South America · Mercosur

Paraguay

Paraguay still runs a territorial tax system: Paraguayan-source personal and business income is taxed, while foreign-source income generally stays outside the IRP/IRE base. The main nomad watch-out is sourcing, not residency marketing: services physically performed in Paraguay will usually be treated as Paraguayan-source even when the client is abroad, and longer stays now run through Law 6984 temporary/permanent residence routes rather than an instant permanent-residence shortcut.

Photo by Kathe Arias on Unsplash

Suitability

•Territorial taxation: Paraguay taxes Paraguayan-source income, while foreign-source income generally stays outside IRP and IRE

•Moderate domestic rates: personal services income is taxed at 8% / 9% / 10%, capital gains at 8%, and standard IRE at 10%

•Law 6984 temporary residence is granted for up to 2 years and can be renewed for an equal period before the ordinary permanent-residence change of category

•Migraciones now expressly recognises “nómadas digitales o trabajador a distancia” as a solvency-evidence category in the permanent-residence change process

•MERCOSUR nationals have a dedicated 2-year temporary route and can later convert to permanent MERCOSUR status if they file on time

Tax

Personal Rate8% / 9% / 10% progressive on Paraguayan-source personal services income; 8% on capital gains; gross personal-services income up to PYG 80M does not trigger payment

Corporate Rate10% (IRE — Impuesto a la Renta Empresarial)

Tax SystemTerritorial system — Paraguayan-source income is taxed; foreign-source income generally stays outside the IRP/IRE base

Pillar Two

P2: UNVERIFIED

UNABLE TO VERIFYPillar Two adoption not confirmed in reviewed primary government materials as of 2026-04-20.

Paraguay is attractive only if your income is genuinely foreign-source. The core sourcing rule still taxes income from activities carried out in Paraguay, so remote services physically performed in Paraguay should generally be expected to fall into IRP even if the client is abroad. The territorial upside mainly protects income earned from activities performed outside Paraguay.

High-volatility checks

Territorial sourcing, IRP/IRE rates, IDU rates, and Pillar Two statusLast checked2026-04-20

Paraguay is often marketed as a simple zero-tax territorial base, but the real risk is sourcing: income from activities carried out in Paraguay can still be domestic-source, while distributed-profit and Pillar Two claims also drift easily across stale summaries.

DNIT — Impuesto a la Renta Personal (IRP)·DNIT — Impuesto a la Renta Empresarial (IRE)·DNIT — Impuesto a los Dividendos y a las Utilidades (IDU)·PwC Tax Summaries — Paraguay — Individual income tax·PwC Tax Summaries — Paraguay — Corporate income tax·PwC Pillar Two Country Tracker (2026)

· VERIFIED: 2026-04-20

Residency

PwC currently states that Paraguayan tax residence arises when an individual spends more than 120 days in a year in the country. That tax answer is separate from immigration status: general long-stay residence now runs through Law 6984 temporary residence first and only later to permanent residence, while MERCOSUR nationals have their own temporary/permanent track. Foreign-source income generally stays outside the Paraguayan tax base even once tax residence exists, but income from activities carried out in Paraguay does not.

Residency TestROUTE & STATUS SPECIFIC

Common Routes

•Temporary residence under Law 6984/2022: for foreigners intending to establish themselves and pursue lawful activity in Paraguay; granted for up to 2 years, renewable for an equal period, and currently priced at Gs. 2,787,550.
•Permanent residence (change of category from temporary): the ordinary route opens only after temporary residence; file within the 3 months before temporary-card expiry or up to 1 month after expiry with the applicable fine. The residence is indefinite, while the card renews every 10 years.
•Permanent-change solvency evidence now expressly includes “nómadas digitales o trabajador a distancia”: Migraciones asks for a work certificate stating the income earned, legalised / notarised / apostilled as applicable and translated into Spanish.
•MERCOSUR route: citizens of Argentina, Brazil, Uruguay, Bolivia, Chile, Peru, Colombia, and Ecuador can use a dedicated temporary MERCOSUR residence valid for 2 years and currently priced at Gs. 2,230,040.
•Transitory-stay extension: foreigners admitted with transitory stay can request one extension of up to 90 days; this prolongs stay without turning it into residence status.

High-volatility checks

120-day tax residence versus Law 6984 and MERCOSUR residence routesLast checked2026-04-20

The 120-day rule is a tax-residence statement from the reviewed PwC summary, while lawful long-stay immigration status now runs through separate temporary, permanent, and MERCOSUR pathways that should not be collapsed into one universal badge.

Temporary/permanent filing windows, transitory-stay extensions, and current Migraciones feesLast checked2026-04-20

Paraguay’s residence workflow changed materially under Law 6984: timing windows, solvency evidence, and fee tables now sit on live Migraciones pages, so recycled older “easy instant residency” copy is especially risky.

PwC Tax Summaries — Paraguay — Individual residence·Dirección Nacional de Migraciones — Residencia Temporal establecida por la Ley N° 6984/2022·Dirección Nacional de Migraciones — Residencia Permanente para el cambio de categoría de residencia temporal·Dirección Nacional de Migraciones — Residencia Temporaria para extranjeros de los países suscriptos al Acuerdo de Residencia del MERCOSUR·Dirección Nacional de Migraciones — Prórroga de Permanencia Transitoria·Dirección Nacional de Migraciones — Aranceles Migratorios

· VERIFIED: 2026-04-20

Cost

Overallbudget (single person ~PYG 7.1M/month ≈ USD 1,000–1,100 excluding rent; with rent USD 1,300–1,500 total)

Housinglow (PYG 1.95M–3.26M/month ≈ USD 300–500 for 1-bedroom city centre; PYG 1.47M–1.95M ≈ USD 230–300 outside centre)

CoworkingUSD 60–150/month for a dedicated desk in Asunción

Lifestyle

ClimateSubtropical — hot, humid summers (35–40 °C Dec–Mar); mild winters (8–20 °C Jun–Aug); distinct wet and dry seasons

TimezonePYT (UTC−4) / PYST (UTC−3) in summer

LanguageSpanish and Guaraní (both official); English not widely spoken; Spanish fluency greatly aids daily life

InternetModerate — fibre available in Asunción; mobile coverage adequate in cities; rural areas significantly limited

Family FitModerate — international schooling options limited and mostly in Asunción; private healthcare adequate in the capital; strong family culture and low crime in residential areas

Cautions

■COMPLEXITY

Territorial does not mean “work from Paraguay tax-free.” The reviewed tax materials still treat income from activities carried out in Paraguay as Paraguayan-source, so remote services physically performed in Paraguay should generally be expected to fall into IRP even when the client is abroad.

⚠ DAY-COUNT: PwC currently frames Paraguayan tax residence as more than 120 days in a year, but immigration residence follows separate Law 6984 or MERCOSUR routes rather than that tax threshold.
Permanent residence is no longer the old instant-settlement shortcut: the ordinary route now requires completing temporary residence first, then filing the change of category during the official pre-expiry / short post-expiry window.
The current IDU rate is not a flat 10% across the board: DNIT shows 8% for resident recipients and 15% for non-residents.
A transitory-stay extension can buy more time in Paraguay, but it remains a visitor-status tool and does not itself create residence.

Keep researching Paraguay

Use this profile as a starting point, then confirm the relevant tax, residency, and business rules with a licensed professional before you act.