Uruguay – SAFI
Sociedad Anonima Financiera de Inversiones

Incorporation and Annual Fees

Is the Only Low Tax Offshore Jurisdiction
In South America

Important Remark

Since SAFI’s will be eliminated in 2007 (and existing ones will have to transform themselves to SA’s by 2010), we recommend SA’s instead of SAFI’s.

They have the same use as SAFI’s (and in fact, for many years, most clients have required SA’s instead) because they can act BOTH onshore and offshore, and still, the taxes are the same (a SA used for offshore activity may even have less taxes… it has a set flat tax, the ICOSA, of USD 350 per year, and pays no tax on capital etc which a SAFI may have).

An offshore jurisdiction that is not generally recognised as a tax haven jurisdiction, which is now becoming increasingly popular. Ideal for investment into Latin America

Offshore Corporations

Much in the same way as countries such as Holland, Uruguay offers offshore corporations to serve various needs – as low-tax holding companies, as a way to protect assets and income or as vehicles for sophisticated secured operations, to name a few examples which are covered below.

Uruguay’s offshore corporations, regulated by Law 11,073 of 1948, have a beneficial tax treatment and provide anonymity for their shareholders, elements that allow for an efficient protection of assets and income.

Known as “SAFI – SOCIEDAD ANONIMA FINANCIERA DE INVERSIONES”, for the Spanish acronym for “Financial Investment Corporations”, these offshore corporations:

· Have a low incorporation / acquisition cost.
· Require minimal integration of capital.
· Guarantee anonymity for shareholders.
· Have a very favourable tax treatment.
· Are considered a very reliable vehicle internationally.
· Can operate freely.

The Range of Permitted Activities
Of the Uruguayan
Offshore Corporations

SAFIs’ corporate purpose is broad. The law allows them to “invest in securities, bonds, shares, notes, debentures, treasury notes or bills, any type of property or good, including real estate”.

The investment / ownership can be done directly or indirectly, for its own purpose or on behalf of a third party.

The only restriction (and this defines their offshore nature) is that the majority (more than 50%) of the investment / ownership must be outside of Uruguay. Thus, for example, a SAFI may be utilized to own shares of various companies, but these companies cannot be Uruguayan companies (at least more than 50% must be shares of non-Uruguayan companies).

It is important to notice, however, that to benefit from the favourable tax treatment that characterizes offshore corporations, all of the investment / ownership must be in goods outside of Uruguay, and this is usually the case for using SAFIs.

An important issue is that SAFIs can freely open bank accounts, in foreign currency, in any bank within Uruguay.

Finally, SAFIs may seek and obtain authorization to operate as offshore banks and may provide services within Uruguay.

Offshore Corporation´s
Preferential Tax Treatment

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 (according to the amount of debt, the tax can be reduced).

Other Advantages Offered by
Uruguayan SAFI

SAFIs may be utilized to engage in any activity, offshore of Uruguay.
Operating costs are extremely low.

SAFIs offer absolute anonymity for their shareholders. The SAFI’s shareholders do not have to be registered in any book or before any local institution. A SAFI’s Director or Board of Directors may be composed of third persons, unrelated to, but designated by its shareholders.

This protection is further enhanced by Uruguay’s long tradition of banking, professional and fiscal secrecy, which are guaranteed by law.

An Offshore SAFI Corporation

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.

To obtain a SAFI, the interested party simply pays for the cost 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.

A SAFI’s Type and Amount of
Required Capital

A SAFI’s equity is represented in the form of bearer shares (although nominative shares can be issued if the owner wishes so).

The SAFI need not have more than one shareholder. The shareholder may be one or many persons or companies.

Since SAFIs have the form of a share-corporation, liability is limited, and thus not extensible to shareholders beyond the capital invested in the company.

SAFIs have an “authorized capital” stated in their by-laws, of which the law requires that only 5% be integrated.

SAFIs’ capital and accounting may be in any currency.

Aspects of a SAFI Operation

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.

The Board of Directors may have one or more members. These may be of any nationality and country of residence / domicile. A Director is not required to be a shareholder of the SAFI.

Legal Obligations of a SAFI

A SAFI’s obligations are minimal and simple. The corporation must:

· Have accounting books of the company.
· Prepare annual financial statements of the company (not of its shareholders).
· Pay the annual tax, once a year.
· Hold an annual shareholders’ meeting to approve the financial statements.

The presence of the SAFI’s owners (shareholders) is not required for any of these activities.

Examples of a SAFI´s Activities

Uruguay’s SAFIs may be used for any offshore activity. Examples of the use of SAFIs are:

i) As an investment vehicle
ii) As a holding company
iii) As a trade intermediary
iv) As a provider of loans and investments
v) As a Special Purpose Vehicle (SPV) to secure assets in a third country
vi) As an owner of patents and copyrights
vii) As an asset-protection vehicle
viii) To engage in leasing agreements
ix) To hire personnel abroad
x) To provide professional services
xi) To carry out captive Insurance and Re-insurance activities

Each of these examples is described ahead:

i) As an investment vehicle:
A SAFI may simply be used to own property, intangible goods or shares of other companies in any country. It may be used to perform contracts of any kind, including the handling of bank accounts.

ii) As a holding company:
Multinationals may elect to use a SAFI as a holding company. The parent company may receive its dividends and financing-related payments tax-free and without exchange restrictions in a SAFI, and redirect its investments from there.

iii) As a trade intermediary
A SAFI may be used as a trade intermediary in the following cases:
· To increase the sale price of exported/imported goods (respecting the regulations of the involved countries), or to generate and retain a commission on the sale.
· To avoid the disclosure of the identity of the supplier of the goods.
· To take advantage of exchange arbitrage opportunities.
In the import or export of goods or services, a SAFI may perform the invoicing, in order to accumulate income in a virtually tax-free jurisdiction, maximizing the profits of a company that may be domiciled in any country.
The goods or services do not enter Uruguay. The SAFI simply handles the flow of the payments of the operation and the respective documentation. The goods are shipped directly from the exporter (in Brazil, for example), to the importer (in Europe, for example).
When using an offshore corporation as a trade intermediary, it can either be the importer or the exporter of goods who owns the offshore corporation. To better understand each case, a description of each follows:
· When the owner of an offshore corporation is the EXPORTER:

a) The goods, the documentation related to them and the payments flow between the importer and the exporter.
b) The letter of credit is received in Uruguay, on behalf of the SAFI.
c) The payment is transferred from the SAFI to the place of origin of the goods or to where the seller wishes to transfer it.
d) An invoice is issued in the country of origin of the goods; another invoice is issued in Uruguay. The letter of credit’s payment reflects the amount in the SAFI’s invoice; the collection is of the amount of the exporting country’s invoice.
e) The goods never touch Uruguay. They move directly from the exporter to the importer.

· When the owner of an offshore corporation is the IMPORTER:

a) The letter of credit is opened in the importer’s country, in favour of the SAFI. The SAFI itself opens another letter of credit in favour of the country where the goods originate.
b) The payment leaves the importer’s country to Uruguay, for the amount in the invoice issued by the SAFI. The amount transferred to the seller is that which is in the selling country’s invoice.
c) The goods never touch Uruguay. They move directly from the exporter to the importer.

In sum, the SAFI is a vehicle to retain the difference between the invoices, and where the payment conditions are altered according to the parties’ needs.

The following diagrams illustrates a SAFI’s role in a trade operation:
When the object is to provide financing to a country in the region:

a. As a first step, an Argentine importer opens a letter of credit in favour of a Uruguayan offshore corporation (SAFI).

b. When the SAFI receives the letter of credit, it issues a new letter o credit (in a back-to-back operation) to a Mexican exporter.

c. The Mexican exporter can sell its trade receivable to a bank in Uruguay.

d. The goods flow directly from the exporter to the importer.

When the object is to generate a transfer price in Uruguay:

I. As a first step, an Argentine importer opens a letter of credit in favour of a Uruguayan offshore corporation (SAFI), for USD 100,000.

II. The SAFI issues a new letter o credit (in a back-to-back operation) to a Mexican exporter, for USD 80,000.

III. The Mexican exporter sends the documentation to the SAFI for USD 80,000.

IV. The SAFI issues an invoice for USD 100,000, and sends that invoice plus the documentation issued by the Mexican exporter to the Argentine importer.

V. The Argentine importer pays the SAFI USD 100,000.

VI. The SAFI transfers USD 80,000 to the Mexican exporter, and retains the difference (USD 20,000) for the SAFI.

VII. The goods flow directly from the exporter to the importer.

iv) As a provider of loans and investments
A SAFI can be used to give loans to third parties, or to channel capital increases in other companies.

v) As a Special Purpose Vehicle (SPV) to secure assets in a third country
A SAFI is the ideal vehicle to use as an SPV owning the assets that may result in a securities operation of any type, in any country in the region.

vi) As an owner of patents and copyrights
An offshore company owning patents and copyrights may make it easier to justify the transfer of royalties for their use.

vii) As an asset-protection vehicle
Offshore companies are commonly used to protect assets from eventual legal claims from commercial or other parties.

viii) To engage in leasing agreements
An offshore company that owns and leases out capital goods avoids the payment of taxes on the leasing-related income.

ix) To hire personnel abroad
An offshore corporation may be utilized to hire executives of a company.

x) To provide professional services
An offshore corporation may be the sole owner of the rights of services that a client may want to offer to third parties.

xi) Captive Insurance and Re-Insurance activities
Uruguayan Safi’s can be engaged in captive Insurance and/or Re-Insurance activities, as permitted by law

Corporate Features


Political Stability – Good
British Based Legal System – No
Type of Company – SAFI
Disclosure of Beneficial Owner – No
Migration of Domicile Permitted – No
Tax on Offshore Profits – 0.3%
Non-English Language Names Allowed – Yes

Corporate Requirements

Minimum Number of Shareholders – One
Minimum Number of Directors- One
Bearer Shares Allowed – Yes
Corporate Directors Permitted – Yes
Company Secretary Required – Yes
Standard Authorised Share Capital – $50,000

Local Requirements

Registered Office/Agent – Yes
Company Secretary – No
Local Directors – No
Local Meetings – Yes (AGM)
Government Register of Directors – Yes
Government Register of Shareholders – No

Annual Requirements

Annual Return – Yes
Audited Accounts – Yes

Recurring Government Costs

Minimum Annual Tax/Licence Fee – Varies
Annual Return Filing Fee – Nil

General Information

Geographical Location

Uruguay is located on the Atlantic coast South America, bordered by Brazil in the north-east and Argentina in the West, and has a total land mass of 173,620 square kilometers. Its topography is mostly flat or rolling, lacking steep mountains. The country possesses no significant natural resources other than its land.


The population of Uruguay is approximately 3.3 million people of European origin, mainly from Spain and Italy. The indigenous population having been destroyed by the early European explorers. This results in a density of 16 people per sq.mt. 40% of the population lives in Montevideo, the capital, and its suburbs.

Political Structure

Uruguay is a Republic. The Executive Branch is in the hands of the President and his Cabinet. The Legislative Branch is composed on the Senate and the House of Representatives. Justice is exercised by Judges and Courts of Justice and the Supreme Court of Justice.

Infrastructure and Economy

Uruguay’s economy is small. Economic development has been restrained by excessive Government regulation of economic detail and inflation rates ranging from 40% to 130%.

The temperate climate and abundant pastureland are ideal for raising livestock, but the agricultural sector lacks the requisite heavy investment and modern organisation to become more productive. The Salto Grande Dam completed jointly with Argentina on the Uruguay River in 1983 produces enough hydroelectric power to make Uruguay generally self-sufficient in its energy needs. A gas-fired power station was completed in 1991, allowing Uruguay to export surplus energy to Argentina. Two road bridges spanning the Uruguay River, and a railway across the Dam expedite travel and trade between Uruguay and Argentina.

There are direct flights to Montevideo from most South American, European countries and the U.S.A. Pluna, the national airlines has direct flights to Madrid. Telecommunication services, although very expensive, are modern and efficient.


The official and spoken Language is Spanish. Many Uruguayans also speak English and other European languages.


Uruguay Peso ($) issued by the Uruguay Central Bank. US$1.00 equals approximately $8 (eight Uruguay Peso).

Exchange Control


Type of Law

Civil Law based on Spanish Civil Law.

Principal Corporate Legislation

Companies Act, Law 16,060 enacted September 1989. Offshore Companies Act. Law 11,073 enacted 1947.

Company Formation

Type of Company for International Trade and Investment
Offshore Companies are called SAFI (Sociedad Anonima Financiera de Inversion).

Procedure to Incorporate

Submission of Bylaws, together with forms signed by two founders to obtain Bylaws approval. Registration in the Public Registry and publication of bylaws summary in the Official Gazette and a Public Newspaper. Type of company is stated in the Bylaws.

Powers of Company

A company incorporated in Uruguay has all the powers of a natural person.

Language of Legislation and Corporate Documents

Spanish, but foreign language translations may be obtained.

Registered Office Required

Yes, must be maintained in Uruguay. All statutory records, including registers of directors, members, charges and the minute book must be held at the Registered Office.

Time Scale to Incorporate

30 days.

Name Restrictions

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.

Language of Name

Can be in any language which uses the Latin alphabet, but the Registrar may request a Spanish translation.

Names Requiring 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.

Suffixes to Denote Limited Liability

Sociedad Anonima Financiera de Inversion, SAFI

Disclosure of Beneficial Ownership to Authorities


Share Capital, Taxation License Fees and Compliance Matters

Authorized and Issued Share Capital

The maximum authorised share capital for the minimum capital duty payable on incorporation is US$30,000. The capital can be in any currency, but the capital duty payable is in Uruguay Pesos based on the exchange rate applicable on the date of Incorporation. The minimum issued capital is US$2,500 or its currency equivalent.

Classes of Shares Permitted

– Registered shares
– Preference shares
– Bearer shares
– Shares with or without voting rights.

Bearer Shares Permitted



SAFI’s are exempted from domestic taxation.

Double Taxation Agreements

Uruguay has not entered into any double taxation agreements.

License Fees

The Annual License fee, which has to be paid within four months of the end of the company’s fiscal year, is calculated on the basis of shareholder’s equity and the company’s liabilities, as follows:
Shareholders Equity + (Liabilities – Shareholders Equity x 2) = Taxable Base.
License Fee = Taxable Base x 0.3%.

Financial Statement Requirements

All Uruguay companies must prepare financial statements, which have to be audited by a local CPA. These financial statements are published in the Official Gazette and presented to the tax authorities to ensure that the correct amount of license fee has been paid over.


A SAFI must maintain five statutory books at its legal domicile; a minute book (meetings of the board of directors and shareholders), a register of shareholder’s meetings, an inventory, a journal ledger and a correspondence record. In practice the latter is not used. In nominative share companies an additional register of nominative shares is maintained.

These books are so called “copybooks”, with numbered pages, that must be certified by the Public and General Register of Commerce. In Uruguay, a system of special carbon copying paper allows the transfer of an impression from a normal sheet of paper to the numbered folio in the copybook. This service is included in our annual fees and they do not impact on the principal or his activity.

Annual Administration

Legal Domicile

A SAFI must have a legal domicile in Uruguay and a legal agent with sufficient powers to represent it before fiscal and other government authorities.

Ordinary Meetings

The Annual General Meeting of Shareholders must take place in Uruguay each year within the four months following the close of the financial year. At least 50% of the issued shares must be present. The shareholders may be represented by proxy.
The register of shareholders’ meetings is kept at the legal domicile of the company. The names of representatives attending the meetings are entered into the register as well as the capital that they represent respectively.

Tax Declaration

Within the four months after the close of the financial year, the company must present financial statements to the General Tax Board (DGI) in order to pay the tax, which corresponds, to a licence fee. The information must be presented on forms provided by DGI.
These financial statements must be certified by a Uruguayan Certified Public Accountant.

Annual Tax

SAFIs pay a licence fee of 0.3% calculated as follows:
Shareholders equity i.e. capital plus accumulated profit, plus reserves + (liabilities – (2 X Shareholders Equity)) = taxable base
Taxable base X 0.3% = Annual Licence Fee or tax to be paid
The only motive for the existence of the tax declaration is to control the calculation and payment of the annual tax/licence fee. SAFIs have never been subject to any other control nor audit procedure since the 1948 law was passed.


We are able to provide, through our agents, a complete accounting service based on modern equipment and computing systems. They are able to maintain orderly and adequate accounting records based on the compliance with generally accepted international accounting rules, and to meet international auditing standards.

Structure of Management


The minimum number of directors is one. They can be natural persons or bodies corporate. They can be of any nationality and need not be resident in Uruguay.

Company Secretary

Although there is no statutory requirement for a Uruguay company secretary a Uruguay company may have a company secretary appointed. They can be natural persons or bodies corporate. They can be of any nationality and need not be resident in Uruguay.


The minimum number of shareholders is two. They can be natural persons or bodies corporate. They can be of any nationality and need not be resident in Uruguay.


Investment Holding

SAFIs were originally designed to hold investments on their own account or for the account of third parties. They are ideal vehicles for the holding of investments of any nature in third countries. Uruguay is an attractive platform for investment into Latin America, and is not generally recognised as a tax haven jurisdiction in Europe.
SAFIs may not maintain investments in Uruguay with exception of deposits in foreign currency in banks or investments in public debt, or mortgage of municipal bonds issued by the Uruguayan government.


SAFIs may also be used for trading activities, i.e. re-invoicing. They can be attractive vehicles for triangular operations between countries especially members of ALADI (such as Brazil, Chile and Argentina). They cannot be used to import products into Uruguay, even if such products are destined for re-export. If the latter is an objective, then consideration should be given to the use of a Free Trade Zone company, details available on request.
SAFIs are ideal for invoicing services, marketing research in respect of the viability of business in Latin America, and for collecting export and/or import commissions related to commercial exchange with Latin America.

Captive Insurance Companies

A popular use for SAFIs is as Captive Insurance and Re-Insurance Companies. SAFIs are permitted to conduct offshore insurance activity although it is important to remember that unlike many jurisdictions these insurance companies will not be regulated by any special insurance authority.

Other Uses and Applications

SAFIs may be used for nearly any activity worldwide, except in Uruguay.


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