Paraguay: permanent residency among the simplest in the world

Paraguayan permanent residency is granted on the basis of documents, without any requirement of continuous presence or productive investment, and processing is reputed to be fast. This is what has made it popular with highly mobile people.

It gives access to a Paraguayan identity number, which makes it easier to open accounts and deal with local formalities, and after several years it opens the possibility of applying for naturalisation.

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

Local-source income is taxed on a scale whose first band is set at 8%², business income tax at 10%³, and dividends paid to a resident at 8%⁴.

These levels are among the lowest in Latin America, and the territoriality that accompanies them is structural, not a special regime. On paper, the combination is hard to beat.

This simplicity reflects a deliberate migration policy choice. Paraguay is a sparsely populated country relative to its area, which has historically sought to attract residents rather than filter them. Its policy was therefore not designed as a tax export product, unlike the Caribbean schemes.

Immigration residency is not tax residency. The first is a right to stay, granted by the immigration authorities; the second determines which state has the right to tax, and it follows different criteria.

A residence card obtained during a stay of a few days, without actually moving your life, therefore has no tax effect. It cannot be relied on against the French tax authorities.

In France, article 4 B of the code général des impôts (French General Tax Code) sets out four alternative criteria: the household, the place of main stay, professional activity and the centre of economic interests. Just one is enough to keep you domiciled in France.

And there is no tax treaty between France and Paraguay. No treaty mechanism is therefore available to resolve dual residency: the only protection lies in an actual, documented severance of ties with France.

We do not publish the exact conditions for Paraguayan permanent residency, the financial thresholds, the processing times or the tax residency criteria under Paraguayan law: they do not appear in the official sources we have been able to verify.

A move to Paraguay triggers the exit tax when the securities held reach a total value of at least more than €800,000⁵, or represent at least more than 50%⁶ of a company's profits.

It applies to people who have been French tax residents for at least from 6 years⁷ in the ten years preceding the transfer.

Since Paraguay is not part of the European Economic Area, payment deferral is not automatic: it requires guarantees and a tax representative, with an application filed at least from 90 days⁸ before the transfer.

This is the timing point that hastily organised departures systematically miss, and it makes the tax immediately payable. A simple migration scheme does not make the tax side of leaving simple.

• Paraguayan territoriality is structural: this is its most solid strength.
• Permanent residency does not confer tax residency.
• There is no tax treaty between France and Paraguay.
• Exit tax deferral is not automatic and must be applied for well in advance.
• Benefiting from territoriality requires living there, which few applicants genuinely contemplate.

Paraguay illustrates better than any other destination a very widespread confusion: equating how easy a document is to obtain with how effective it is. The two are entirely unrelated. A scheme that is simple because it asks little produces, by design, few effects — and it is precisely because it does not require you to live there that it does not protect someone who does not live there.