The ultimate in banking privacy and stability?
I received an e-mail the other day really annoyed me.
It was from International Living. They wrote about how Uruguay is a great tax haven for Americans.
Unfortunately, anyone who reads it and believes them may be in for a few surprises.
Banking privacy in Uruguay
In the e-mail, they say that Uruguay is one of the “few remaining countries with a sound banking system that welcomes Americans”, and that it “it provides far greater financial privacy than one can have in the United States”.
The reality that I’ve seen (personally and from friends of mine there) is a little different.
- Several people have not been able to open accounts at some Uruguayan banks. If you aren’t actually living there, with utility bills you can present as proof, you may not be able to open an account at certain banks.
- If you do open an account, you may not be able to receive a Visa/MasterCard debit card until you are a permanent resident of Uruguay. You only get an ATM card, which can’t be used for online purchases. It can easily take over a year to complete your permanent residency application.
- One American had his bank in Uruguay tell him they were closing his account, and he had to take his money elsewhere. I’ve heard rumors this is happening with other Americans.
- At one bank in Uruguay where I opened an account, I needed to sign a W-9 form (an IRS form) and a form saying I release the bank from Uruguayan banking secrecy laws.
Now, I don’t know about the people at International Living, but I don’t exactly describe that as “welcoming” or “greater financial privacy”.
Banking stability in Uruguay
Their e-mail also mentions “Uruguay’s history of banking stability”.
I guess their history books only go back to 2003. Otherwise, how could they not mention the Uruguay banking crisis of July 2002? The one that ended up with several insolvent banks, and almost a third of the money withdrawn from all banks.
One main factor behind the banking crisis was that Argentina, Uruguay’s neighbor, had their own collapse. And much of the money in Uruguayan banks is held by Argentines.
For anyone not following the political and economic situation in Argentina, don’t be surprised if Argentina has another meltdown within the next few years. Whether Uruguay’s banking system is prepared for it or not, remains to be seen.
There’s more to taxes than just income taxes
The title of their e-mail is “Have you discovered this low-tax haven?”
It may be possible for you to not to pay any income, or wealth, tax in Uruguay. However, they completely ignore the 22% IVA (Value Added Tax) you’ll pay on your purchases there.
That’s the highest IVA in South America. In fact, according to the numbers I have, that’s higher than anything you’d find in Central America too.
Beware of the hype around living overseas
This is one of the big reasons I started this website.
Many of the big “overseas relocation” sites paint half the picture. They use either fear tactics or hype to get you to spend hundreds or thousands of dollars on their “secret information”.
Living overseas can be a great way to improve your life. With around 200 countries on the planet, there’s a good chance you can find a country where you can live a better life than you do now.
However, watch out for missing, or misleading, information.
Is Uruguay a good country to move to?
Now, just because I’ve mentioned some problems with Uruguay, that doesn’t it may not be a good place for you to live. In fact, there is a lot I like about it. If a few things in my life were different, I could have easily stayed there.
However, make sure you get the full picture before you fall in love with any country. When you read the information you find, realize that it may leave parts out.
Talk with the people who live there. Visit it yourself. Then, when you have the whole picture, decide if you should move to that country.
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