Tax and Fiscal Residency

Opening

If you are resident in Paraguay and your income arises abroad — a salary earned outside the country for work performed outside it, an investment portfolio, rent from a property in another jurisdiction — that income is, as a rule, outside the scope of Paraguayan personal income tax. IRP applies to Paraguayan-source income and contains no residual clause bringing the remainder into charge.

That is accurate, and it is what most people come to ask. It is also half the answer.

The other half is that obtaining Paraguayan residency does not, on its own, end your tax residence in your country of origin. That determination is made by the authority of that country, under its own criteria, and no Paraguayan document replaces it.

There are therefore three distinct matters that are commonly treated as one: immigration residency, Paraguayan tax residency, and tax residency in your country of origin. Obtaining the first does not automatically produce the second, and neither of them cancels the third.

This page sets out what Paraguay taxes and what it does not, what the tax residency certificate does and does not prove, what information is currently exchanged with other countries, and which treaties exist. Without promising outcomes that depend on a foreign authority.

The Tax Residency Certificate

It is the document the well-informed client names first. It is issued by the DNIT (the national tax authority), not by the Dirección Nacional de Migraciones (the immigration authority), and its procedure is governed by Resolución General N° 65/2020.

What It Proves

That, for the period or tax year stated in the document, the applicant is subject to Paraguayan tax rules.

It serves as documentary support before the tax authority of another State and as a requirement for invoking a double taxation agreement.

What It Does Not Prove

It does not state that another State has stopped treating you as resident. It does not sever a foreign tax residency. It is not a certificate confirming no outstanding tax debts, and it is not a tax clearance certificate. It does not substitute for the test applied by the authority in your home country. And on its own, it does not prove days of physical presence or centre of vital interests.

How It Is Obtained

It is requested from the DNIT. If the applicant is a registered taxpayer, this requires a RUC (taxpayer number), tax obligations up to date, and a copy of the identity card of the holder or of their representative. If not, an identity card. For individuals, the Constancia de Movimiento Migratorio (the immigration movement record) for the tax year requested is also required.

The issuance period is ten business days. The application may be rejected for a missing item of information or a missing document, in which case it may be resubmitted. Correspondence is sent through the Marandu electronic tax mailbox, part of the DNIT's Marangatú system, or by email.

In practice, the certificate is issued valid for one year from its date of issue, not by calendar year. The clock runs from the date stamped on it.

When It Is Useful

To invoke a treaty in force. As documentary evidence in the conversation with your home-country adviser. And as reasonable support before a financial institution, provided the rest of your profile is consistent.

On its own, it is not a tax plan.

Paraguayan Residency Does Not, On Its Own, Sever Your Home-Country Tax Position

This is best said sooner rather than later, because it is the objection that actually stops those who can afford to pay.

Settlement status and the identity card are immigration status. The tax residency certificate is an act of the DNIT. Neither, on its own, cancels tax residency status in Argentina, Brazil, Spain or Italy.

Those systems decide using their own criteria: days of physical presence, permanent home, family, centre of economic interests, and the treaty's tie-breaker rules where a treaty exists. Paraguay does not replace that analysis.

The real objection of anyone weighing a move was never the cost. It is the possibility of having changed domicile and still being treated as resident by their home authority. If this is not named in the first conversation, the client discovers it later, with their accountant copied in.

What this firm does is separate the three layers — immigration, Paraguayan tax and home-country tax — and set out in writing which document covers each one. What it does not do is claim that a Paraguayan document closes a foreign file.

Paraguayan-Source Income: What Is Taxed and What Is Not

Anyone coming from a worldwide-income system assumes that being resident means everything falls within the tax base. Paraguay does not work that way, but the full answer is more nuanced than the territoriality slogan suggests.

Individuals: The IRP

A territorial test. What falls within the tax is what Ley N° 6380/2019 treats as Paraguayan-source income under Articles 47 and 48: work or activity carried out in the country, real estate located here, and certain locally sourced returns.

As a rule, it does not capture salary earned abroad for work performed abroad, a foreign investment portfolio, or rent from a property located outside the country. The IRP has no residual clause bringing anything else into the tax base.

Companies: The IRE

The starting point is the same. Article 1 taxes Paraguayan-source income.

What changes the outcome is Article 6, which operates on two levels.

First, it widens what counts as Paraguayan source. It brings in, among other items, technical assistance and services used in the country; the use or licensing of assets exploited here; interest and returns on securities where the issuer is resident in Paraguay; deposits, exchange-rate differences and dividends from entities abroad where the investor is the Paraguayan company; insurance on local risks; and international transport, subject to its exclusions.

It then adds a residual clause: activities carried out abroad that are not otherwise listed are also treated as Paraguayan-source, unless an income tax — whatever it is called — has already been paid there at a rate equal to or higher than the IRE rate. If less was paid, the difference falls within the tax, and Article 134 grants a credit for tax paid abroad, capped at the IRE otherwise due on that same income.

The Asymmetry

That combination resembles a worldwide-income system without quite being one. There is no controlled foreign company regime, and undistributed profits of a subsidiary are not attributed to the parent.

And individuals are not subject to that architecture. Their source rules reproduce neither the provision on foreign dividends and interest nor the residual clause.

The practical consequence is worth knowing before deciding on the structure: the same foreign dividend can fall outside the IRP if received by the member as an individual, and fall within the IRE at 10% — and later within the IDU when distributed — if received by the company.

Paraguay has not moved to a worldwide-income system. It widened the source of the IRE and established a credit for cases where less than 10% was paid abroad. Individuals, under the IRP, do not have that widened source.

The Test Applied by Your Home-Country Authority

This is not a Paraguayan test. It is what your adviser will ask when assessing your position.

It looks at how many days you spent in each country, where you have a permanent home, where your family lives and your children are schooled, from where your investments are managed, where contracts are signed, and whether your bank account shows genuine activity or is dormant. Where a treaty applies, the tie-breaker rules apply: habitual abode, centre of vital interests and nationality.

One clarification is worth making about a claim that circulates. Resolución General N° 65/2020 does not set a day-count as the rule for an individual's tax residency: it requires the Constancia de Movimiento Migratorio for the tax year, which is a different thing. The hundred-and-twenty-day period in Article 152 of Ley N° 125/91 relates to domicile, not to this certificate. And neither substitutes for the count carried out by the authority in your own country.

For companies, the foreign tax authority's analysis is different: controlled foreign company rules, permanent establishment and place of effective management. A company with a RUC but no office, no personnel and no decisions taken in the country is valid before the DNIT and difficult to defend under a foreign audit.

Substance in Paraguay is not a requirement of incorporation. It is a defence in the home country.

Where no treaty applies, the analysis is governed entirely by the domestic law of your home jurisdiction, and the absence of a tie-breaker provision generally works against the taxpayer rather than in their favour.

Information Exchange and the CRS

This is the point where the most inaccurate information circulates, in both directions.

What Happens Today

Paraguay does not exchange financial information automatically. Local banks do not send the annual Common Reporting Standard report to the authorities of Argentina, Spain or Brazil.

There is exchange on request, under the Convention on Mutual Administrative Assistance approved by Ley N° 6656/2020, for periods beginning 1 January 2022. It covers identity, accounts, RUC, tax returns and ultimate beneficial owner.

US citizens are, in addition, covered by FATCA, and a number of Paraguayan entities already report through that channel.

What Is Coming

Paraguay committed to carrying out its first automatic exchanges in 2027, announced at the Global Forum plenary held in Asunción in November 2024. The commitment is voluntary, and the Forum allows deferrals for developing countries.

Neither indefinite silence nor imminent exchange: a dated commitment, subject to implementation.

What Changes and What Does Not

Once automatic exchange begins, the tax base does not change: visibility does. The financial institution identifies the account holder's tax residency and reports balances, interest, dividends and other returns to the DNIT; the DNIT sends them on to the authority of the country where that holder is tax resident. The individual's IRP still does not tax foreign income.

One point worth understanding is often underestimated. The standard requires a self-certification from the account holder and obliges the institution to apply a reasonableness test: it cannot accept that declaration if it knows, or has reason to know, that it is inconsistent with the rest of the file.

An identity card, residency and a RUC, with a coherent profile, should be enough. A foreign passport, income that is entirely foreign, a phone number and address outside the country, and no trace of local life, is a profile the institution can treat as reportable to the home country, even with Paraguayan documentation in hand.

Two distinct situations follow. Someone who is a full Paraguayan tax resident will have their accounts reported to the DNIT: transparency, not a new tax rate. And someone who holds settlement status and an identity card but remains tax resident in their home country, with accounts in Paraguay, should know that opacity by omission has an expiry date.

The Argentine Case

Argentina joined the standard in 2015 and has been exchanging since 2017. The infrastructure is operational.

And there is no broad bilateral treaty: Ley N° 1105/1997 covers international transport, not income or wealth. This means the Paraguayan accounts of an Argentine tax resident can be reported without any tie-breaker provision to fall back on. The Paraguayan certificate is an argument; it does not cancel Argentine residency.

Taxes a Resident Actually Pays

Resident individual, without a company. IRP on Paraguayan-source income once it exceeds the statutory threshold of 80,000,000 guaraníes, on a scale of 8% and 10%. VAT at 10% if a registered taxpayer. Municipal taxes depending on the activity.

There is no personal wealth tax, and a foreign investment portfolio is not caught by the IRP merely because you reside in the country.

Individual with a sole proprietorship. IRE, under the general regime at 10%, or under the SIMPLE or RESIMPLE regimes depending on the income cap. A sole proprietorship under SIMPLE is not an IDU taxpayer. VAT, and IPS contributions if there is staff.

Companies. IRE at 10% on net income. VAT at 10%, with 5% on the goods the law lists. IDU on distribution: 8% if the member is resident and 15% if not. Advance payments, withholding tax on payments abroad, IPS on payroll, the municipal trading licence, and keeping the ultimate beneficial owner record up to date.

Non-residents receiving income from Paraguay. They fall within the Non-Resident Income Tax, not the IRP, and the local payer withholds the tax.

A resident who pays no tax is either someone who does not reach the IRP threshold, or someone whose income is entirely foreign and has no local taxable event. It is not the natural state of an operating company.

Formal Obligations

RUC. Access to Marangatú. Electronic invoicing where applicable. Monthly VAT returns. Annual IRE or IRP returns, following the filing calendar by RUC digit. IRE advance payments. Statutory books. IPS and MTESS registration where there is staff under a contract of employment. Keeping the ultimate beneficial owner record up to date. A genuine tax domicile. And retaining documentation for the statutory limitation period.

Non-compliance is not an administrative delay. It generates fines and surcharges, prevents you from obtaining the tax residency certificate — which requires being up to date — complicates the banking relationship, and leaves a flagged file exactly when a foreign authority decides to ask.

Double Taxation Agreements

Knowing which exist matters. Knowing which do not, more so.

With broad coverage of income and, in several cases, wealth: Chile, Taiwan, Uruguay, Qatar, the United Arab Emirates and Spain. These serve to resolve residency tie-breaks, to limit withholding at source, and to access a credit for tax paid. Applying them requires proving tax residency within the meaning of the treaty and, in practice, the DNIT certificate together with genuine substance.

In July 2026 Paraguay and Chile signed a new treaty, updating the one in force since 2006 and incorporating anti-abuse and administrative cooperation clauses developed under the OECD's BEPS project. It is in the process of implementation.

With sectoral coverage, which is of no use for income planning: Argentina, under Ley N° 1105/1997, limited to international air, river and land transport. Germany, under Ley N° 1087/1984, limited to air transport. And Belgium, under Ley N° 1236/1987.

Without a broad treaty: Argentina as regards income and wealth, Brazil, the United States, Italy, France and the United Kingdom, among others. In other words, a good part of the home jurisdictions of those who consult us.

The absence of a treaty does not mean Paraguay is invisible to that authority. It means the tie-break will be resolved under the domestic law of the home country rather than a treaty clause. The Paraguayan certificate does not create a treaty that does not exist, and neither does information exchange.

The Conversation With Your Home-Country Adviser

In most cases, the decision is not made in Asunción. It is made once your accountant, tax adviser or lawyer in your home country can write an opinion without reservations.

That professional needs, in this order: to understand that settlement does not equate to home-country tax residency; to know what the DNIT certificate does and does not say; to understand the real scope of Articles 1, 6 and 134 for companies and Articles 47 and 48 for individuals; to have the list of treaties in force and, above all, of those that do not exist; to understand the current state of information exchange and the 2027 commitment; and to know what evidence of substance will be documented.

This firm does not replace your local adviser and does not give opinions on foreign tax law. It prepares the material so that professional does not have to reconstruct the Paraguayan regime on their own.

Fees

Handling the tax residency certificate application: USD 120. If you are not a client of the firm, the costs of the power of attorney are added.

Monthly accounting services for individuals: from USD 30 to USD 80, depending on the volume of work and turnover.

Tax advisory services: quoted according to the complexity of the case and whether or not it is engaged together with the accounting service. Accounting services for companies are quoted according to the tax regime and level of activity.

How We Work

The scope of each engagement is set out in writing before you take on any commitment, with its express exclusions and an indication of what depends on the DNIT and what does not.

The tax residency certificate service is paid in two equal instalments: the first on confirming the engagement and the second when the application is filed.

Tax advisory engagements are structured case by case, because their scope and duration depend on the specific situation.

What We Do Not Do

We do not promise that Paraguayan residency will cancel your tax position in your home country. That determination belongs to the authority of that country under its own legislation.

We do not give opinions on foreign tax law. We work with your local adviser, not in their place.

We do not undertake that the DNIT will issue the tax residency certificate, nor that another State will accept it as a tie-breaker element.

We do not design structures whose viability depends on an authority not obtaining information.

Common Mistakes

Believing that moving your domicile is enough. This is the central mistake and the source of almost all the others.

Underestimating substance. The certificate can be obtained; the tie-break and the home country's controlled foreign company rules are not resolved with a document.

Assuming Paraguay reports nothing. There is no automatic exchange today, but there is exchange on request since 2022, FATCA for US citizens, and a dated commitment. And the financial institution applies its reasonableness test even before automatic exchange begins.

Treating the IRE as a classic worldwide-income tax, or the IRP as if it had the IRE's residual clause. These are different taxes with different architectures.

Applying for the certificate without the Constancia de Movimiento Migratorio for the tax year, or assuming its validity runs by calendar year.

Incorporating the company before defining whether the income will be Paraguayan-source, widened-source, or foreign with tax at 10% or above. The RUC does not rearrange the source.

Handing your home-country adviser a sales presentation. What they need is the regime explained with its articles and the list of treaties that exist and that do not.

Resorting to a local partner of convenience or a structure assembled remotely, and expecting to establish substance afterwards. The foreign authority does not distinguish between a badly designed structure and an empty one.

Frequently Asked Questions

Does Paraguayan residency make me a Paraguayan tax resident?

Not automatically. Immigration residency and tax residency are distinct matters, with different requirements and different authorities.

Does obtaining Paraguayan residency cancel my tax residency in my home country?

Not on its own. That determination is made by the authority in your home country under its own legislation, having regard to days of physical presence, housing, family and centre of economic interests.

What is the tax residency certificate and what is it for?

It is the document issued by the DNIT that certifies that, for the stated period, you are subject to Paraguayan tax rules. It serves as support before another tax authority and to invoke a double taxation agreement.

How long does it take and how much does it cost?

The issuance period is ten business days. The service carries a fee of USD 120, to which the costs of the power of attorney are added if you are not a client of the firm.

Does Paraguay tax my foreign income?

For an individual, as a rule no: the IRP taxes Paraguayan-source income and does not incorporate a residual clause. For companies, Article 6 of Ley N° 6380/2019 widens the concept of source and adds a residual clause covering activities abroad, unless an income tax has already been paid there at a rate of 10% or more.

Does Paraguay report my accounts to my country?

Not automatically, today. Exchange on request exists for periods beginning 1 January 2022, and US citizens are covered by FATCA. Paraguay has committed to starting automatic exchange in 2027.

I am a US citizen. Does any of this change my US filing obligations?

No. The United States taxes its citizens on worldwide income regardless of residence, so neither Paraguayan residency nor a Paraguayan tax residency certificate alters your US filing position. Paraguayan financial institutions already report under FATCA. If your objective is to reduce US tax exposure, this is not the instrument for it, and we would rather say so at the outset. Your position should be reviewed with a qualified US adviser.

When does the CRS begin and what changes?

The commitment is for 2027. When it begins, what is taxed does not change: what is visible does. Financial information starts being sent to the authority of the country where the account holder is tax resident.

Is there a treaty between Paraguay and Argentina?

There is one, but it is limited to international transport. There is no broad treaty covering income or wealth, so there is no tie-breaker provision to rely on.

What is the IRP threshold?

The tax applies to Paraguayan-source income exceeding 80,000,000 guaraníes, on a scale of 8% and 10%.

Is holding a Paraguayan identity card enough for the bank to treat me as a local tax resident?

Not necessarily. The exchange standard requires a self-certification and obliges the institution to assess its reasonableness. A profile with no activity and no genuine address in the country can be treated as reportable to your home country even with Paraguayan documentation.

Can you advise me on the taxes of my home country?

No. We do not give opinions on foreign tax law. We prepare the material your local adviser needs to analyse your position.