Recently, in the framework of an improvement in the business environment in Uruguay, aiming to attract investments and facilitate the start-up of projects, a new more flexible legal vehicle was regulated than the existing ones: the Simplified Shares Companies (“SSC”) ).
These provisions complement and reinforce the recent changes that make the criteria for obtaining fiscal residence in Uruguay more flexible.
Here we share some of its operational advantages:
- Simplification of the start of operations. The SSC have an agile and simplified constitution system, which allows the economic activities in or from Uruguay to start quickly. It is possible to start the constitution process, even in the days of COVID-19, since it is foreseen the possibility to sign the constitutive documentation abroad and send it certified and legalized. We recall that this corporate vehicle respects the principle of the source of the Uruguayan tax system, therefore, it will be able to structure itself efficiently not only local activities but also international operations. Typical examples: intermediation or trading; development of software or technological applications; service center; family wealth management, ownership of real estate and other financial assets, among others.
- Option of tax regime with the advantages of the limited company. It is possible to opt for a simplified taxation regime or fiction, as personal companies (SRL) have, but with the advantages of public limited companies. That is, being able to count, for example, with a single shareholder, who can be national or foreign, and not necessarily resident in Uruguay.
- Possibility of obtaining venture capital financing: SSC allows it to be financed by issuing shares (new partners). Remember that personal societies could only be financed in two ways: by contributions from the owner or by loans. With the ability of SSC to issue shares with different voting rights, prohibition on sale, among other faculties, it allows the seller to form a tailored partnership for the incorporation of new partners according to their objectives.
- Succession Planning: with SSC, by means of a statute tailored to the succession objective sought, the shareholder will be able to organize in future the future functioning of his business after his retirement or death. This is possible with the engineering that allows SSC in their different types of actions.
- Tax exemption: Until December 31, 2020, the conversion of sole proprietorship companies into SSC, among others VAT, IRAE, and in particular the ITP (Tax on Equity Transmissions) for those sole proprietors who own properties, are exempt from taxes. In case of transformation of SRL into SSC, there is no sale of shares or transfer of assets, which, in principle, would not have a tax impact on the operation.
Source: Cibils-Soto Consultores