Software development for foreign clients from Uruguay: VAT, IRPF, IRAE and exemptions

For a developer living and working in Uruguay, a US or European customer does not by itself determine the tax result. VAT on the transaction, income tax and the legal form of the supplier are separate questions.

VAT: a foreign customer alone is not enough

Uruguay treats specified services as exports when the statutory conditions are met. The list includes, under its conditions, custom software design, development or implementation, software licences and transfers of software-use rights. Exclusive use abroad is important for several categories.

Individuals working from Uruguay

DGI states that services performed from Uruguay over the Internet for a foreign company are generally Uruguayan-source employment-category income for IRPF purposes. That income-tax conclusion is separate from whether a specific transaction qualifies as a VAT service export.

IRAE software exemption

Uruguay has a specific IRAE regime for qualifying software production and related services under the current Title 4 framework and articles 161 bis and following of Decree 150/007, as amended by Decree 244/018. It has activity, substance, documentation and traceability requirements and should not be applied to generic IT work merely because a contract says “software”.

Decree 188/026 is a different topic

Decree 188/026, published in August 2026, regulates changes to the IRPF impatriate regime. It is not the software IRAE exemption. It can matter greatly to someone relocating to Uruguay, but it should be analysed separately.

Keep evidence

• Contract and technical scope.
• Customer country and tax data.
• Evidence of where the service is economically used.
• Repositories or deliverables supporting the activity performed.
• Direct costs and personnel evidence if an IRAE software exemption is analysed.
• CFE, payments, fees and exchange-rate records.