Tax Residency Paraguay - The most COMPLETE Guide

Your country is a tax stranglehold? and have you heard of tax residency in Paraguay? low taxation? or even exempt taxation system? Yes, that's right. Its territorial taxation system allows tax residents to not paying taxes on income generated outside the country.

I will explain the main advantages and requirements to obtain Paraguayan tax residency, as well as the necessary process to formalize the application. In addition, we will consider the tax particularities that should be taken into account.

Benefits of Paraguayan Tax Residency

Paraguay has consolidated its position as an attractive destination for those seeking optimize your tax situation. Its tax system presents features that benefit residents, especially considering the territorial taxation that applies in the country, but not only that, I will tell you more advantages below.

The tax residency in Paraguay is being a great success being able to pay from a 0% by the foreign income and even a maximum of 10% for local rent.

Tax and Economic Advantages

As a tax resident in Paraguay, you will enjoy numerous tax advantages, such as low or no taxation in the country on income generated outside the country, The country also offers access to be independent or to open companies in the country to be active. Additionally, the country offers a cost of affordable living and a warmer climate, However, one of the many advantages is that we can be residents without practically living here.

Taxes 0% foreign income with tax residency in Paraguay

If you are an individual, you are taxed territorially, i.e. you do not pay taxes on foreign income and only pay taxes on local income.

Foreign Income - Services	Local Rent - Services	Local Rentals - Corporate
Taxes: 0%	Taxes: 8-10%	Taxes: 3%-10%

What is considered foreign income?

Paraguay's territoriality is strict and if all of these cases occur is considered foreign income:

• You are outside the territory of Paraguay offering the service.
• The IP of the device or sim card of the device is outside Paraguay.
• The activity did not take place within Paraguayan territory.
• The final product was used outside Paraguay.
• The client does not pay you from a Paraguayan entity and is not a resident of Paraguay.

Conclusions

As you can see Paraguay gives the entrepreneur the option to prosper, even if your activity is considered Paraguayan income taxes are very low and if you live in the country you can deduct many things that also depending on your expenses you could be paying much less than 10%.

No social security payments

It is a free country and if you do not want to pay retirement or health, it is totally optional and it is not necessary so this cost can be 0, if you do not require it.

Be a tax resident living 1 day a year in Paraguay.

Here comes the best for digital nomads, just as you hear it, or rather, read it.

• With temporary residence: Stay 1 day per year.
• With permanent residence: Stay 1 day every 3 years.

Business opportunities

Paraguay is known for being business-friendly, which represents an excellent opportunity for entrepreneurs and investors. The country has regulations that encourage investment and growth of new initiatives.

The most promising sectors include agriculture, renewable energy and technology. Investing in Paraguay can be very interesting due to government incentives and a regulatory environment that favors economic activity.

Requirements for tax residency in Paraguay

In order to obtain residency in Paraguay, you will need to bring from your country the following requirements:

1. Passport or Identity Card.
2. Birth certificates with apostille.
3. Criminal record with apostille.
4. Marriage certificate or divorced or widowed (Only if applicable) with apostille.

In some cases if you live outside your country of origin, the residence card of the new country if you have lived more than 1 year. Here you have all the requirements in the official website of Migraciones.

Then apart in Paraguay to process:

• Interpol certificate.
• Certificate of foreign background.
• Certificate of life and residence.
• Foreigner's license.

Don't worry, our team will take care of these 4 things in order to get it legally and quickly in Paraguay.

What is the apostille?

The agreement hague apostille is a legalization on documents that serves internationally to verify that it is legal, almost all countries have this, many digitally.

Paraguay has this agreement and if your country also has the apostille, it is convenient to bring the documents with apostilles, so it will be much easier for your residence in Paraguay.

Alternatives to the beech apostille

If your country does not have this apostille agreement or it is difficult for you to obtain it, it is advisable to go to the Paraguayan embassy in your country and legalize the documents, so that they can also be presented in Paraguay.

How long does it take to obtain tax residency in Paraguay?

From the time you come to the end of the 4 steps described below and you are already fiscally registered in the country, between 3 to 4 months with our semi-fast method.

What documents do I need from Paraguay?

To start with the Paraguayan residency with the benefits of taxation in the country, it is first necessary to obtaining residency and then for the second time is the taxation (RUC) and as optional the Tax Certificate which is usually highly recommended.

In this article, we will break down the process into 4 steps:

1. Paraguayan Temporary Residence Card.
2. Paraguayan ID card.
3. Open RUC and bank account.
4. Certificate of tax residence (Optional but recommended).

There are more certificates that we need to process in the country and one more carnet (called carnet de extranjeria) that you need for settling in the country, but the ones that you need are the ones that you need to obtain in the country. 4 steps from top are the most important documents for our final objective the Fiscal Residence of the Republic of Paraguay.

Next, we will describe the steps we need to take and we will go deeper into the maintenance of the Paraguay tax residence and the common mistakes that most people make.

The Paraguayan Residence - First step

It is important to mention that the residence in Paraguay, in itself only gives us the right to live in the country, However, it does not give us any tax advantage, nor will we be able to open bank accounts in the country, nor be operative.

In summary, residency in Paraguay offers numerous benefits to expatriates, although the process to obtain it can be complex for someone who has no experience with the bureaucracy in Paraguay.

Benefits of the Paraguayan residency card

Once you have your license:

• You have the right to live in Paraguay.
• You have access to work as an employee.
• You have access to apply for a Paraguayan cedula.

How long does it take?

Normally it takes 3 to 4 months, but with our help will come out much sooner.

Paraguayan cedula - Second step

The Paraguayan cédula, an identity card or also known in other countries as the DNI provided by the Paraguayan national police.

This document is important for several daily activities, such as opening local bank accounts and obtaining a driver's license in Paraguay, being able to be a freelancer and pay taxes in the country, as well as being a member of MERCOSUR.

Benefits of the Paraguayan cedula

The paraguayan identity card provides a number of benefits and we are already more operational in the country. Some of the main benefits:

• Belonging to and being a member of the Mercosur.
• Carry out legal procedures with your Paraguayan cedula.
• Opening of bank accounts.
• Opening of RUC (See below for more information on RUC).

How long does it take?

It takes between 40 to 60 days. Although it can be less days.

Once we have the Paraguayan cedula, we can open the RUC.

Open RUC in Paraguay (Taxation) - Third Step

Once we have the Paraguayan ID, we can open our RUC to confirm that we have an activity in the country and with that we are considered tax residents.

This process is also one of the most delicate, because if you choose the wrong activity you would be evading taxes. That is why a specialized accountant is highly recommended, and we have one in our team, specialized only for foreigners.

With our RUC ready, we would already have our Paraguayan tax residence active.

What is the RUC in Paraguay?

The Registro Único del Contribuyente, known as RUC, is a component of the system. taxation in Paraguay. This unique identification number is assigned to individuals and companies in order to facilitate tax collection and compliance with tax laws.

You have RUC as an individual and as a legal entity (Company). If you do not want to complicate you start as a natural person and once you have more roots in the country and separate assets you can open a Paraguayan company.

How long does it take?

The RUC of natural person, since it is requested 2 working days.

Tax Residency Certificate - Step 4

The tax residency certificate is a formal proof of a person's tax location and is required to apply for international treaties that may exempt from certain taxes and offer benefits. It is optional since Paraguay does not require it, but it can serve as proof to present it to other governments.

We have an article dedicated to the Certificate of tax residence in Paraguay.

How long does it take?

It takes 7-10 days from the time it is requested.

Common problems when applying for Paraguayan residency

Documentation problems

The most frequent problems that can arise when looking for the residence in Paraguay are related to documentation. It is always advisable to verify if any additional documents are required and ensure that all are properly apostilled or legalized.

Many times we have had a person with an imminent flight come to us with incomplete documentation, so we recommend our clients to let us know 1 to 4 months before coming to prepare the ground and make sure their residence is secure.

Gestoria scams

In Paraguay there is a proportion of significant swindles you pay a considerable amount of money and whoever provides the service disappears, be it real estate, construction companies, vehicles, or people who promise you a residence in record time or at a very low cost. That is why here I talk about the 4 most common scams by agencies that offer residency.

In our consultancy we are very committed to the person's success and we check their documentation before they come to minimize risks and give continuous feedback to the person.

Poor tax advice

There are people who do not leave their country cleanly and do not put together a good tax plan, to have everything correctly and to avoid suspicions from the country you are leaving it is generally good to have the support of a tax advisor and even worse then they do not know how to manage it correctly in Paraguay and accumulate fines in the Paraguayan treasury.

Our team includes 1 advisor at the local Paraguayan level and expert on foreigners with off-shore companies to go deeper into the country's taxation and we can put together a tax plan according to your circumstances.

Paraguayan residence on paper

There are people who do not declare anything about their income, or do not have an address available, this type of people have a ‘paper’ residence that can have very serious consequences in the medium term, such as your country of origin repatriating you fiscally or Paraguay suspecting your activity or problems when moving funds.

We always recommend to go deeper and seek professional help and not to stay with the 4 or 5 things that are very generalized on the internet, since each case is different.

Conclusions

You already have your tax residence in Paraguay after these 4 steps, that's all, but you have to keep in mind one more thing: When opening a RUC remember that you have to do monthly statements even if you have no movements.

It is better to have an accountant to do them for you, which is usually around 40 usd per month. In the Vivir Paraguay team we have one.

Click here >> If you want to and your Tax residence RESERVED.

If you have any doubts or questions, please contact me at alejandro@vivirparaguay.com