Paraguay taxes — by nationality. Your home country's rules don't disappear when you land here.

From the law itself

Why foreign income is not taxed.

Paraguay taxes only Paraguayan-source income. The territorial principle is Article 6 of the 2019 tax law, verbatim:

Constituirán rentas de fuente paraguaya las que provienen de actividades desarrolladas en la República, de bienes situados o de derechos utilizados económicamente en la misma.

Income arising from activities carried out in the Republic, from property situated in it, or from rights economically used in it, shall constitute Paraguayan-source income.

The Paraguay side in 90 seconds

Territorial system, narrow definition of local-source.

Paraguay taxes only Paraguay-source income for both residents and citizens. The summary below is what most readers need before reading the by-nationality sections.

• Foreign-source income (foreign salary, foreign dividends, foreign capital gains, foreign pension): 0% IRP. No filing required for foreign-source unless you also have local-source.
• Paraguay-source income (Paraguay rental, Paraguay business, salary for work performed in Paraguay): 8/9/10% IRP progressive scale, threshold ~Gs. 80 million (~US$ 13k at the May 2026 BCP reference of 6,189 PYG/USD).
• No CFC. No worldwide-income reporting. No wealth tax. No exit tax for tax residents leaving Paraguay.
• Tax residency is separate from immigration residency. The 120-days/year figure is a domicile presumption under Ley 125/91 Art. 152 (the tax code), not a statutory tax-residency day-count. See tax residency for the full mechanics.

IRP — by income bracket

Progressive rate table for Paraguay-source services income.

Progressive scale for Rentas de Servicios Personales — services performed inside Paraguay (Ley 6380/2019). USD figures use BCP referencia 6,189 PYG/USD.

Untaxed minimum: gross personal-services income up to Gs. 80,000,000/year (~ US$ 12,925) is exempt from IRP — you don't even file.

Capital income — rentals, interest, royalties from Paraguay-source — is taxed at a flat 8% under the Rentas de Servicios de Capital regime (RGC).

Dividend tax (IDU)

Paraguay-source dividends — resident vs non-resident.

Impuesto a los Dividendos y Utilidades is separate from IRP. It applies only to dividends and distributed profits paid by a Paraguayan company. Foreign-source dividends (your US LLC, EU GmbH, etc.) are NOT subject to IDU.

Paraguay Investor Pass holders (US$ 150k+ category) keep the resident 8% rate even before establishing tax residency.

Taxes Paraguay does not levy

What you don't owe.

Paraguay's territorial system + simple statute book results in a short list of absent taxes that exist in most peer jurisdictions.

By income source

Common expat tax scenarios.

Four typical patterns. Pick the one that fits, run the numbers in the tax calculator, and verify with a Paraguayan tax lawyer before filing — your home-country rules also apply.

• Remote worker — foreign clients 0% IRP

  Live in Paraguay, paid by US/EU/RU/UA clients. Income is foreign-source under territorial rule. IDU does not apply. Filing required if you've registered for RUC; if you haven't, no filing obligation.

• Remote worker — Paraguayan employer 8 – 10% IRP

  Live in Paraguay, paid by a Paraguayan company. Paraguay-source by statute (Ley 6380 Art. 5). IRP progressive scale (8/9/10%). Employer typically withholds; you file annually.

• Property landlord (Paraguay rental) 8% IRP (RGC)

  Rental income from Paraguay real estate is Paraguay-source. Taxed at 8% under the Rentas de Servicios de Capital regime on net rental income (gross minus deductible expenses). Plus annual Impuesto Inmobiliario at the municipal level.

• Pensioner — foreign pension only 0% IRP

  Foreign Social Security, state pension, occupational pension, IRA / 401(k) / SIPP drawdown. Foreign-source under territorial rule. Filing required only if you've registered for RUC.

Bookkeeping cost menu

What compliance costs once you're filing.

Reference market rates for Paraguay-side accounting + tax services as of May 2026. Prices vary by city and complexity. Most relocators with foreign-only income don't need most of these — see the scenarios section below.

By nationality

What stays the same when you move from your home country.

• United States

  Citizenship-based taxation. The IRS still wants the 1040 forever.

  What stays the same

  • 1040 + worldwide income reporting: no change. The IRS taxes US citizens and green-card holders on global income, regardless of residence.
  • FATCA: Paraguay's IGA status with US Treasury is informal (not on the published Model 1 in-force list) — but Paraguayan banks ask for W-9 / W-8BEN at onboarding and apply FATCA-style due diligence anyway. Treat as 'banks know you're a US person and document accordingly.' Verify your specific bank's reporting posture before relying on a particular rail.
  • FBAR: foreign accounts > US$ 10,000 aggregate require FinCEN Form 114 annually. Includes Paraguayan bank accounts, Wise, Revolut, brokerage.
  • State tax: a few states (CA, NM, SC, VA) keep claiming residency on weak ties. File a clean Form 590 / equivalent and document the move.
  • Renouncing citizenship is the only true exit. State Department dropped the fee from US$ 2,350 to US$ 450 effective April 13, 2026 (Federal Register, 13 March 2026). Form 8854 exit-tax filing required. Triggers mark-to-market on net worth ≥ US$ 2.0M (or 5-yr avg tax ≥ US$ 211k/yr — 2026 §877A figure, Rev. Proc. 2025-32). Mark-to-market gain over the US$ 910,000 exclusion (2026, up from US$ 890k in 2025) is taxed at long-term capital gains rates.

  What changes

  • Foreign Earned Income Exclusion (FEIE): US$ 130,000 for 2025; US$ 132,900 for 2026 (Rev. Proc. 2025-32). Eliminates US tax on most expat earned income IF you meet the bona-fide-residence or 330-days-out-of-365 test. Paraguay residence + 330 days outside the US works cleanly.
  • Foreign Tax Credit: applies to foreign income tax paid. Paraguay's 0% on foreign income means there's no Paraguayan tax to credit, so FTC isn't useful for foreign-source. Useful for Paraguay-local-source IRP if you have it.
  • Self-employed: SE tax (15.3%) does NOT go away under FEIE. Plan for it — and consider a Paraguayan SA/SRL to convert SE income into corporate income (consult both lawyers first). (2026 figures from Rev. Proc. 2025-32; renunciation fee from the 13 March 2026 Federal Register notice; all last checked May 2026.)

• Canada

  Lighter coverage — verify with a Canadian cross-border accountant.

  What stays the same

  • The one that catches people: the CRA departure tax is a deemed disposition of most assets at fair market value on the day you leave, so the capital-gain tax is owed even though you haven't sold. RRSP/RRIF withdrawals as a non-resident hit 25% withholding, and with no Canada–Paraguay treaty there's no reduced rate. We don't run Canadian exit returns ourselves — engage a Canadian cross-border accountant before you go. (Rules last checked May 2026.)

  What changes

  • Once cleanly non-resident and Paraguay-resident, foreign income earned outside Canada is 0% Paraguay-side; Canadian-source income (rent, dividends, employment) keeps Canadian withholding.

• United Kingdom

  Lighter coverage — the Statutory Residence Test is the whole game.

  What stays the same

  • Your UK tax residence turns on the Statutory Residence Test (day-count plus ties, gov.uk RDR3), not on whatever residence you've declared in Asunción. The practical bar for a leaver is usually under 16 days in the UK per tax year if you were UK-resident in any of the prior three; fail it cleanly first. Watch inheritance tax too — UK domicile (post-2025, deemed long-term residence) still reaches your worldwide estate at 40%, and domicile is sticky. The April-2025 non-dom replacement (the 4-year FIG regime) only helps people arriving in the UK, so it's irrelevant if you're leaving. ISAs and SIPPs aren't tax-deferred from Paraguay's side. We don't file UK departure returns — get a UK adviser. (Rules last checked May 2026.)

  What changes

  • Once UK tax residence is cleanly broken, Paraguay treats your non-UK income at 0% and there's no UK tax on it; UK-source income (rentals, dividends from UK companies) stays UK-taxable, with no comprehensive UK–Paraguay double-tax treaty in force as of 2026 to offset it.

• Germany

  Wegzugsbesteuerung (§ 6 AStG) on substantial corporate holdings.

  What stays the same

  • Exit tax (§ 6 AStG): if you've held ≥ 1% of a German Kapitalgesellschaft for ≥ 7 of the last 12 years, deemed disposal at exit. Tax due on the gain at exit, even though you haven't sold. EU-wide deferrals exist; Paraguay is third-country, no automatic deferral.
  • CFC (Außensteuergesetz): if you control a foreign passive company while German tax resident, its undistributed income is attributed to you. Mostly relevant if you keep a German residence after moving — don't.
  • Erweiterte beschränkte Steuerpflicht (extended limited tax liability): for 10 years after leaving, German citizens moving to a 'low-tax country' (Paraguay qualifies) remain liable on German-source income on a broader-than-usual definition. File correctly.
  • Anmeldung at Bürgeramt: cancel (Abmeldung) on departure. Failing to do this keeps you administratively German-resident.

  What changes

  • Once cleanly out and Paraguay-resident, foreign salary, foreign dividends, foreign rental income are 0% Paraguay-side.
  • German social security: contributions stop on departure. Existing pension entitlements remain — payable into a Paraguayan account.
  • If you incorporate in Paraguay (SA, SRL): CFC rules at home vanish once you're properly out. The Paraguayan corporate IRE is 10% on local-source profit only. (§ 6 AStG and AStG CFC provisions last checked May 2026.)

• France

  Lighter coverage — the exit tax bites on real holdings.

  What stays the same

  • Two things to flag with a French fiscaliste. The exit tax (Article 167 bis CGI) lands on substantial holdings (over 50% of a single company, or a portfolio above €800k) at the date you leave; because Paraguay is non-EU, deferring it to actual disposal needs a guarantee. And the IFI real-estate wealth tax keeps reaching back: French property worth €1.3M or more stays in your IFI base for five years after you go. France and Paraguay have no full double-tax treaty, so French-source income keeps French withholding at statutory rates. (Rules last checked May 2026.)

  What changes

  • Foreign salary, dividends and capital gains drop to 0% once you're cleanly tax-resident in Paraguay; French-source income stays French-taxable.

• Italy

  Lighter coverage — but check whether Italy's own regimes beat the move first.

  What stays the same

  • AIRE registration is the gate: without it the Agenzia delle Entrate keeps treating you as Italian-resident no matter where you live. Italian-source income (rentals, IT-paying salary, an IT pension) stays taxable, and an Italian-resident decedent's estate covers worldwide assets. We don't run Italian departure filings — use a commercialista. (Rules last checked May 2026.)

  What changes

  • Cleanly out and AIRE-registered, foreign-source income is 0% Paraguay-side.
  • Run the math against Italy's own incentives before you commit. The regime per pensionati esteri taxes foreign pensions at a flat 7% if you settle in a Southern Italian commune of up to 30,000 inhabitants — the population ceiling was raised from 20,000 by Art. 26 of Italy's Law 34/2026, effective 7 April 2026 (verified May 2026). The regime impatriati cuts tax on Italian-source income by 50% (60% with a resident minor child) for five years. And the HNWI flat tax for new residents rose to €300,000/yr under the 2026 Budget Law published 31 December 2025, up from €200k. For some retirees those beat Paraguay outright; for digital nomads they don't apply.

• China (PRC)

  Lighter coverage — the FX bridge matters more than the tax.

  What stays the same

  • Domiciled-in-China residents are taxed on worldwide income unless they break the 6-year exemption clock (30+ consecutive days abroad in any of the prior six years). The real friction is money movement: the USD 50,000/year RMB conversion limit, with larger sums needing approved channels and triggering bank scrutiny. In practice most PRC-passport holders run the FX through Hong Kong or Singapore and land the funds in a Paraguayan account. Paraguay is not currently a CRS signatory, which is part of the appeal — but that's a moving target, so check the current status, and engage a Chinese tax adviser. (Last checked May 2026.)

  What changes

  • Cleanly out, and past the 6-year clock test, foreign-source income is 0% Paraguay-side.

• Russia

  Lighter coverage — KYC at the bank is the real bottleneck.

  What stays the same

  • Russian tax residence is a pure day-count: 183+ days in any 12-month window makes you resident on worldwide income, so you break it by staying under. CFC (КИК) disclosure runs annually until you cease residency, and foreign accounts (a Paraguayan one included) must be reported on Form 1110704. The practical issue we see is the bank: since 2022, Russian-passport holders face heavier source-of-funds review at Paraguayan banks, so plan 4–8 weeks for a clean account opening. Get a Russian tax adviser on the residency-break paperwork. (Last checked May 2026.)

  What changes

  • Once non-resident (under 183 days in any rolling 12-month window), foreign income is 0% Paraguay-side; Russian-source income still draws 30% non-resident PIT and 15% dividend withholding, often a reason to wind it down after the move.

• Brazil

  Saída Definitiva + 12-month attribution.

  What stays the same

  • Brazilian Comunicação de Saída Definitiva (DSDP) at departure + Declaração de Saída Definitiva (DSD) the following year. Failure to file = treated as Brazilian tax resident on worldwide income, indefinitely.
  • Continued Brazilian tax residence for 12 months from departure UNLESS you file the DSDP. After that, only Brazil-source income is taxed.
  • Brazil-source income (rentals, BR companies): subject to non-resident rates, often higher than resident.
  • MERCOSUR Temporary Residency track: Brazilians can file under the MERCOSUR Residency Agreement at the published Migraciones fee of Gs. 2,230,040 ≈ US$ 360 (cash) — that is the MERCOSUR Temporary Residency tariff, not a 'discount' on Permanent Residency.

  What changes

  • Once DSD filed + Paraguay resident, foreign source = 0%. Paraguay does not have a DTT with Brazil, so cross-border taxes are at statutory non-resident rates.
  • Brazilian retirement (INSS, RPC): payable abroad. Bank-to-bank wire to a Paraguayan USD account works. (Saída Definitiva rules and the MERCOSUR tariff last checked May 2026.)

• Argentina

  No exit tax — but capital controls dominate.

  What stays the same

  • Argentine residency for tax purposes is determined by intent + day-count. Establish Paraguayan residency cleanly + spend most of the year out of Argentina.
  • Bienes Personales (wealth tax): worldwide assets covered for Argentine tax residents. Once you're Paraguay-resident, only Argentine-source assets remain in the base.
  • Capital controls: the USD-200/month cepo cap for retail residents was lifted on 14 April 2025; the 2026 cepo flexibilisation (BCRA Comm. A 8417, April 2026, verified May 2026) further removed the limits on overseas card cash-advances. Frictions remain (parallel rates, AFIP/ARCA scrutiny on large outflows); many Argentinians still arrive with crypto on a hardware wallet and convert at a Paraguayan OTC.
  • MERCOSUR Residency Agreement track: file under the MERCOSUR Temporary Residency at Gs. 2,230,040 cash ≈ US$ 360 (vs Permanent Residency Gs. 2,787,550 / US$ 450 under Decreto 4122/2025).

  What changes

  • Foreign-source (anything outside Argentina) becomes 0% Paraguay-side once tax-resident here.
  • The day-to-day USD friction goes away — Paraguayan banks accept USD freely, no cepo, no restriction.

The banking rails

Wise + Paraguayan USD account is the standard setup.

Most relocators end up running a 2-rail or 3-rail banking setup. The combinations below are what works in practice for foreigners with Paraguay residency. None of these are sponsored — your situation may genuinely call for something different.

• Paraguayan USD account (Itaú / Sudameris / Continental)

  USD savings, rental income, large wires in/out

  Required for receiving meaningful sums into Paraguay. Itaú is the default for foreigners; the others work too. Source-of-funds review on first deposit > US$ 5,000. KYC is more rigorous than peer countries — bank on 4–8 weeks for full account activation.

• Paraguayan PYG account

  Daily life — cards, utility bills, rent paid in PYG

  Same banks as the USD account. Useful for the routing the local economy uses (electricity, water, internet, mobile, taxi). Currency conversion at the Paraguayan rate is competitive.

• Wise (Borderless)

  Receiving foreign salary, multi-currency holding, low-cost FX

  The most-used international rail. Holds 50+ currencies; pays you on local rails (US ACH, EU SEPA, UK Faster Payments). Convert internally at near-mid-market FX. Card works in Paraguay and abroad. Since 1 May 2026 Wise replaced the old 'two free withdrawals per month' rule with a single ~€250/month free-withdrawal allowance and removed the fixed per-withdrawal fee. Wise's debit card is not issued to Paraguay-resident addresses, but existing cards keep working until expiry. Wire from Wise to your Paraguay USD account = 0.4–0.6% all-in.

• Revolut (where available)

  Day-to-day debit + crypto on/off-ramp + multi-currency

  Available for EU, UK, US (selectively) residents. Less reliable for international wires than Wise but better for daily cards + travel. Subject to Revolut's KYC posture on Paraguayan addresses (sometimes friction).

• Statrys / Mercury / Relay (business accounts)

  Foreign company business banking — useful for non-PY entities

  If you operate a Delaware LLC, BVI Ltd, Hong Kong Ltd, etc., and need a real business account that accepts wires from international clients, these are the realistic non-bank choices. None offer a Paraguayan account — they live in the company's domicile country. Pair with Wise to settle into Paraguay.

• Payoneer

  Receiving from US-only payors that won't pay Wise

  Some US payors (Amazon Affiliates, certain marketplaces) only push to Payoneer. Treat as a transit account; sweep to Wise weekly. Higher fees than Wise — never hold balance on Payoneer.

• Crypto exchanges (Binance, Kraken, Coinbase)

  On/off ramping where banks fail or for crypto-heavy holders

  P2P USDT-PYG via Binance is the practical rail when bank wires are slow. Self-custody recommended for size. See the crypto guide for source-of-funds documentation that keeps Paraguayan banks comfortable.

Common working combos: (1) US/UK/EU resident → Wise + Itaú USD/PYG. (2) Crypto-heavy holder → Coinbase/Kraken + Wise + Itaú USD/PYG. (3) International business owner → Mercury/Statrys + Wise + Itaú USD/PYG. (4) LATAM resident with capital controls → P2P USDT in + Itaú USD/PYG.

Common mistakes

Where dual-jurisdiction setups go wrong.

• Claiming Paraguay tax residency without breaking home residency

  Result: dual tax residency without a treaty to break the tie. Your home country and Paraguay both tax the same income; Paraguay's 0% on foreign-source doesn't help because your home country taxes the same income at its statutory rate. The fix is to break home residency cleanly — most jurisdictions have a specific test (UK SRT, Canadian non-resident, Italian AIRE, Brazilian DSD) that must be satisfied with a paper trail.

• Forgetting the exit-tax filing

  German § 6 AStG, French Article 167 bis, Canadian deemed disposition, US 8854. Each requires a return filed at exit on substantial holdings. The deemed-sale tax is owed even if you never sold. Failing to file = the home country audit reaches you years later, with penalties + interest.

• Routing through a non-treaty bridge

  Using a tax-haven jurisdiction (Cyprus, BVI, Cayman) to bridge between Paraguay and your home country sometimes worsens the situation — your home country's CFC may attribute the bridge entity's income to you, AND tax-haven 'bridges' attract additional scrutiny under post-2024 OECD Pillar 2 / GloBE rules. Direct paths are usually cleaner.

• Not declaring Paraguay-source income locally

  If you rent out a Paraguayan property, run a Paraguayan business, or earn salary for work physically performed in Paraguay, that's Paraguay-source. The 0% applies only to foreign-source. Local-source IRP filings are mandatory for RUC holders. Auditors do follow the bank trail.

• Keeping the empty apartment back home

  Many tax authorities use 'available housing' as a strong tie indicator. UK SRT, German residence test, French Article 4B all weight an empty available home heavily. Sell, rent on a long-term lease (1-yr+), or have a relative actually live there. An apartment that 'sits ready for your return' often defeats the residency claim.

• Funding via crypto without source-of-funds documentation

  Paraguayan banks accept crypto-derived funds but ask for documentation. Save the foreign exchange's KYC letter, monthly statements, withdrawal confirmations, on-chain receipts. The first time a bank questions a deposit without paper, the account freezes for 4–8 weeks. With paper, it resolves in 24 hours.

FAQ

Paraguay taxes — common questions