Uruguay Employer Tax Obligations: A Comprehensive Guide

When establishing operations in Uruguay, understanding employer tax responsibilities is crucial for compliance and effective workforce management. Uruguayan law mandates several employer contributions that form part of the country's robust social security system.

Mandatory Employer Contributions

Employers in Uruguay must contribute 12.625% of employee compensation toward social security programs:

Pension Fund: 7.5%
National Health Insurance: 5%
Labor Reclassification Fund: 0.1%
Labor Credit Guarantee Fund: 0.025%

Pension Contributions

The Social Security Bank (Banco de Previsión Social, BPS) administers Uruguay's pension system. Employers contribute 7.5% of total employee compensation, including base salary, overtime, and bonuses. For example, an employee earning 55,000 UYU monthly would require a 4,125 UYU employer pension contribution.

Employers must also maintain accurate payroll records, provide detailed pay slips, and ensure timely BPS payments according to the official calendar.

National Health Insurance

Employers contribute 5% toward the National Health System (SNS), funded through the National Health Fund (Fonasa). This contribution excludes supplementary salary (Aguinaldo). The system may include Mutual Contribution Supplement (CCM) calculations based on beneficiary numbers.

Labor Reclassification Fund

This 0.1% contribution supports vocational retraining for private sector workers, particularly those facing unemployment. Managed by the National Institute for Employment and Vocational Training (INEFOP), the fund provides training programs and technical assistance.

Labor Credit Guarantee Fund

Established under Law 19.690, this 0.025% contribution protects employees against employer bankruptcy risks, applying to all private sector employees regardless of registration category.

Voluntary Benefits

While not mandatory, many employers enhance their compensation packages with private health insurance, meal vouchers, transportation allowances, flexible work arrangements, and professional development opportunities.

Employee Tax Responsibilities in Uruguay

Employees contribute between 18.1% and 59.1% of their income through various deductions:

Pension: 15%
National Health Insurance: 3%-8%
Labor Reclassification Fund: 0.1%
Personal Income Tax: 0%-36%

Pension System Structure

Uruguay operates a mixed pension system combining BPS and Pension Savings Managers (AFAP). Contributions are calculated across three income brackets with different distribution rules. New employees since 2023 contribute 10% to BPS and 5% to AFAP for incomes up to 128,410 UYU.

Health Insurance Calculations

Employee contributions range from 3% to 8% based on salary and family status. The Contribution Base (BPC), adjusted annually, serves as the calculation basis. For 2024, BPC stands at 6,177 UYU.

Personal Income Tax

Uruguay applies progressive tax rates to resident and non-resident income. The 2025 tax brackets range from 0% to 36%, with family unit taxation options available. The system includes limited deductions, making most gross income taxable.

Annual Taxable Income (UYU)	Tax Rate (%)
0 - 518,868	0
518,869 - 741,240	10
741,241 - 1,111,860	15
1,111,861 - 2,223,720	24
2,223,721 - 3,706,200	25
3,706,201 - 5,559,300	27
5,559,301 - 8,524,260	31
8,524,261+	36

International companies expanding into Uruguay often partner with experts like SailGlobal to navigate these complex regulations and ensure full compliance with local labor laws.

Uruguay Employer and Employee Taxes 2024: Complete Guide to Social Security Contributions