Paraguay residence: The easiest tax residency
🇨🇿 For Czech translation look here
Paraguay residence offer the easiest approach to territorial taxation. This means that you only pay taxes on local income earned in Paraguay, but you do not pay taxes on international income. This can be an interesting solution for different types of people, such as those operating through a US LLC. But there are more variations and setups possible.
A very interesting benefit is that it is possible to be a tax resident of Paraguay even if you do not live in Paraguay for a long time but, for example, travel and live permanently in different places around the world. Any resident can register with the tax office (SET) in Paraguay and obtain an RUC tax number and there is no minimum time limit to become a tax resident (unlike many other countries). In addition, the tax office will issue a tax residency certificate (can be issued online in Marangatu) after only 3 months of filing a tax return.
Paraguay residency is therefore very easy and cheap to obtain (physical residency) compared to many other countries. Maintaining Paraguay residency requires no minimum time spent in the territory. The obligations of a resident are quite minimal and that is to enter the territory once a year for 1 day in the case of temporary residency. This gives tremendous freedom of movement and the opportunity to live in multiple countries. At the same time, Paraguay residency does not even require investment in real estate or investment in business or any financial obligations.
All this makes Paraguay residence very attractive to many people and Paraguay has also become a very popular country for many Europeans, thanks to the greater freedom and minimum regulations. If you are interested in Paraguay residency, we can arrange all the steps and services for you, whether it is the processing of the immigration card, the "cedula" (identity card), registering with the tax office and filing tax returns.
Taxation in Paraguay
The local income tax for an individual is 10%, which is only applicable from Gs.80,000,000 for 1 year.
For international income, taxes are 0% and you do not have to disclose your international income.
For companies incorporated in Paraguay, the corporate tax burden is 10% of any income. Territorial taxation applies only to individuals. For this reason, it is preferable not to own a Paraguayan company (unless you plan to physically do business in Paraguay), but to form a "disregarded LLC company" in the U.S., which acts as a "pass-through" entity where taxation passes through to the final beneficiary and taxes according to their tax residency if the basic conditions are met. More in this article.
Every person living in Paraguay and having consumption pays 10% tax on goods. However, as a tax resident, you can put these invoices as an expense and reduce your tax base by this. Unless your tax base is zero because your only income is international (in which case creating an expense does not provide any benefit).
Tax summary
The local income tax is 10%
International income tax is 0%
The tax for a Paraguayan company is 10% (regardless of where the income comes from, whether local or international). Therefore, it is more advantageous to have a US LLC company than a Paraguayan one.
Tax residency is voluntary for up to 120 days per calendar year. You may or may not register with the tax office. If you exceed 120 days living in the country, you automatically become a tax resident. It is not requirement to be enrolled in the tax office to obtain Paraguay residency unless it is convenient for you.
So how do I become a tax resident in Paraguay?
The first step is to obtain Paraguay residency. In this case, temporary residency. This is granted for 2 years with the possibility of renewal after 2 years or, which is a better option, it can be changed to permanent residency, which is then valid for 10 years.
Getting a Paraguay residence takes approximately 1 month with our service. In the standard case it otherwise takes months. Minimum 3 months and usually around 6.
It takes another month for us to obtain a "cedula" which is the issuance of an ID card based on approved residency. Again, we will do this for you by proxy in an expedited process. It normally takes 90 days to issue “cedula”.
Once the “cedula” is obtained, it is possible to register with the SET tax office and obtain an RUC tax number. Once registered with the tax office, the monthly VAT return (IVA) is required and can be filed in the Marangatu online portal and takes about 30 seconds to do so.
Links: