August 5, 2022
Uruguay's tax authority clarifies tax treatment of profit repatriations paid by a permanent establishment under double tax treaty
In Consultation No. 6490, Uruguay's DGI concluded Article 7 (Business Profits) of the Uruguay-Belgium double tax treaty applies to profit repatriations from a PE to its head office. The DGI explained that Article 10 (Dividends) refers to dividends paid from a resident of a contracting state to a resident of the other contracting state, which is not the case with profit repatriations from a PE to its head office.
Under Article 7 (Business Profits), Uruguay may tax the profits of a nonresident when the profits are derived in Uruguay and the following conditions are met:
The DGI determined the second condition was not met and Uruguay could not impose the NRIT on the profit repatriations paid by the PE to its head office.
Consultation No. 6490 was published on the DGI's website on July 13, 2022.