Moving to Paraguay in 2026: territorial taxation, accessible residency and a low cost of living

Paraguay applies strict territorial taxation, set out in Article 6 of the tax modernization law: income of Paraguayan source is income derived from activities carried out within the territory of the Republic. Foreign-source income does not form part of the tax base, at a rate of 0%³.

This is the foundation of the country's appeal, and it is written into the law, not into a brochure. For a freelancer or an annuitant whose income comes from abroad, this is a rare architecture in South America, where most states tax residents on their worldwide income.

Personal income tax is progressive and short. Its first bracket is taxed at 8%⁴, with the higher brackets remaining moderate.

Companies and dividends

Corporate income tax is a single rate of 10%⁵ on net profit, one of the lowest in the region.

Distributions are taxed separately, through a tax on dividends and distributed profits, at a rate of 8%⁶ where the recipient is resident and 15%⁷ where the recipient is not, the tax being withheld by the distributing company.

The whole, 10%⁵ on profit and 8%⁶ on distribution for a resident partner, remains well below European levels, and it is this combination, more than the scale applying to individuals, that explains why structures are set up there.

We do not publish the Paraguayan rules on inheritance and gift taxation, nor the exact bracket thresholds of the individual income tax scale: they do not appear in the extracts of the law available to us.

A point of method is worth making for any territorial system, and Paraguay is no exception: it protects income whose source is abroad, not income whose source is local. A freelancer based in Asunción who invoices Paraguayan clients is carrying on an activity developed within the territory, and the resulting income is taxable there. Territorial taxation rewards relocating a residence, not relocating an activity.

The question becomes more complicated where the activity is carried out from Paraguay for foreign clients. The location of the source then depends on the analysis adopted by the tax authority, and that analysis should be secured before the move rather than argued over after an audit.

Paraguay has long been presented as the simplest and cheapest permanent residency on the continent. The scheme has been reformed, and one should reason on the current regime rather than on the accounts of arrivals in previous years.

The main route remains permanent residency granted to people who can show means of subsistence, with a documentary file covering identity, the absence of a criminal record and financial capacity. Specific routes exist for investors and for family reunification.

The amounts and conditions required for Paraguayan permanent residency, as well as those of the investment routes, do not appear in the official sources we were able to consult: we do not quantify them. This point has been amended several times and must be checked with the General Directorate of Migration before any commitment.

One thing should be understood before taking any steps: obtaining Paraguayan residency and obtaining a cédula (identity card) are two distinct stages, the second determining the practical use of the first, whether for opening an account, registrations or contracts.

Finally, permanent residency does not in itself confer tax residence. The latter depends on its own criteria, and Paraguayan territorial taxation takes effect only once that status has been acquired and can be enforced against the authorities.

Acquisition by a foreigner is free for urban property. A restriction does exist, however, on land located in border zones, where acquisition by nationals of neighbouring countries is regulated.

The market is dominated by Asunción and Ciudad del Este, the latter drawing its activity from the Brazilian border and cross-border trade. The dynamics there are very different, and a property bought in one cannot be compared with a property bought in the other.

The main point of vigilance is the chain of title. The Paraguayan registry requires careful verification, and using local counsel independent of the seller is not an excessive precaution but an ordinary condition of security.

Agriculture, moreover, accounts for a significant share of foreign investment. This sector has its own constraints, such as title, access to water and labour, and is not analysed in the same way as a residential investment.

We do not publish Paraguayan transfer taxes, property tax or the taxation of rental income: they do not appear in our extracts.

Paraguay is one of the cheapest countries in South America. Services, labour and local food are very affordable relative to a European income.

We do not publish a typical monthly budget: we have not found an official Paraguayan series measuring a basket of expenses comparable to that of an expatriate.

Three factors temper this finding. First, imported goods, whose price includes transport in a country with no coastline. Second, healthcare: private facilities in Asunción handle routine medicine, but serious cases frequently lead to a transfer to Brazil or Argentina. And third, the climate, whose very hot summers make air conditioning a permanent expense.

Being landlocked is the country's structural constraint: air links to Europe require a connection, and supply of specialised goods is slower and more costly than elsewhere in the region.

On the other hand, monetary stability there has been better than in several neighbouring countries, which limits the erosion of a budget calculated in local currency.

1. Check the conditions currently in force with the General Directorate of Migration, as the regime has been reformed;
2. gather the civil status and criminal record documents, legalised and translated; this is the longest step and it is prepared in France;
3. obtain the cédula after residency: it determines the practical use of the status;
4. open a local bank account, a step that requires the cédula;
5. deal with the departure from France according to its own criteria: Paraguayan territorial taxation takes effect only after an actual transfer of tax residence.

The last point is the one that decides everything. A French national who obtained Paraguayan residency without moving their household or their centre of economic interests would remain domiciled in France, and local territorial taxation would be of no use to them.

We do not publish processing times: we have no dated, quantified official source for Paraguayan residencies.

• Territorial taxation is written into the law, in Article 6: it is a solid advantage, but it requires actually being a Paraguayan tax resident.
• The residency regime has been reformed: the amounts and conditions circulating in older guides are no longer valid.
• Permanent residency, the cédula and tax residence are three distinct stages.
• Taxation of profits at 10%⁵ followed by distributions at 8%⁶ must be read as a whole.
• The Paraguayan passport brings no mobility gain for a European national.

Finally, Paraguay is a destination where the gap between the advertised simplicity and the administrative reality is significant. The country is welcoming and the tax regime is genuinely favourable, but the procedures call for patience, reliable local advice, and acceptance of an environment where the informal economy plays a larger role than in Europe. This is not an obstacle; it is a parameter to take into account before leaving, not to discover on arrival.