What is the Expense Reimbursement policy in Uruguay?

This article outlines how business expenses are reimbursed in Uruguay, including mileage practices, documentation requirements, tax rules, and per diem guidelines. Uruguay’s tax authority (DGI) places strong emphasis on receipts, traceability, and fiscal invoices (CFEs), making proper documentation essential.

1. Travel & Mileage

Mileage Rates (Personal Vehicle)

Uruguay does not publish a government mileage rate.

Employers may define internal rates based on expected vehicle costs (fuel, maintenance, depreciation).

Common corporate practice:

• UYU 20–35 per km, depending on vehicle type and fuel cost.

Tax Treatment

Mileage reimbursement is non‑taxable when:

• The km rate is reasonable, and
• A credible mileage log is maintained (date, distance, route, purpose).

Reimbursements become taxable salary when:

• Rates are excessive
• Flat monthly allowances are paid without linking to kilometres. 
• Logs or documentation are missing

Parking & Tolls

• Reimbursable only with receipts (facturas fiscales).
• Not included in mileage rate.
• Parking or tolls without receipts are generally taxable or non-reimbursable.

2. Business Travel Rules

Uruguay does not impose statutory caps on travel costs.

Internal company policies may define:

• Maximum airfare class
• Hotel quality level
• Rental car limits
• Daily expense caps

Tax-Free Reimbursement Requirements

• Travel must be strictly business-related
• Personal or mixed-purpose travel is taxable
• Expenses must be reasonable and supported by fiscal invoices
• Employer may require pre‑approval for all travel

3. Transportation & Lodging

Air Travel

• Economy class required unless long‑haul justification is documented
• Business class allowed for intercontinental/long‑duration flights if approved
• Receipts/invoices required

Taxi, Cab, Ride-Hailing Apps

(Uber, Didi, Cabify, etc.)

• Allowed
• Must provide electronic fiscal invoice (CFE)

Bus, Train, Tram

• Tickets/boletos are acceptable receipts

Rental Cars

Must include:

• Rental contract
• Fiscal invoice (Factura / Boleta)
• Fuel receipts (individualized, itemized)

Hotels & Lodging

• Hotel fiscal invoice required
• Invoice must list employer or employee name

4. Invoicing & Documentation Requirements

To remain non-taxable, expenses must be supported with a DGI-compliant fiscal invoice (Factura CFE) showing:

• Supplier name
• Supplier RUT (tax ID)
• Employer or employee name
• Electronic invoice number (CFE)
• Description of goods/services
• Date of transaction
• Amount with IVA breakdown

Uruguay is strict: almost all expenses require an electronic fiscal invoice.

The Preferred Invoice Entity is: Arulmy S.A. (Horizons)

No-Receipt Rule: Uruguay does not have a threshold that allows reimbursement without receipts.
If documentation is missing, the amount is taxable income to the employee.

5. Reimbursable & Non-Taxable Expenses 

If supported by fiscal invoices and business justification, the following are generally non-taxable:

Business Travel

• Airfare
• Bus, taxi, ride-share
• Mileage reimbursements (with logs)
• Hotels and lodging
• Meals during business trips
• Fuel expenses (company car or rental)

Work-Related Expenses

• Office and computer supplies
• Client meetings or conferences
• Training or certification costs
• Phone/internet used for work (business portion)

Client-Facing Meals

• Allowed with:
  • Valid invoice
  • Business purpose
  • Attendee names recommended

6. Per Diem Allowances 

Uruguay does not publish official per diem rates.

Company-Defined Per Diems

Employers may set internal per diem amounts.

Common ranges:

• Domestic travel: varies by company
• International travel: varies by destination, often aligned with typical corporate benchmarks

Tax Treatment

Per diems may be non-taxable when:

• Used for business travel,
• Paid for travel outside the normal workplace,
• Amounts are reasonable, and
• Not excessive or duplicative (e.g., no hotel receipts + “lodging” per diem)

Excessive or unjustified per diems are treated as taxable salary.

7. Entertainment, Gifts & Team Events

Client Entertainment

• Deductible only if:
  • Business-related
  • Supported by proper fiscal invoice
  • Reasonable in cost

Gifts

• High-value or non-business-related gifts may be treated as taxable income.

Team Activities

• Usually tax-free if paid directly by employer
• If employees claim reimbursement, must include a fiscal invoice and business justification

8. Non-Reimbursable or Taxable Personal Expenses

Typically taxable unless part of an approved wellness program:

• Medical expenses
• Gym memberships
• Yoga, sports, or swimming
• Therapy or wellness services

When reimbursed outside a structured program, these are taxable benefits.

9. VAT (IVA) in Uruguay

• 22% standard VAT
• 10% reduced VAT for certain categories
• VAT applies to vendor invoices, not to reimbursements themselves
• Employers should collect DGI-compliant invoices for accurate IVA accounting

10. Compliance & Audit Expectations (DGI)

Uruguay’s tax authority closely audits expense reimbursements.

To ensure compliance:

• All expenses should have CFEs (electronic invoices)
• Business purpose must be explicitly stated
• Meal invoices must itemize items
• Alcohol or personal consumption are non-deductible and often taxable
• Mileage logs must be accurate and consistent
• Reimbursements without invoices are taxable employment income

Repeated high or undocumented expenses can trigger:

• Employer reassessments
• Tax penalties
• Reclassification as salary
• Social security liabilities