Uruguay Company Formation
Legal form: The most important types of companies in Uruguay are: Corporation (Sociedad Anónima), Branch Office of Foreign Company, Offshore Corporation (Holdings), Limited Liability Company (Sociedad de Responsabilidad Limitada), Free zones Corporations. The most frequently used type of company by international investors in Uruguay is Sociedad Anónima Financiera de Inversion (SAFI). Uruguay's offshore company legislation dates back to 1948 when Sociedad Anonima Financiera de Inversion, or SAFI came into being. The Sociedad Anónima Financiera de Inversion (SAFI) is a form of Holding Company, which constitutes a special category within the Uruguayan Corporations. It has as its purposes commercial and financial activities of an offshore nature within a very favorable Tax System. A Corporation is considered to have offshore activities when the Company develops all its economic activities outside Uruguay, nevertheless, it can be managed and domiciled in Uruguay. The purpose of this kind of Company is very broad and must be oriented towards economic activities outside Uruguay.
Name of the company:Name can be in any language which uses the Latin alphabet, but the Registrar may request a Spanish translation. The name must contain the words 'Sociedad Anonima Financiera de Inversion, or SAFI" to denote limited liability and type of the company. Names containing the following words require consent or a license:
Bank, Buildings Society, Savings, Loans, Trust, Insurance, Assurance, Re-Insurance, Fund Management, Investment Fund, Fiduciary, Broker or their foreign language equivalents. The following names can nor be approved: a name that is similar or identical to an existing company, a name that is known to exist elsewhere, a name that in the opinion of the Registrar is undesirable or offensive, a name that implies illegal activities or implies Government patronage.
Any person or company, of any nationality, may acquire or incorporate a SAFI. There are two ways to own a SAFI: by incorporating a new one, or by acquiring a "dormant" one that has already been incorporated. The latter is the most common method, since SAFIs that are pre-incorporated have by-laws with a broad spectrum of permitted activities that allow practically any kid of profit or non-profit activity. It is also practical to buy already incorporated company due to comparatively long procedure of the incorporation of a new company.
To obtain a SAFI, the interested party simply pays for the costs of incorporation to the person or firm (such as our firm) that incorporated it, then names a Director (which our firm can also provide), and the shares -bearer shares- are all handed to the buyer. A simple process of registration of the company with the tax authorities activates the SAFI immediately.
The share capital: Usual authorized capital is US$ 50,000. SAFIs must have an authorized capital stated in their by-laws, of which the law requires that only 5% be paid up. Registered shares, bearer shares, shares of no par value, preference shares, redeemable shares and shares with or without voting rights are permitted.
Directors of the company: A minimum of one Director is required and corporate Directors are permitted. Local Directors are not required. Changes of Directors must be registered and communicated to government offices but they do not appear on the public file.
Uruguay companies must maintain registered office and registered agent within Uruguay. Registered agent may be corporate body or individual resident in Uruguay.
Taxation: The main advantage offered by SAFIs is the special tax treatment they are granted. Unlike regular corporations incorporated in Uruguay, SAFIs have no income tax of any kind, or any tax on any of the goods it owns. The only tax a SAFI must pay is an annual tax of 0.3% of its net worth. For all practical purposes, this tax can be reduced even more according to the SAFI's chosen capital structure and so according to the amount of debt the company carries, the tax can be reduced.
A SAFI must, like all Uruguayan companies, file financial statements, and a local accountant must audit these. The financial statements are then published locally and presented to the tax authorities. However, the only reason for the tax declaration is to validate the calculation and payment of an annual license fee. The actual amount of the annual license fee that a SAFI must pay is determined from a taxable base, which is calculated as equity plus profit and reserves, plus liabilities less equity multiplied by two. The license fee is then calculated against the base at a rate of 0.3% (zero point three). The maintenance of an adequate ratio of assets to capital allows the reduction of the tax to a value equivalent to an annual 0.1% of the corporate assets.
Meetings: A SAFI has two bodies: the Board of Directors and the Shareholder Assembly (plus an optional Auditing Committee). The main body is the Shareholders' Assembly. It must meet once yearly. Shareholders may empower third parties to represent them in the annual shareholder meeting. This body designates the Director(s) and their powers.
Time needed for Uruguay formation: Usually it is up to 40 working days, but we need up to 10 working days for legalization of the documents and delivery by courier. To shorten the time for incorporation shelf companies are available.