How Uruguay Stacks Up
I visited Uruguay for the first time 26 years ago at the tender age of 22. I was just starting out covering this live and invest overseas beat and had, frankly, no idea what I was doing. Lucky for me, therefore, that the Uruguay government arranged a travel companion for this first press trip of my career, the most recognized and seasoned retire overseas writer at the time, Jane Parker. Jane was researching the Uruguay chapter of the book she was writing; I was along for the ride.
With Jane’s help, I began to discover during that two-week tour of Uruguay how to approach this kind of investigation. When sizing up a country as a potential place to spend your time or your money, what’s important?
First, safety. Most everything else is a matter of priorities, what’s more or less important to you. However, unsafe is unacceptable.
Second, cost of living.
Third, quality of life, for super-cheap is a plus only if it’s buying you at least a comfortable lifestyle.
Next, medical care and health insurance. Depending on your age and health, it may be important to you to be within easy access of international-standard health facilities.
Finally (though not insignificantly), what I refer to as “jurisdictional issues”–residency, taxation, and banking.
This is where your personal agenda becomes very important. Are you looking for a full-time foreign escape? Then options for obtaining a visa to reside in the country as a foreign resident become important. If you’re thinking of spending only part of each year overseas, you can avoid the visa question altogether.
Nobody wants to pay more in taxes each year than they have to, but tax issues are more important to some than to others and might be very important to you, depending on where and how you derive your income and how you’ve structured your investment and business holdings.
Banking is a two-tier issue. You may need or want an account with what might be termed an international bank (one with branches in many jurisdictions). In addition, if you’re planning to move to another country, you have another, day-to-day banking agenda. You need a local bank account, out of which you’ll pay local bills.
To recap, when sizing up a potential overseas haven, you’ve got to consider:
- Safety and Stability
- Cost of Living
- Quality of Life
- Medical Care and Health Insurance
- Residency Options
How does Uruguay stack up?
It’s one of the safest and most stable nations on earth, boasting a simple, back-to-basics way of life that’s increasingly hard to find anywhere. This is a place where family and family values are prized.
The cost of living qualifies as affordable but not super cheap. In addition, currency rates are a concern. If your income is derived in U.S. dollars, you’ve lost about 10% of your buying power over the past 12 months.
Uruguay is Latin America but, thanks to population migration over the centuries, with a Euro-edge. The capital city, Montevideo, has a theater and an old town, plus parks and plazas, like any proper European city. Your life here certainly could be comfortable.
Beyond Montevideo, Uruguay boasts a long coastline and a cowboy interior. On my first visit with Jane Parker years ago, we visited a working estancia, where we spent the day among the gauchos, riding, roping, herding. (Well, they roped and herded. We tried to stay out of the way.)
Medical facilities are top-notch, and comprehensive health coverage can cost less than US$100 per month. This is not “health insurance,” per se, but coverage at a particular Uruguay hospital. These kinds of “hospital plans” can be a good option if your plan is to be in one country full-time.
Establishing full-time foreign residency and opening a bank account both can be super-straightforward propositions in Uruguay.
Legislation relevant to the local tax liabilities and obligations of the foreign resident in this country were in flux until earlier this year. Through 2010, it was believed that the Uruguayan government might impose taxes on bank deposits and other assets held offshore by both citizens and residents in the country.
Had this proposed legislation passed, it would have meant a radical change from the country’s historic territorial tax system, which exempts citizens and residents from taxes on all offshore income, taxing only income earned within the country.
However, in April of this year, the Uruguay Finance Minister announced that Uruguay would be implementing a rule establishing that both foreigners who take up residence in Uruguay and, importantly, foreigners who have established residency in Uruguay face no taxes on any type of income generated abroad, at least for the first five years of residency.
After that, certain types of income, specifically dividends and interest, will be taxed at 12%–unless the person has already paid tax on the income elsewhere.
Further, our sources in Uruguay believe it is likely that these measures will be extended from the current five years, creating a more permanent non-taxed status for foreigners who take up residence in this country.
As a result, Uruguay remains a top offshore haven. It’s also one of the world’s safest and most welcoming places to spend time.
For all these reasons, we’ve included it as one of the featured jurisdictions for our upcoming Emergency Offshore Summit and have invited our top Uruguay contacts, including our preferred attorney from Montevideo, to join us on stage over the three days of this event.