US Company Formation from Uruguay (2026): US LLC or C-Corp, Uruguay's Territorial Tax and 12% on Foreign Capital Income, the Software Exemption and Free Zones

Uruguay is, per person, one of Latin America's leading software exporters. Montevideo's software houses and the service companies in Zonamerica and other free zones sell to the USA every day. Uruguayan start-ups have scaled to global markets, and a growing community of foreign residents has made Uruguay home, attracted by its stability and its tax regime for new residents. A US company is a natural tool for all of them: a US contracting entity, a Delaware parent for investors, or a US vehicle for a freelancer's American clients.

Uruguay's tax system is territorial at its core: Uruguayan-source income is taxed, foreign-source business income is not. There is a long-standing exception. Since 2011, Uruguayan residents have paid personal income tax (IRPF) at 12% on dividends and interest from abroad, the rentas de capital mobiliario. And there is no US–Uruguay income tax treaty. This guide explains how those rules, the software exemption and the free zones work alongside a US company, for both US LLC formation and US C-Corp formation.

In short: Uruguayans and residents of Uruguay can own 100% of a US LLC or C-Corporation, formed remotely. Uruguay taxes Uruguayan-source income, so services performed in Uruguay are taxable there, whoever invoices them. Residents pay 12% IRPF on foreign dividends and interest, and US corporate dividends to Uruguay also carry 30% US withholding because there is no treaty. New tax residents have had access to an election that defers tax on foreign capital income for a number of years. Software companies can be exempt from IRAE if they meet substance requirements in Uruguay. With UCB, a Wyoming LLC with EIN is $249 and a Delaware corporation with EIN is $358, all-in.

Who can form a US company from Uruguay

US states set no nationality or residence requirement. A Uruguayan citizen, a foreign resident of Uruguay, a Uruguayan S.A. or S.A.S., or a free zone company can own a US company outright, and an individual owner can be its sole manager or director. No US visa, SSN or US address is needed, and the whole process is remote. The company needs a registered agent in its state, which is included for the first year in every UCB formation (see registered agent explained), and an EIN from the IRS, which needs no SSN or ITIN (see EIN for non-residents).

For identity, use a passport. The cédula de identidad alone is not accepted by US banks. For proof of address, a UTE electricity bill, an Antel bill or a bank statement, with a translation. A Uruguayan company owner should have its RUT registration, statutes and the registration of its beneficial owners ready. Uruguay requires companies to report beneficial owners to the Banco Central.

How Uruguay taxes income connected to a US company

What is taxed and what is not

Uruguay's main taxes are:

• IRAE, the business income tax, at 25%.
• IRPF, personal income tax, with progressive rates on labour income and flat rates on capital income.
• IRNR, for non-residents.

All three are built on the source principle: income from activities carried out, assets located or rights used in Uruguay is taxed, and foreign-source business income is not.

For a resident of Uruguay with a US company:

• Services you perform in Uruguay are Uruguayan-source. A developer or designer working from Montevideo for American clients earns Uruguayan income, taxed under IRPF (or IRAE for a company), even if a US LLC invoices the client. Services exported from Uruguay are generally exempt from VAT (IVA), but not from income tax.
• Dividends and interest from abroad are taxed under IRPF at 12% for residents. That includes a dividend from a US corporation or, depending on how the Uruguayan side views it, a distribution from a US LLC. Foreign tax paid on the same income can be credited in some cases.
• Business profits of the US company itself are foreign-source, provided they come from activity outside Uruguay.

Uruguay amended its rules on foreign passive income for entities in multinational groups in 2022, after EU scrutiny, and has adjusted residence and holiday rules more than once since. Ask your Uruguayan contador to confirm the current rules for your case.

New residents

Uruguay has offered people who become tax resident a holiday on foreign capital income: an election to be taxed as non-residents on foreign dividends and interest for a number of years, or to pay a reduced rate. The length and conditions have changed over time, most recently in 2025–2026. If you are moving to Uruguay with an existing US company, take advice before your residence starts, because the election is made at that point.

The software exemption and the two-company model

Uruguay exempts from IRAE income from software development and related IT services, provided the company has real substance in Uruguay. Under rules tightened in 2020:

• the exemption depends on the share of development costs incurred in Uruguay and with unrelated parties;
• the company must employ qualified, properly paid full-time staff in proportion to the services it provides;
• for IT services, the exemption is all-or-nothing rather than partial.

The common structure is therefore a Uruguayan software company, an S.A. or S.A.S., possibly in a free zone, that employs the team, develops the product or delivers the services, and claims the exemption. It sits alongside a US company that signs US contracts and handles US sales. The US company pays the Uruguayan company for its work at arm's-length prices. The more of the real development that happens in Uruguay and is paid for there, the stronger the exemption case.

Free zone companies, in Zonamerica, WTC Free Zone and elsewhere, are exempt from most national taxes on activities carried out from the zone with foreign clients. They have their own substance and employment rules (largely Uruguayan staff). Your adviser can compare them with the software regime.

US LLC formation from Uruguay

The US side

A single-member LLC owned by a non-resident is disregarded for US federal income tax. With no US office, US employees or US agents who conclude contracts, its income is generally not effectively connected with a US trade or business, so no federal income tax is due (see effectively connected income explained). Distributions are not US dividends, so no 30% withholding applies. The LLC files Form 5472 and a pro forma Form 1120 every year, and missing it carries a $25,000 penalty (see Form 5472 explained).

A Montevideo example

These are illustrative figures, not a client case, at UYU 40 to the dollar.

Lucía is a product designer in Pocitos with clients at US start-ups. She forms a Wyoming LLC so that clients can sign with a US company and pay by ACH, and it invoices US$90,000 a year.

In the USA, the LLC files Form 5472 and a pro forma 1120. It owes no federal income tax.

In Uruguay, her contador treats the income as hers for services performed in Uruguay, about UYU 3.6 million. It is taxed under IRPF as labour income from self-employment, with her social security contributions, rather than as a 12% foreign dividend. Her export of services is outside IVA. The LLC is a convenience for her clients, not a tax structure, and her contador documents it that way.

US C-Corp formation from Uruguay

The US side

A C-Corporation pays 21% federal tax on its profits, plus state tax where it does business, and files Form 1120 and Form 5472 every year (see the 21% corporate tax explained and the C-Corp guide for non-residents). With no treaty, dividends, royalties and related-party interest paid to Uruguay carry 30% withholding. A Uruguayan individual receiving a US dividend then pays 12% IRPF on it, with any available credit. The combined cost makes regular dividends from a US corporation to Uruguay expensive.

When to choose it

• Raising venture capital. Uruguayan start-ups that raise from US funds use a Delaware C-Corporation parent, with the Uruguayan company (often a software-exempt or free zone company) as subsidiary. The founders' return comes from selling shares, not from dividends (see raising US investment as a foreign founder).
• A US sales subsidiary with US staff, which owes US tax anyway. It should reinvest rather than distribute.
• Enterprise clients who will only contract with a US corporation.

A software company example

Take an illustrative case: a Montevideo software company with 60 engineers, exempt from IRAE under the software regime, forms a Delaware corporation for US enterprise sales. Two account executives work in Austin.

The US corporation signs the contracts, pays the Uruguayan company a development fee priced at cost plus a margin, and keeps a sales margin taxed at 21% plus Texas franchise tax. It reinvests that margin in more US sales staff. The engineering margin stays in Uruguay under the exemption, provided the substance tests are met year after year. See US subsidiary for a foreign company and Texas LLC for non-residents.

Which state

• Wyoming or New Mexico for a freelancer's or small company's LLC with no US premises.
• Delaware for a corporation raising investment or selling to enterprises.
• The state of the US team, for a subsidiary with staff, such as Texas, Florida or California.

See best state for non-residents and the state selector.

What it costs

State fees and the first-year registered agent are included. A US business address with your own suite number is $60 a year. See what a US LLC costs every year.

Banking and payments

Uruguay is a low-risk country for US banks and fintechs, and residents are generally accepted for remote business accounts. What helps:

• A specific business description.
• An English website showing your products or work.
• Matching details across the state filing, EIN letter and application.
• A US business address with your own suite number.

Uruguayan banks hold US dollar accounts as a matter of course, so money moves easily between the US account and Uruguay. Keep invoices and the company's records for the bank and for the DGI. See US business bank accounts for non-residents, why banks reject non-resident applications and Stripe for non-residents.

Common mistakes

• Treating income for work done in Uruguay as foreign-source because a US LLC invoiced it.
• Forgetting the 12% IRPF on dividends and interest from abroad.
• Paying dividends from a US corporation to Uruguay at 30% US withholding, plus 12% IRPF.
• Weakening the software exemption by moving development or paying related parties abroad.
• Moving to Uruguay without electing the new-resident regime in time.
• Skipping Form 5472 because the LLC owed no US tax.

Frequently asked questions

Can a Uruguayan citizen own 100% of a US company? Yes, without visiting the USA or holding a US visa.

Does Uruguay tax income from my US LLC? Income for services performed in Uruguay is Uruguayan-source and taxable, whichever entity invoices it. Foreign dividends and interest are taxed at 12% IRPF for residents. Business profits genuinely earned abroad are not taxed.

Is there a US–Uruguay tax treaty? No income tax treaty. US dividends, royalties and related-party interest paid to Uruguay are withheld at 30%.

Can my Uruguayan software company keep its IRAE exemption with a US sales company? Yes, if it continues to meet the substance tests in Uruguay, and the pricing between the two companies is at arm's length.

Will my US LLC pay US tax? Usually not, with no US office, staff or agents. It files Form 5472 and a pro forma 1120 every year.

Do I need an ITIN? Not to form the company or obtain its EIN. See what is an ITIN and who needs one.

How UCB can help

We handle US company formation from Uruguay remotely: the state filing, EIN, registered agent, US business address and bank application. Each year we file the federal return through our US tax filing service. Your Uruguayan contador handles DGI filings, the software exemption and pricing between your companies, and we supply the US records they need. See our formation, EIN and bank account package ($348) and the Latin America guide.

Setting up a US company from Uruguay? WhatsApp us at +1 315 961 2956 or email enquiries@ucbsolutions.com.