Uruguay as a Retirement Destination

Posted on July 4, 2007
Filed Under Real Estate, Cost of Living, Immigration | 11 Comments

A reader asked me to compare retirement incentives offered by the Uruguayan government versus incentives offered by other countries such as Costa Rica, Panama, Belize, Nicaragua, Honduras etc. Since I don’t know much about those countries, I decided instead to write more generally about the advantages and disadvantages of Uruguay as destination for retirees. Even though the incentives offered by the Uruguayan government to foreign retirees aren’t many, there are several other factors that may be just as important when comparing countries.

First, the advantages of Uruguay as a retirement destination:

You can apply for permanent residency as a rentista (i.e. person who lives off non wage income), and you only need to show foreign income of USD 500 per month and a clean criminal record (plus assorted paperwork).

If you show foreign income of USD 1500 per month AND you purchase a property (or make an investment) valued at USD 100,000 or more, you are entitled to Uruguayan citizenship for you and your family, after the residency is approved. Otherwise, you would need to wait 3 to 5 years to become eligible. This “deal” may be more relevant to immigrants of certain nationalities than to Europeans or North Americans.

All permanent residents can bring their household goods tax free, excluding cars and motorcycles. However you will need to put some money in escrow (equivalent to the import tax on those goods), until your residency is approved (6 months or more). Then you get your money back.

No limitations on outright ownership of property by foreigners.

If your non-wage income comes from abroad you aren’t subject to the Uruguayan income tax. In many cases, even wage income from abroad is also exempt from Uruguayan taxes.

Cost of living, depending on your “consumption patterns”, can be 50% lower that the cost of living in Europe or North America.

Real estate in choice areas is significantly cheaper than in most equivalent places in Europe and North America

Inexpensive health care. The quality of the health care treatment a retiree will mostly likely need, i.e., chronic care, will probably be much better and a fraction of the cost compared to what he/she could get back home.

Uruguay is a country that is still fairly tolerant of gringos, even though some resentment exists, especially toward Americans. Although, compared to some other countries, the degree of resentment is small and will most likely happen behind your back.

In Uruguay, you’ll be safe from terrorism and kidnappings.

Uruguay is one of the least corrupt countries in Latin America.

Uruguayans are friendly and highly educated.

Now the disadvantages:

A decent knowledge of Spanish is needed in day-to-day life. The more Spanish you know, the more pleasant your experience will be. This may be difficult for some retirees to adapt to at this stage of life.

The expat community, if that is important to you, is small and mostly concentrated in Montevideo (although this may be considered an advantage by some).

Uruguay is geographically far from Europe and North America, so a quick jaunt to attend a wedding or graduation is not only expensive but also impractical.

While the weather is much milder than what most Europeans and North Americans are accustomed to, Uruguay has a winter. So if one is looking for a Bermuda-shorts-and-flip-flops-year-round type of place, this ain’t it.

Uruguay is not a culturally diverse country. This means that some foods and other items you may be accustomed to back home will either be expensive or not available.

Cars and gasoline are very expensive, about double what you would pay back home. Car insurance and taxes are also expensive.

Uruguay has an asset tax that applies to large, expensive properties.

The fees associated with buying and selling a property are high, almost 15% round trip. Recent tax changes, created a new 12% home equity appreciation tax that adds to the expense of selling a home in Uruguay.

Real estate market lacks sufficient liquidity in most areas. This fact combined with the high cost to flip a property means one needs to be very careful before buying a property.

House break-ins are fairly common. This means security measures may need to be taken to avoid surprises.

If you choose to live in more remote areas, the quality of local medical care will be wanting. Emergency care may not be available.

Uruguay is not a good destination for retirees with disabilities; few places are handicapped accessible.

Other posts in Cost of Living

Other posts in Immigration

Other posts in Real Estate

Related Posts

Comments

Click here to view the most recent comments from all posts

11 Responses to “Uruguay as a Retirement Destination”

la vieja on July 4th, 2007 6:11 pm

One advantage of retirement in Uy is the similarity to life in the US or Europe of times past. There is a pattern of seasons, a flow of city life, a general familiarity that fits like an old bathrobe and slippers. It is not “party central”. It just feels like home. For older folks who may not adapt so easily this is distinctly an advantage. Party Animals would be best served elsewhere.
urufish on July 4th, 2007 8:04 pm

If you earn your income from outside the country, it’s not guaranteed you will not be subject to income tax. I’m researching this now with a team of accountants.. The reason there isn’t a black and white answer is because it’s an interpretation of the laws and without time to discuss it amongst professionals, you dont get a ‘consensus’ opinion. The only thing we can say for certain at this point is that if your work involves programming or related IT activities, you are specifically exempt from Uruguayan income tax. If your work involves customer service, or support, or consulting, you may all under the income tax law depending on whether you use ‘assets’ here in Uruguay to perform your job, eg. a computer. We should have a majority opinion on this in the next 2 weeks.

I was originally told by customs that you have to pay a bond equal to the value of the duty on the container if you bring it in without the exemption form you get from Immigration when you get your permanent residence. However, the customs act has a provision for ‘temporary’ entry of goods (like a visa for a car or motorcycle) that you can use on your container. This is another one of those 2 week investigations, to locate the exact law, translate it into English (for me) and understand the details. I believe (at this point), you can get a 3 or 6 month ‘visa’ for the goods and probably, an extension, based on providing customs with the explanation that you are awaiting your permanent residency.
Brazzie on July 4th, 2007 9:42 pm

Urufish, thank you for the info. Please keep us posted on the findings. However it is important to point out that the main source of income of most retirees, pensions and interest, are also not subject to Uruguayan income tax.
urufish on July 4th, 2007 10:45 pm

You’re right… because the expat doesn’t use ‘assets’ in Uruguay to earn the money… like the pensions, the bond coupons, the interest, etc. That’s why we need to read the law and sit with a half dozen bright accountants and figure out how the DGI will interpret the law as written. The definition of the word ‘asset’ is the key I think. Right now, the majority opinion of my accounts is that ‘assets’ can be interpreted as a laptop or computer… We haven’t debated whether a ‘telephone’ is a Uruguayan asset… eg. you’re a consultant giving advice over the phone, using the telephone, here in Uruguay to generate the income… in the negative, if you didn’t use the phone, would the income be generated? In the case of a pension or interest, the money will show up regardless. I’m sure you see where this is going.
juan del plata on July 6th, 2007 6:17 am

does uruguay tax capital gains?
juan
Brazzie on July 6th, 2007 6:59 am

Yes, I think it is supposed to be a flat 12%. But it is a new thing and I did not have the time to read the law yet. So I don’t know what types of investments (if any) are exempt.
urufish on July 6th, 2007 8:28 pm

12% applies to real property capital gains.. eg. houses, buildings, cars. No one I spoke with talked about stocks or other kinds of investments… which indicates they’re not on the table yet.
moustach on July 9th, 2007 10:15 am

Brazzie
I have no other way to contact you except this blog so here goes. As you are aware, I spend a lot of time reading you web pages. I have also read your “about me and FAQ”, that’s because I too am on a quest!

I am 57 (don’t look a day over 60) have been at my profession for 34 years and am being led to do something for the remainder of my life. I have been married to my bride for 34 years and am enjoying growing old with her. We have three boys,one married, one in his 2nd year of college and one attempting (sometimes poorly) to become a man.

You and I have a couple of things in common. I too have Meniere’s syndrome developed after I returned from Gulf War I. I have the constant ringing (permanent nerve damage), but only have the occasional vertigo and nausea. My timetable is also closely akin to yours in that I desire to retire on my sixtieth birthday (or closely there about, Dec.’09) and move into the next phase of my life.

Why Uruguay? Unlike you I am spiritual/Christian (no, I am not in your face, will not bombard you with tracts or bang you over the head with my 25lb. King James Bible), but I do know that my life has been a directed journey, and besides, I love a good discussion!!! All that being said, I would love to go someplace and loving converse about a simpler life and deeper things.

I will tell you that the decision will be one of the most troubling in my life, not because of the materialism of the states, but the family that I will be leaving, both blood and faith. It is entirely possible, that the move will not be us alone. My brother-in-law started researching South America for retirement purposes and got me interested. I found UY, then got him interested.

We’ll see. More later if you desire to continue this contact.
I will be in Uruguay the last week of Sept. Hope to meet a lot of folks including the Southron.
Moustach
Brazzie on July 9th, 2007 11:18 am

Hi Moustach, thanks for the nice note. Sorry to hear about your tinnitus and vertigo.

By the way, you can write me an email if you wish. The address is at the bottom of the About Me page. It is represented as an image so spamming bots don’t email me incessantly.

I am glad you are going to UY in person soon. At least, you will be able to have a better feel for the place. Maybe you’ll like it, maybe you won’t. It is always safer to check how deep is the water before diving.
Newbie on July 10th, 2007 8:39 am

Hello good folks.. lovely site, thanks to all. May I join you? I just arrived in UY and am working on locating an apartment to “Set up house” while I look for permanent residence.

Any advice on Financial Advisors, and/or real estate assistance?

Best regards-

Newbie
Brazzie on July 10th, 2007 8:58 am

Hi Newbie, you can find a lot of real estate info here:
http://uruguaydreaming.com/uy-resources/?action=show&parentId=119&username=&plugin=bookmarks&expand=,343,105,159,301

Short term stays:
http://uruguaydreaming.com/uy-resources/?action=show&parentId=305&username=&plugin=bookmarks&expand=,343,105,159,301

Maybe urufish and other local expats can help you locate financial advisers.

Cheers

Uruguay as a Retirement Destination

Comments

Categories

Related Links

Most Popular Posts

Monthly Archives

Blogroll

Find It

Admin