South American countries are sometimes held up in other developed democracies as fiscal scarecrows whose politics and policies are to be avoided at all costs for fear of spiralling inflation or the risk of a run on currency.
Not so Uruguay, which is bigger than Switzerland and the Benelux countries combined and has enjoyed years of relative stability. Mercado Libre co-founder Marcos Galperin is just one of the more than 22,400 Argentines who opted for permanent Uruguayan residency between 2020 and 2022, according to data compiled by Uruguay’s Foreign Ministry—four times the number in the previous three years.
It’s basically a country that I would say embraces democracy and embraces capitalism. And those two things are generally good for business.Marcos Galperin, Mercado Libre co-founder
So what happened in 2020? Within weeks of taking office in March 2020, new Uruguayan President Luis Lacalle Pou, eased rules for foreigners wishing to domicile themselves there for tax purposes. To be eligible, immigrants must spend at least 60 days in Uruguay and buy property worth at least about $500,000 or invest a minimum of $2.2 million in a business. In return they pay no taxes on foreign investment income for 11 years.
Meanwhile, countries like Columbia and Brazil have been legislating to tax the rich harder and Argentina saw its consumer price index rocketing 138% year-on-year in September, compared with just 3.9% in Uruguay. The consequences for where people are choosing to live are palpable, according to Bloomberg and other media. In Uruguay the “signs of an influx of wealthy residents are everywhere”, from year-round opening of yacht clubs, to growing numbers of gated communities, to hundreds of places opening up at new international schools costing tens of thousands a year.
As well as having a secure agricultural economy with few food supply risks and lower risks of kidnap and extortion for the wealthy, “Uruguay made a conscious decision to be a services hub,” says Rodolfo Castilla, sales manager at wealth management platform Insigneo Financial Group.
By the end of last year, that meant just less than 1000 financial advisers were managing almost $29 billion on behalf of more than 36,000 high net worth clients in Uruguay, according to central bank data. Many of these services firms are based in and around the capital, Montevideo, in special zones that exempt them from taxes.
While gated living is not everyone’s idea of luxury, 140 km of Atlantic beach living rivalling the ecru-washed aspirational beach towns of USA’s Hamptons, might be.