How to Register a Sole Proprietorship (Empresa Unipersonal / Monotributo) in Uruguay

Registering as a sole proprietor in Uruguay is appealing because the Monotributo regime offers a simplified tax and social-security pathway for small businesses and freelancers, making it much easier to formalize without heavy compliance or accounting burdens. It’s fairly easy compared to larger company forms, though choosing the right regime and staying under income limits are important.

The main challenges are staying within the Monotributo thresholds (income, employees), correctly registering with both tax and social security authorities, and understanding when you’ll need to move into the general regime. The main benefits are lower costs, simpler filings, unified payments, and access to social security benefits with less administration.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in Uruguay?

In Uruguay, a sole proprietorship under the simplified tax regime is commonly called Monotributo (or Empresa Unipersonal Monotributo) when you opt into that simplified small-business regime.

You may also operate under the general unipersonal regime or the Literal E or other tax regimes, depending on your income, type of clients, and whether you issue invoices with VAT. “Unipersonal” means one person owns and runs the business, bearing full liability unless you incorporate in another form. Terms like sole trader, independent contractor, or freelancer are used interchangeably in English.

How does a sole proprietorship (monotributo / unipersonal) work in Uruguay?

Here are the core details:

Monotributo / unipersonal vs other business structures in Uruguay

Here’s a comparison of Monotributo (small-scale sole proprietorship) versus operating under the Unipersonal general regime or forming a limited company.

Step-by-step guide: How to register a sole proprietorship (monotributo / unipersonal) in Uruguay

1. Check eligibility requirements

Make sure you meet the eligibility requirements for Monotributo. You should be an individual (person física), with revenue below the Monotributo threshold, not doing excluded business types, and not needing to issue VAT-discriminated invoices. Confirm whether your activity is permitted under DGI / BPS.

2. Choose and register a trade name

Choose whether you will use your legal name or a trade name. If using a business name, ensure availability, and register that name with the tax authority (DGI) when you complete your “Inscripción de una Empresa Unipersonal Monotributo” in the Registro Único de Contribuyentes (RUT).

3. Gather the required documents.

Typically, you'll need your national identity card (cédula or passport if foreign), proof of tax domicile, proof of address, and documentation regarding the type of business activity. If using a trade name or issuing invoices, you might need a notary certificate or similar.

4. Register as a monotributario or unipersonal

Register with the Dirección General Impositiva (DGI) via its online system or in person, submitting the relevant form for Monotributo (or Unipersonal regime if you do not qualify for Monotributo). You’ll also register with the Banco de Previsión Social (BPS) so that your social security contributions are set up.

5. Choose optional contributions

Decide whether to include optional components like health insurance (Fonasa) or additional family coverage, if Monotributo options allow; check BPS offerings.

6. Issue documentation

Begin issuing documentation properly. Under Monotributo, documentation for operations must include the legend “Monotributo,” and you do not need to indicate being up-to-date with VAT (IVA) if you are not VAT-registered.

7. Pay the monthly fee

Pay the Monotributo monthly fee (which covers your tax and social security contributions) as per the schedule established by DGI and BPS. Be aware that if you exceed the thresholds (income or employees), you’ll need to move into the general regime, with associated additional obligations.

Financial and tax obligations for sole proprietors in Uruguay

• Monotributo: A simplified, unified regime where you pay a fixed monthly fee instead of separate VAT/IRPF/IRAE computations. No requirement of detailed monthly declarations except as required within Monotributo.

• VAT (IVA): The standard rate is 22% on goods and services. Uruguay also has reduced rates (10%) for certain categories like hotel services, food, medicine, etc. Exports are zero-rated.

• Social security: Monotributo contributions go through BPS. Monotributistas contribute to retirement (jubilación) and may optionally include health (Fonasa) depending on their situation.

• Migrating out of Monotributo: If business exceeds income thresholds, has more than allowed employees, or needs to issue VAT-discriminated invoices (for clients requiring them), you must transition to the general (Unipersonal) tax regime.

• Record-keeping: Though Monotributo reduces the burden, you still must maintain documentation of operations, issue receipts/invoices as required, include “Monotributo” in such documents, and maintain proof of income if audited.

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FAQs

What is the income threshold for Monotributo in 2025?
You need to check the latest figures: Monotributo applies to those with revenues under the legal threshold defined by DGI/BPS. (Exact cap is periodically updated.)

Do Monotributistas need to register for VAT (IVA)?
Not while under Monotributo, since this regime is designed to simplify tax obligations and typically excludes VAT obligations until you exceed thresholds or need to issue invoices to businesses that demand VAT invoices.

Can someone with Monotributo status have employees?
Yes, but with limitations. Usually, only one employee is permitted under Monotributo, and often that employee is closely related (spouse, family). Exceeding the number of employees triggers switching to the general regime.

How much are the monthly payments under Monotributo?
The amount depends on your activity category and optional health/coverage elements. It’s a fixed monthly fee set by DGI/BPS, replacing separate tax and social security dues.

How long does it take to register?
Once you have your documents ready (ID, proof of address, and business activity defined), registration with DGI and BPS under Monotributo is typically quick. The Unipersonal regime may take slightly longer because of VAT registration or more complex accounting obligations.

Can foreign nationals register as monotributistas / sole proprietors in Uruguay?
Yes, subject to legal residency or permit requirements. They must still comply with Uruguayan tax and social security laws, have valid identification, tax domicile, etc.

Do I need a separate business bank account?
Not strictly required under Monotributo for many small operations, but strongly recommended for clarity, separating personal and business finances, especially as operations scale or clients require invoiced documentation.

What happens if I stop qualifying for monotributo?
You’ll need to switch to the general tax regime (Unipersonal general), start doing VAT-discriminated invoicing, regular income/business taxes, and possibly different social security levels. Update registration accordingly with DGI/BPS.

Does Deel help with these compliance issues?
Yes. Deel provides invoices that can meet local document requirements (including “Monotributo” legend), record-keeping, payment history, and contract templates. It can help streamline your taxes, though it doesn’t replace an accountant or lawyer.