Unfortunately, much of what the press articles and blogs have been saying is more alarming than the reality. It has been said that Uruguay will tax:

• its corporate vehicles’ offshore assets
• foreign residents’ assets
• foreign residents’ income

That is incorrect.

The problem was originated because a draft of a proposed change to a tax law was leaked.  A different, adjusted draft, was finally prepared.  And that draft is still a work in progress, and is being adjusted in the Senate´s committee.  And the proposed change only aims to tax the money that Uruguayans have abroad, not foreigners who come to Uruguay.

Here’s the exact situation of where the issue stands on the three supposed taxes:

Taxes on corporate vehicles’ offshore assets: On May 28^th, the Ministry of Finance, where the bill proposal is being discussed, issued an official statement clarifying one issue of the proposed bill: that there will be no new taxes on Uruguayan companies, and that their offshore assets will not be taxed.  Explicitly: that nothing will change for Uruguayan corporate vehicles.  So, Uruguay remains an offshore tax free jurisdiction.

Taxes on foreign residents’ assets: It has been made clear from the start that assets owned abroad by foreign residents in Uruguay will not be taxed at all.  This was never in doubt.  This is only for citizens (at a very small scale; and remember that this asset tax is gradually being phased out since 2007, and will disappear by 2017).

Taxes on foreign residents’ income:

• Some types of income (not all) generated abroad could be taxed.  But the aim of the law is to tax the money that Uruguayans have abroad, not foreigners who come to Uruguay.
• The Ministry of Finance issued a second statement on June 1^st, clarifying that the law will in no way jeopardize the country’s policy of attracting foreigners to relocate in Uruguay.  And that their income will not be taxed or double taxed.
• The likelihood is that on income tax the tax will be circumscribed to Uruguayan citizens, and the government is considering adjusting the text of the bill, possibly to grant tax credits, so no one is taxed twice.
• And remember, it would only be on some types of income: interest on deposits and dividends.  So, any other type: salary, capital gains on sale of shares or property, pensions, lease, income, etc. are all excluded.

Even if he is correct, I still think the proposed law is a bad idea and another step down the slippery slope…

In the last four years I have seen a negative trend that leaves me shaking my head in wonder as Uruguay’s government does everything it can to make this country poorer. Prices have increased, and property prices have become ridiculous. From a business point of view, everything has become harder and more expensive.

But, THE WORST IS YET TO COME. Uruguay’s government has announced that it is giving up its traditional territorial taxation and will start taxing the worldwide income of its residents—including investment income.

In fairness, according to a friend of mine in the governing party, Uruguay was bludgeoned into this change by the OECD countries, especially by the USA and the EU, which threatened to ban Uruguay’s agricultural products if this new taxation was not enacted.

Nevertheless, the impact of this new tax law will be huge, especially on expats and immigrants who moved here based on the principal that their foreign investment income and pensions would be tax free.

The flight has already begun; even people who have gotten their permanent residency have left and more are planning to leave.

Those who can afford two homes in two different countries are debating whether it is worth living here less than 183 days per year, in which case they would not be tax resident (assuming Uruguay uses the OECD model on which the tax is based); and then living someplace else for less than 183 days (except the US which has different rules). With a couple of vacation days in a third country, they would then not be tax-resident in either place.

Those who cannot afford two homes are taking a hard look at Central America and Eastern Europe, depending upon their tastes and needs.

I am personally broken-hearted about this, but will probably still spend about 180 days here, and the balance in one or more of the other places in which I have business.

I wonder if anyone in government here has considered the results of this ill-advised decision?

Frankly, unless Uruguay provides some exceptions, like for pensioners, or at least concludes a series of double taxation treaties, without which some immigrants could find them paying taxes twice, the number of new residents will slow to a trickle, while the number of immigrants leaving, for at least a majority of the year will swell to a tidal wave that will have a huge negative impact on the economy as they spend their dollars or euros elsewhere.

I am taking a wait and see attitude before making any final decisions, but I am sifting through my options. I suggest you do the same.

The meeting will be at my house in Pinar, I have a map for those wishing to attend with their own transport or by bus.  For those in Montevideo, who need transport, I will arrange to send a driver and the Land Rover both in and out.  Anyone coming from the East, we can easily collect at the last Peaje on the Interbalnearia.

Please encourage other people to come–Uruguayos and Extranjeros.  Please ask them to write me at this email address to confirm their attendance.

I look forward to seeing you!

I thought that perhaps after 7 years, I might experience some twinge of homesickness upon my return to Florida–but instead, I found it even more foreign than the last time I was there.

Certainly, some things were simpler to get done there; and traveling alone, having almost everything handicapped accessible was really nice.  But I was forced to travel alone because the US Embassy here was, as to be expected TOTALLY UNCOOPERATIVE in arranging a Visa for one of my assistants to accompany me.  As far as I can tell, from multiple dealing with the US Embassy here, apparently they think the Americans with Disabilities Act does not apply to them, and I have had less cooperation and more downright obstructionism from the Embassy than from any other source in my entire travels.

Nevertheless, I was able to get around in Florida quite nicely–I rented a Chevrolet Suburban, which was big enough for me to drive and flew into Orlando via Panana.  Doing that saved me hours clearing Customs and Immigration in Miami, which is a particularly onerous form of purgatory…

After that it was a 2-hour drive to Clearwater and my hotel.

The most important things I did were personal; I spent a lot of time with my nephew and his fiancé, went to my home church, and, for the first time was able to visit my brother’s grave.  (As some of you may remember, he died the day I left Costa Rica to move here.)

The negative things that I noticed were a few incidents of anti-white racism:  one blantant by a “Best Buy” employee; another was that there were simply too many choices for everything in every store.  After living outside the US for 12 years, I can’t deal with 37 kinds of everything, when I have grown accustomed to 3 or 4–it really made shopping a lot of work.

The amazing thing was that every time I thought of home, it was here in El Pinar, not anyplace in the US.

Uruguay is not perfect, it certainly has its problems, and is no longer even a particular inexpensive place to live.

Nevertheless, it is home.  While I was gone, I missed the people, the culture–the myriad little things that make a place home.

I was happy and relieved to return.  Even better, on Wednesday my nephew and his fiancé will be visiting for 10 days.  If everything  goes as planned, they will return to Florida and start packing to move here ASAP.

Sin dudas, Uruguay es mi hogar–without doubts Uruguay is my home.

In my next post(s) I will talk a bit about the “retirement havens”  so much promoted by International Living and some others with a pecuniary interest in promoting them…

Even in the midst of pain, there was one really humorous situation that I thought would be a good way to restart my missives here.

Those who are residents here know that you need your Cedula (National ID) number for EVERYTHING, even more than one uses a social security number in the US.  The Cedula is used in business as well as the government and the same number is used on your driving license and even passport.

Because of that, and because the numbers are simply issued in order, my Cedula number is relatively high, reflecting about 50 years less than my age–this caused a really funny incident some months ago.

I was having some health problem or another so one of the staff here called SEMM, the Ambulance/traveling doctor service connected with my health insurance at COSEM.  The SEMM operator didn’t bother to look at my file, but assigned a doctor based simply on my cedula.  As such, they sent a pediatrician, (it’s a good thing that Cedulas don’t indicate sex or they might have sent an obstetrician).

When the doctor arrived at the main gate she asked “¿donde esta el bebe?”   Someone explained the mistake, but the doctor said that since she was here, she would take a quick look at me to ensure the next doctor sent was the correct one.

As she came into my room, my assistant explained the foul up and after greeting the doctor, I told here “Soy el bebe grande.” (I am the big baby).

Later that day another doctor appeared better qualified to treat “el bebe grande”.

(To those who speak better spanish than I, I apologise for any acentos I have missed or mistakes in translation–perhaps I have simply become too accustomed to “masomenos”.

This coming weekend is a 4 day holiday, so I hope to make up for some lost time on this blog.

As most of the world celebrates Easter today, I let my thoughts flow freely, which is always interesting, sometimes dangerous, more often humorous and occasionally actually worthwhile.

I hope that today’s thought falls into the last of those categories.

US expatriates will know that there is an increasing attack on us by the new US Congress and Administration and, many of us believe that the US$87,000 annual earned income exclusion may be repealed.  If that happens, I believe the majority of the expatriates will simply not pay. They will never return to the US again, and, in effect, become criminals in their native land.

Then, a clear thought, like a thunderbolt on a moonless night flashed through my mind.  We are a politically persecuted minority because we choose to live outside the USA!  Moreover, being taxed by the USA at all violates the very principal on which the American Revolutionary War was fought: “No taxation without Representation!”

The American colonists were not represented in Parliament, hence, under the Common Law, Parliament had no right to tax them.  As non-residents, WE ARE NOT REPRESENTED IN CONGRESS!  Therefore, Congress does not have a right to tax us.

Further, the US is the ONLY major nation that taxes non-residents and further punishes expatriates–taken together, this makes us a politically persecuted minority.

Think about it!  I will be writing more about this.

But there is a catch:  directors of corporations cannot participate in the BPS connected health insurance plans, even though they pay into BPS.  So much for socialist fairness.  Directors have to pay for private insurance–what a great way to encourage new business in Uruguay.

So, even though the owner/director pays into BPS for himself and his employees, he is barred from benefiting.  I wonder who thought this idea up:  Larry, Curly or Moe (or maybe Shemp or Curly Joe)…

However, there is a way out.  You can set up an Uruguay domestic company and then hire nominee corporate directors from outside the country.  Those directors can then give you a total power of attorney to operate the company, bank accounts etc, as an EMPLOYEE, and thus eligible for health insurance.

Another way is to set up an unipersonal, a sole proprietorship, but that has other issues.

This is one more example of why I say I love living in Uruguay but hate doing business here.  Sometimes I think the government is trying to intentionally keep Uruguay poor…

That was the straight forward part.

Our neighbor, Argentina, with whom we have so much interaction is still on Summer time for another week–this means that it is now 1 hour later in Buenos Aires than in Montevideo for the next 7 days. (We share the same time with our other neighbor Brazil, so there are no complications there.)

And then there is Europe.

We are now 1 hour farther away from Europe (3 hours earlier than UK time and 4 hours earlier than Central European Time (CET)), but only for 3 weeks. At that time, Europe will go off of summer time and there will be an additional hour between us.

Who said telling time was simple?

The following was sent to me by the Editor of the newsletter of the British Society of Uruguay and is posted at his request.  I plan to see it and write a review–I always wanted to be a theatre critic…

In March a group of professional British actors come to Montevideo to stage a new play on the Battle of the River Plate, seventy years after the event. ‘The Drama of the River Plate’ will appear at the Millington-Drake Theatre, Anglo Centre, San José 1426, for four nights only, from Thursday 26 March to Saturday 28 March at 9pm and on Sunday 29 March at 7pm. All profits from the ticket price of UY$180 will go to a fund designed to bring more shows from the West End to Uruguay each year.

Photo: El País / Juan Pablo Rodríguez

Written in English and directed by Jonathan Lamb, the 70-minute work centres around the fascinating character of Hans Langsdorff, left, Captain of the Graf Spee. The actors (left to right below) are Robert Rowe, Andrew Wall and, in the role of Langsdorff, Robert Ashton; accompanied by the voices of Imelda Staunton (star of the film Vera Drake, and teacher Dolores Umbridge in the Harry Potter films), Martin Jarvis (Titanic) and Jim Carter (The Golden Compass).

Seventy years ago, in December 1939, the German pocket battleship Graf Spee and three British cruisers locked horns off South America in the opening sea battle of the Second World War. For a few breathless days the River Plate was the centre of the world. But the real story behind the battle lies in the character of one man: Hans Langsdorff, captain of the Graf Spee.

Langsdorff was a hero of the First World War. A torpedo expert, he had risen high in the German defence ministry in the 1930’s, before choosing to return to sea. He was given command of one of Germany’s latest and most powerful warships, and told to sink British merchant shipping – as long as he and his thousand men could survive. For four long months he roamed the southern oceans, sinking nine ships without causing a single death: his humane character and his code of professional honour meant that he treated his prisoners impeccably, and at least one of them became his friend. But at dawn on 13 December, Langsdorff unchained a sequence of events that cost him his ship, his prestige and, a week later in Buenos Aires, his life.

Who was this gallant, troubled man? Why did he do what he did? Why did he take refuge in Montevideo instead of an Argentine port, and why did he scuttle his ship? Why, in his bedroom in Buenos Aires on the night of 20 December, did he write his last letters, then take the honourable way out? These are some of the questions which, thanks to sponsorship from Lloyds TSB, Lloyds Private Banking and the Anglo, the play will try to answer. Tickets: 9027634/9018819.