Paraguay: the lowest cost of living in South America

We do not publish a typical monthly budget for Paraguay: we have not found an official series measuring a basket of spending comparable to an expat's, and we do not use unverifiable self-reported databases.

What can be said relates to the structure of the economy. Paraguay is a sparsely populated agricultural country with low labour costs, where services and local food are very affordable.

The country applies territorial taxation: income that is not Paraguayan-source is not taxed, at a rate of 0%¹.

Local-source income falls under a scale whose first band is 8%². Corporate income tax is set at 10%³, and dividends paid to a resident beneficiary at 8%⁴.

These levels are among the lowest on the continent, and the accompanying territoriality is structural rather than an exception: it cannot be closed down like a tax incentive regime.

The country also has macroeconomic features that are rare in the region: a long-stable currency, moderate public debt and contained inflation. For assets held locally, these factors matter more than a tax rate.

A low cost of living is the counterpart of a limited level of public services. For major procedures, the Paraguayan healthcare system requires recourse to the private sector or travel to Argentina, Brazil or further afield.

International schooling is limited and concentrated in Asunción. For a family with school-age children, this is the first criterion to check, before any tax consideration.

Finally, air connectivity to Europe is limited: most routes go via São Paulo, Buenos Aires or Madrid, which lengthens journeys and makes trips home more expensive.

These three factors — health, school, distance — make up the real cost of settling in Paraguay, and they appear in no price comparison.

Paraguayan permanent residence is reputed to be simple and does not require continuous presence. It gives access to a local identity number and, after several years, opens the possibility of applying for naturalisation.

But it does not confer tax residency. A residence card obtained during a stay of a few days, without actually moving one's life, has no tax effect and cannot be relied on against the French tax authorities.

In France, Article 4 B of the French General Tax Code uses four alternative criteria: the household, the main place of stay, the professional activity and the centre of economic interests. A single one is enough to keep French tax domicile.

And there is no tax treaty between France and Paraguay: no treaty mechanism exists to resolve dual residency.

Finally, departure triggers the exit tax above more than €800,000⁵ in securities, and deferral is not automatic: it requires guarantees and a tax representative, requested at least from 90 days⁶ before the transfer.

We publish neither the exact conditions for Paraguayan permanent residence, nor the financial thresholds, nor the tax residency criteria under Paraguayan law: they do not appear in the official sources we have been able to verify.

• Someone willing to genuinely live in Paraguay, since territoriality only benefits an actual resident.
• A profile without heavy needs in healthcare or international schooling.
• An indisputable severing of ties with France, in the absence of a tax treaty.
• A project that accepts the distance and the cost of trips back to Europe.
• A departure prepared at least from 90 days⁶ in advance if the securities portfolio exceeds the thresholds.

Paraguay illustrates a very widespread confusion: equating how easy a document is to obtain with how effective it is. A scheme that is simple because it asks little produces, by design, little effect — and it is precisely because it does not require you to live there that it does not protect someone who does not.