Uruguay is a South American country bordering Argentina and Brazil. Officially known as the Oriental Republic of Uruguay, the country is famous for its art deco buildings, colonial homes, old port market, and beach-lined coasts. Many companies see Uruguay as an attractive location for an expansion, especially if they’re entering the agriculture, meat processing, oil refining, tourism, and cement industries.
Unfortunately, an expansion is rarely as easy as finding an office space and getting to work. You have to consider numerous factors, such as your Uruguay payroll options and how you’ll set up your Uruguay payroll. If you’re not sure what type of payroll will work the best for your company, you can trust Globalization Partners with Uruguay payroll outsourcing.
Uruguay’s Taxation Rules
Uruguay uses a Pay As You Earn (PAYE) system, which means employers must withhold income tax from employees’ paychecks. Income tax rates range from 10 to 30% and apply to salary, vacation pay, severance, and more. As an employer, you’ll have to withhold social security contributions while making your own contributions.
Tax contributions for Uruguay employers also include the pension and medical insurance funds. Typically, employers pay 12.5% of an employee’s salary, plus another 0.125% for employees with dependents. For workers with health risk operations, employers have to pay another 6.9 to 27.5% depending on the level of risk.
Uruguay Payroll Options to Choose From
You can choose from the following Uruguay payroll options for your subsidiary:
- Internal: Once you set up a subsidiary in Uruguay, you can use an internal payroll. However, your company will need a larger staff, more money, and a commitment to working in Uruguay long-term.
- Remote: Your other option is adding your Uruguay employee to your parent company’s payroll in another country. Although this solution will allow all employees to use one payroll, you’ll still need to follow different regulations for each country.
- Uruguay payroll processing company: Contracting with a Uruguay payroll processing company will protect your company from having to work on your own payroll, but you’ll still have to focus on making sure you stay compliant.
- Uruguay payroll outsourcing: Uruguay payroll outsourcing with a global PEO such as Globalization Partners will mean outsourcing every aspect of your payroll. We’ll even act as the Employer of Record to handle compliance on your behalf.
Requirements for Setting up a Uruguay Payroll
Before you start to set up your Uruguay payroll, you need a subsidiary in the country. Your subsidiary will help you legally work, hire employees, run payroll, and provide compensation and benefits. If you don’t have the time or knowledge to establish your own subsidiary, you can work with our team. Globalization Partners already has a subsidiary in Uruguay that you can use to start working fast. Then, you can add your employees to our payroll to ensure total compliance.
Entitlement and Termination Terms for All Companies
Terminating an employment contract can be a costly process if you’re not sure of the right entitlement and termination terms in Uruguay. Determining these terms before you choose a Uruguay payroll option can help you stay compliant. For example, termination with just cause is allowed without prior notice or indemnification. However, abuse termination is subject to indemnification when there’s no just cause, there’s no notification of termination, or the termination is in bad faith.
Globalization Partners Can Make Your Expansion Easy
Globalization Partners wants to see you expand fast without worrying about compliance or your payroll. Contact us today for more information about Uruguay payroll outsourcing.