own legal personality and shareholders, while the trust is a contract-based arrangement to manage assets or achieve a specific purpose.
In practice, both can complement each other depending on the business structure and the project’s needs.
The trust is usually used for specific projects, investments or guarantees, while the corporation is used as a permanent business structure.
How to Set Up a Trust in Uruguay
Setting up a trust requires proper legal and contractual planning.
In general, the process includes:
- Defining the parties: settlor, trustee and beneficiary
- Establishing the purpose and conditions of the trust
- Drafting the trust agreement
- Transferring the assets or rights to the trust estate
- Completing the necessary registrations depending on the type of trust and assets (including the beneficial ownership declaration to the BCU)
The specific structure may vary with the purpose of the trust and the assets involved. Professional trustees must be registered with the Central Bank of Uruguay (BCU).
Taxation of Trusts in Uruguay
The tax treatment of a trust depends on the type of structure, the activity carried out and the parties involved. As a general rule, trusts are IRAE (corporate income tax) taxpayers, with the exception of guarantee trusts.
Each case must therefore be analysed individually to determine the tax obligations correctly.
In business or real estate projects, proper tax planning is usually a key part of the structure.
Tax Advantages of Trusts
One of the attractions of a trust is the possibility of achieving a more efficient structure in certain projects.
Depending on the type of transaction and the legal design, a trust can offer advantages related to:
- Asset organisation
- Tax efficiency
- Risk separation
- Greater transparency in management
However, the specific benefits always depend on the chosen structure and compliance with the rules in force.
Conclusion
The trust has become a very versatile tool for structuring investments, protecting assets and organising business projects in Uruguay.
Whether to guarantee obligations, manage assets or develop real estate projects, it offers flexibility and greater legal certainty for the parties involved.
Before setting up a trust, it is advisable to analyse the project’s goals and get specialised advice to define the most suitable structure.
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