Paraguay: permanent residency still the simplest

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

Paraguayan-source income of individuals falls under a scale whose first bracket is set at 8%².

Corporate income tax is set at 10%³, and dividends distributed to a resident beneficiary are taxed at 8%⁴.

These levels are among the lowest in Latin America, and territorial taxation is their foundation. It is not a special regime that could be closed: it structures the Paraguayan tax system.

The country also has macroeconomic features rare in the region: a long-stable currency, moderate public debt and contained inflation. These factors matter more than a rate for wealth held locally, and they are rarely mentioned.

Paraguayan permanent residency is reputed to be simple and quick, and it does not require continuous presence in the country. This explains its popularity with highly mobile people.

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

But it does not, in itself, carry Paraguayan tax residency. That follows its own criteria, and a resident card obtained without actually settling is not enough to move one's tax domicile.

This is the central confusion surrounding the scheme, and it is fuelled by an abundant supply of intermediaries. Immigration residency is a right of residence; it says nothing about which state has the right to tax.

We do not publish the exact conditions of Paraguayan permanent residency, the financial thresholds, the timeframes or the tax residency criteria used in Paraguayan law: they do not appear in the official sources we were able to verify. They must be established with the Paraguayan authorities.

One last point deserves to be raised about naturalisation, often presented as the scheme's ultimate goal. It requires a period of effective residence and a judicial procedure, and it is in no way automatic at the end of that period. Offers that present it as the natural continuation of the resident card go well beyond what the law provides.

For a French national, the situation is as follows: as long as the household, the main place of stay, professional activity or the centre of economic interests remain in France, Article 4 B of the General Tax Code (code général des impôts) applies.

A Paraguayan resident card obtained during a stay of a few days, without any real move of one's life, therefore has no tax effect. It cannot be relied upon against the French tax authorities.

There is also no tax treaty between France and Paraguay, which deprives the taxpayer of any treaty mechanism for settling dual residency.

Finally, leaving for Paraguay triggers the exit tax above more than €800,000⁵ of shares, and since the country is not part of the European Economic Area, deferral requires guarantees and a tax representative, requested at least from 90 days⁶ before the transfer.

• Paraguayan territorial taxation is structural rather than a special regime: that is its main asset.
• Permanent residency is accessible, but it does not carry tax residency.
• There is no tax treaty between France and Paraguay.
• Benefiting from territorial taxation requires actually living there, which few applicants consider.
• Departure triggers the exit tax with no automatic deferral.

Paraguay is therefore a coherent destination for those who genuinely settle there, and a mirage for those who buy a resident card without leaving France. The difference between the two situations lies not in a document but in facts — a home, a family, an activity — that the tax authorities know how to check. It is the textbook case of a scheme whose simplicity is real and whose effect is nil.