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Uruguayan accountants · Reports in English

UK pensions and dividends in Uruguay: tax treatment

How Uruguay treats UK pensions, dividends and related income.

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Since 1993Estudio Zurbriggen
CCEAU 61148 · 225636Two registered public accountants
In English, in writingConfidential written report
Calls also possibleWe work mainly in writing

By Cr. Matías Zurbriggen, public accountant (CCEAU 225636).

Receiving a UK pension or dividends while living in Uruguay, or planning to move here? We assess the Uruguayan tax treatment of your income and any relevant elections in a confidential written report in English. Request a tax diagnostic to review your circumstances.

Request your Uruguayan tax diagnostic in English

This guide focuses on the Uruguayan treatment of UK pension payments and dividends. Related bank interest and investment gains are considered where relevant. General tax residence and relocation questions are covered separately: see our guide to Uruguayan tax residency and the Tax Holiday and our article on moving to Uruguay from the UK.

Summary. UK pension payments, investment withdrawals, dividends and interest, and gains on sale can have different Uruguayan tax treatments. The first question is how each payment is classified under Uruguayan law. The UK side is outside our scope and should be checked with a UK adviser.

Pensions. The starting point is the framework of the Uruguayan social security assistance tax (IASS), under which pensions arising from contributions to non-resident social security institutions are excluded in the terms of Title 12, article 2. We need to confirm that your payment falls within that rule.

Dividends, interest and gains. Dividends and interest from non-resident entities, and from 1 January 2026 certain gains, can fall within Uruguayan personal income tax (IRPF).

Election. If you become a Uruguayan tax resident from 2026, article 24-Bis may allow you to make an initial election to be assessed under the non-residents' income tax (IRNR) instead of IRPF on income covered by article 6(2) of Title 7, for a limited period. It is subject to conditions that must be met each year, with annual evidence of compliance provided to the DGI.

How Uruguay treats UK pension payments

Uruguayan law excludes pensions arising from contributions to non-resident social security institutions from IASS. We need to confirm that your payment falls within that rule before stating its Uruguayan tax treatment. The UK position is outside our scope and should be checked with a UK adviser.

Qualifying pension income is governed by the IASS framework rather than the ordinary IRPF rules for employment income. Article 2 of Title 12 of the 2023 Ordered Text (TO 2023) determines which pension payments fall within IASS; investment income requires a separate assessment.

The DGI has applied this exclusion to a pension paid by a foreign social security institution (Consultation 6,214). That is useful support, but it does not make the exclusion automatic for every UK product.

Uruguay and the UK have a double taxation convention in force. It does not by itself establish that a UK pension will be tax-free in the UK. The UK treatment and any treaty claim are outside our scope and should be checked with a UK adviser.

Workplace and personal pensions, drawdown and investment withdrawals

A workplace or personal pension needs an individual assessment. Regular payments, drawdown and lump sums should not be assumed to have the same Uruguayan classification. We assess the Uruguayan treatment using the scheme documents; a UK adviser should verify the UK product and tax rules.

A withdrawal does not, by itself, determine the tax treatment. Depending on the arrangement, it may include a repayment of capital, pension income, investment income or a gain. The payment must be classified before its Uruguayan tax treatment is confirmed (Title 7, article 12; Decree 148/007, article 20-Bis).

How Uruguay treats UK dividends and interest

Dividends and interest from non-resident entities were already within the scope of IRPF before 2026. Law 20,446 (article 653) rewrote article 6(2) of Title 7, which now covers, for a Uruguayan tax resident, certain returns on capital from non-resident entities and certain gains relating to the assets covered by that rule.

Dividends, bank interest and investment gains require separate consideration. Under the general IRPF rules, dividends and interest are generally taxed at 12%, subject to any applicable exemption or special regime (article 37 of Title 7).

A credit may be available for qualifying foreign income tax paid on the same income covered by article 6(2). It is subject to the statutory limit and the applicable evidence requirements (article 25 of Title 7). We assess the Uruguayan credit; your UK adviser confirms the UK tax.

Gains on UK shares and funds

From 1 January 2026, gains on assets covered by article 6(2) of Title 7 can fall within IRPF. The result depends on the asset, any applicable exemption and the individual's valid tax elections.

Special tax valuation rules apply to certain financial assets that meet the statutory and regulatory conditions. Their application depends on the asset and supporting evidence; they do not apply automatically to every investment.

The legislation also provides an annual alternative for determining taxable income (article 32 of Title 7, as amended by article 651 of Law 20,446; Decree 148/007, article 29-Ter). We assess which provisions apply to your assets.

Holdings through a company and UK property

Income attribution rules may require certain income received by an entity to be attributed directly to an individual who meets the statutory beneficial ownership test (article 21 of Title 7). The assessment includes ownership and control; the 5% participation threshold is not the whole test.

UK property income needs a separate assessment. Rent and sale proceeds are different categories, and direct ownership may differ from ownership through an entity. The Tax Holiday should not be assumed to cover either: the Uruguayan treatment depends on the case.

How the Tax Holiday may affect UK investment income

Article 24-Bis applies only to the income specified in article 6(2) of Title 7. Pension classification is a separate question. A payment from a foreign pension arrangement must be assessed before it is treated as pension income or investment income. The Tax Holiday does not cover salary or fees for work done in Uruguay.

If you become a Uruguayan tax resident from 1 January 2026, article 24-Bis of Title 7 (added by article 648 of Law 20,446) lets you make an initial election, once, to be assessed under IRNR. Where the initial IRNR election under article 24-Bis validly applies to income covered by article 6(2) of Title 7, that income is assessed under IRNR rather than IRPF.

Foreign-source income falls outside IRNR's territorial scope (article 6 of Title 8). We confirm the income's classification and source, and whether the election applies for the relevant year.

The statutory window covers the year of the change of tax residence and the next ten tax years. Relief depends on meeting the applicable conditions for each year; a year without relief does not extend that window.

If you became a Uruguayan tax resident before 2026, the earlier article 24 regime may be relevant. DGI Resolution 2,158/026 permits that election to be exercised until 31 December 2026, subject to eligibility under the earlier regime. An existing election under the earlier regime also needs to be reviewed. DGI Resolution 2,158/026 addresses its scope following the extension of the foreign income rules in 2026.

The election is conditional. Eligibility depends on your residence history and the statutory conditions.

Eligibility also requires that you were not a Uruguayan tax resident in either of the two immediately preceding tax years and have not used the article 24 regime, subject to the statutory exceptions.

Our diagnostic assesses eligibility under the applicable legislation, the scope of any available election and the continuing obligations relevant to your circumstances.

A valid election also carries continuing evidence requirements. The rules after the initial period need a separate assessment. After the initial period, the general IRPF rules apply according to the type of income, unless a valid subsequent option under article 24-Bis applies. Those options have their own conditions and time limits.

Under DGI Resolution 2,158/026 (published 17 September 2026), the election is made by a declaration filed with the DGI once only, and it cannot be changed once exercised.

You must provide the DGI with annual evidence that the applicable conditions have been met, including for years in which no such income is received, by 31 January of the following year.

Where a designated withholding agent is involved, it must verify the election's validity on the DGI website before paying, crediting or attributing the relevant income (Resolution 2,158/026, number 5; Resolution 1,517/026, number 19). Withholding is governed by separate rules. The applicable withholding rate depends on the designated agent and the taxpayer's valid regime; it should not be assumed to match the general IRPF rate.

How each type of income is treated

Income	Resident under the general IRPF rules, with no special election	Resident with a valid initial IRNR election under article 24-Bis	Main rules
UK State Pension and regular pension payments	Classified first under the IASS framework. Whether the exclusion for pensions arising from contributions to non-resident institutions applies must be confirmed for each payment	Pension classification is a separate question; the election covers only income within article 6(2)	Title 12, art. 2; Law 18,314, art. 11
Workplace or personal pension: drawdown, lump sums and investment withdrawals	Individual assessment of the payment and any income component, including whether it contains a repayment of capital	The election applies only to any part classified as income within article 6(2)	Title 12, art. 2; Title 7, art. 6; Title 7, art. 12; Decree 148/007, art. 20-Bis
Dividends from non-resident companies	Generally 12%, subject to any applicable exemption or special regime	Where the initial election validly applies to income within article 6(2), assessed under IRNR rather than IRPF; foreign-source income falls outside IRNR's territorial scope. Annual evidence of compliance is provided to the DGI	Title 7, arts. 6, 24-Bis, 37; Title 8, art. 6
Interest from non-resident banks or bonds	Generally 12%, subject to any applicable exemption or special regime	As for dividends	Title 7, arts. 6, 24-Bis, 37
Gains on shares or fund units	From 1 January 2026, can fall within IRPF; depends on the asset, any exemption and valid elections	As for dividends, within the scope of article 6(2)	Title 7, arts. 6, 32; Law 20,446, art. 651; Decree 148/007, art. 29-Ter
UK property: rent and sale proceeds	Separate assessment for each category	Not to be assumed covered	Title 7, arts. 6, 29

A household with several sources of income

A retired couple may receive several payments that require separate treatment: pensions, dividends, bank interest and investment gains. Each source of household income needs a separate assessment. Our diagnostic identifies the Uruguayan treatment of each item and assesses any available election for each person. UK tax questions remain with their UK adviser.

Points to keep in mind

Do not assume that every UK pension payment has the same Uruguayan classification. Regular payments, drawdown and lump sums are assessed separately.
A UK tax label does not establish an investment's Uruguayan treatment. We assess its legal form and the relevant Uruguayan rules. ISA rules and any UK tax relief are outside our scope and should be checked with a UK adviser.
A portfolio sale can raise a separate Uruguayan tax question. Our diagnostic identifies the relevant treatment and any uncertainty requiring further review.
The evidence required depends on the investment and the valuation rules that apply. We identify any gaps in the records needed to assess your Uruguayan position.

Where to start

The Uruguayan treatment depends on your actual pensions, accounts and holdings. Contact us in writing to request a Uruguayan tax diagnostic in English. We identify the Uruguayan treatment of each item and assess any election that may be available.

You receive a confidential written report in English within 3–5 working days after we have all the required information. We work mainly in writing, in English; calls are also possible.

Estudio Zurbriggen has operated since 1993. Its two public accountants are registered with CCEAU under numbers 61148 and 225636.

Request your Uruguayan tax diagnostic in English

Frequently asked questions

How does Uruguay treat my UK State Pension?

The Uruguayan treatment depends on the payment's classification under the pension rules. We confirm whether the statutory exclusion applies to your circumstances. The UK position is outside our scope and should be checked with a UK adviser.

Is a UK workplace or personal pension treated in the same way?

Not necessarily. A workplace or personal pension needs an individual assessment, and regular payments, drawdown and lump sums should not be assumed to have the same Uruguayan classification. We assess the scheme documents; a UK adviser should verify the UK product and tax rules.

How is a withdrawal from my pension or investment account treated?

A withdrawal does not, by itself, determine the tax treatment. Depending on the arrangement, it may include a repayment of capital, pension income, investment income or a gain. We assess the nature of the payment and any income component under Uruguayan law. UK product and tax rules should be verified with a UK adviser.

Are UK dividends and bank interest taxed in Uruguay?

Under the general IRPF rules, dividends and interest are generally taxed at 12%, subject to any applicable exemption or special regime. Where the initial IRNR election under article 24-Bis validly applies to income covered by article 6(2) of Title 7, that income is assessed under IRNR rather than IRPF.

Foreign-source income falls outside IRNR's territorial scope. We confirm the income's classification and source, and whether the election applies for the relevant year. The UK side is outside our scope and should be checked with a UK adviser.

Do I pay tax on the whole growth of shares I bought years ago?

Not necessarily. Some assets qualify for special valuation rules, while others require a different assessment. The asset's classification and supporting records determine how the taxable gain is established.

Can I credit UK tax against Uruguayan tax?

A credit may be available for qualifying foreign income tax paid on the same income covered by article 6(2). It is subject to the statutory limit and the applicable evidence requirements. We assess the Uruguayan credit; your UK adviser confirms the UK tax.

Does the UK-Uruguay tax treaty make my UK pension tax-free?

Sources

Title 7 of the 2023 consolidated tax legislation (Title 7, IRPF), articles 2, 6, 12, 21, 24-Bis, 25, 29, 32 and 37.
Title 8 (IRNR), article 6.
Title 12, article 2 (IASS).
Law 18,314, article 11.
Law 18,718, article 2.
Law 20,446, articles 648, 651 and 653.
Decree 148/007, articles 5-BIS, 5-SEXIES, 20-Bis and 29-Ter; article 5-SEXIES was added by Decree 188/026 and amended by Decree 225/026.
DGI Resolution 2,158/026 (published 17/09/2026).
DGI Resolution 1,517/026, number 19.
DGI Consultation 6,214.
UK-Uruguay double taxation convention (Law 19,443); DGI, table of double taxation conventions.

General information on Uruguayan tax law checked as at 4 October 2026. It does not replace advice on your circumstances. UK tax matters are outside our scope and should be checked with a UK adviser.

Author: Cr. Matías Zurbriggen, public accountant, CCEAU 225636.

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