Paraguay

Why Paraguay?

Paraguay has the most permissive tax system in Latin America for nomads: pure territorial taxation (0% on foreign-source income), permanent residency with no physical presence requirement, and low cost of living (Asunción ~$1,000/month). But the risk from Spain is high — covered at the end.

Territorial tax system

• IRP (Personal Income Tax): 0% on foreign-source income. 10% on local income above 80M PYG/year (~€10,000).
• VAT: 10% on local sales.
• IRE (Corporate Tax): 10% for Paraguayan companies.
• Dividends / capital gains: 8% if Paraguayan source, 0% if foreign.

If you work remotely billing European/American clients without a Paraguayan client, your effective IRP is 0%.

How to get residency (step by step)

After the 2022 reform, the original "$5K deposit + 90 days" regime disappeared. Two main paths now:

1. Ordinary permanent residency: apostilled documentation (passport, criminal records, medical certificate, proof of means). Filed with Migrations. ~3 months, ~$1,500-2,500 USD with an attorney.
2. SOFIPA (investors): prove real investment in Paraguay (business, real estate >$70K). Faster for certain profiles.

After getting residency: Paraguayan ID card in 1-2 weeks. Renewal every 10 years.

No minimum presence requirement: you don't have to live in Paraguay to keep residency.

Double-taxation treaties

No Spain-Paraguay treaty in force. This means:

• Hacienda isn't obligated to automatically accept your Paraguayan residency certificate.
• Risk of double taxation if Hacienda deems you a Spanish tax resident by center-of-interests.

Implications from Spain (HIGH risk)

Paraguay is one of the most-watched destinations by Hacienda for Spanish nomads. Reasons:

1. Territorial system = "tax haven" under aggressive interpretations (even though not on the official EU list).
2. No double-taxation treaty → Hacienda can ignore your Paraguayan certificate.
3. No presence requirement → easy "paper change" without real cut, which activates the center-of-economic-interests test.

For it to actually work:

• Move family (spouse/minor children) to Paraguay or another non-Spanish country.
• Close Spanish company or transfer administration to another resident.
• Close main bank accounts in Spain.
• Sell/long-term lease the main residence.
• Modelo 720 required as long as you keep Spanish assets.

Without that real cut, Paraguay only gives you papers that won't defend you in an audit.