Tax residency in Paraguay: full 2026 process

Paraguayan tax residency is one of the most sought-after instruments among digital nomads, founders and family offices in the region. Under the territoriality principle of the Paraguayan tax system, anyone who becomes a tax resident is taxed only on Paraguayan-source income; income generated outside the country is not subject to IRP. In this guide we review what it actually is, how to obtain it in 2026, how much time must be spent in the country and how it differs from immigration residency.

Immigration residency vs tax residency

These are two different concepts:

• Immigration residency is granted by the National Directorate of Migration. It allows you to live legally in Paraguay and obtain an ID card.
• Tax residency is recognised by the DNIT (National Directorate of Tax Revenues). It determines in which country you pay income tax.

Immigration residency is a prerequisite for tax residency, but does not replace it: you can hold a Paraguayan ID card and still be a tax resident in another country if you spend most of the year abroad.

What changed with Law 6984/2022

Before 2022 there was an informal arrangement known as "temporary tax residency" which allowed tax-residency certificates to be obtained quickly without genuine presence. Law 6984/2022 and its subsequent regulations tightened the test: today the DNIT requires objective evidence of genuine tax residency.

In current practice as of 2026, an individual is considered a Paraguayan tax resident if any of the following apply:

• Spending more than 120 days in Paraguay during a tax year (calendar year), whether continuously or in instalments.
• Having one's permanent home or the centre of one's vital interests (family, principal assets, principal economic activity) in Paraguay.
• Being a Paraguayan State official posted abroad.

If your country of origin also treats you as a tax resident, the tie-breaker rules of the double-taxation treaty (where one exists) or OECD principles may apply. That is why it is advisable to work with both a local adviser and one in your country of origin in parallel.

The territoriality principle

Becoming a Paraguayan tax resident does not automatically mean saving on taxes: it means being taxed as a resident, that is, on Paraguayan-source income. Paraguay does not tax —barring a handful of exceptions— income earned outside the country.

Examples of income not taxed for a Paraguayan tax resident:

• Salaries or fees received abroad for services rendered to non-Paraguayan clients.
• Dividends from companies incorporated outside Paraguay.
• Interest on deposits in foreign banks.
• Capital gains on the sale of financial assets not issued in Paraguay.
• Rental income from real estate located outside Paraguay.

Income that is taxed comprises Paraguayan-source income: IRP on local fees, IRE on local companies, IVA on sales, IRP-GC on the sale of Paraguayan real estate.

Step-by-step process

1. Obtain immigration residency. The first substantive step. With an apostilled birth certificate, criminal-record certificate and medical certificate you open a file at the Migration office. Timeframe: 6 to 12 months. See the detail in our visas and residency guide.
2. Obtain a Paraguayan identity card. Once the permanent residency resolution has been issued, the cédula is processed at the Identification Department of the National Police (2 to 4 weeks).
3. Register a personal RUC. Even if you have no taxable activity in Paraguay, it is good practice to register with the DNIT to consolidate your tax-resident status and be able to request certificates.
4. Document physical presence. Keep tickets, immigration stamps, rental contracts, utility bills in your name and credit-card statements showing local spending.
5. Exceed 120 days in the year. Count effective days inside the country. A partial day on entry or exit counts as a day.
6. Apply for a tax-residency certificate. Electronic form on the DNIT's Marangatu portal. The applicable fee is low (check with the DNIT for the exact amount) and the official issuance time is 10 working days.
7. Submit the certificate to the country of origin where required (banks, local tax authority, custodians).

Typical supporting documentation

• Passport with entry and exit immigration stamps.
• Rental contract or title deed in the taxpayer's name.
• Bills from ANDE (electricity), ESSAP (water), internet and gas.
• Valid Paraguayan ID card.
• Movements on Paraguayan bank accounts showing regular local spending.
• Certificates from study centres, clubs and gyms where applicable.

Practical benefits

• Taxation only on Paraguayan-source income: overseas income not taxed.
• Maximum IRP rate of 10% even on the highest Paraguayan income.
• Domestic dividends pay a final 8% (IDU); no further layers.
• A good fit with structures such as the service maquila at 1%.
• DNIT certificate accepted by regional banks and international custodians.
• No inheritance or wealth tax.

Ongoing obligations

• Annual IRP return if Paraguayan income exceeds the thresholds.
• Four-monthly advance payments where applicable.
• Update your details with the DNIT if your address or activity changes.
• Retain physical-presence documentation for at least 5 years (the tax limitation period).

Common mistakes

• Relying on the old "pay USD 550 and you have tax residency" arrangement — no longer valid after Law 6984/2022.
• Failing to count the 120 days properly: a simple spreadsheet log is advisable.
• Forgetting to deregister tax residency in the previous country where required (Argentina, Spain and Germany among others).
• Operating overseas bank accounts without renewing the tax-residency certificate annually.

Complementary issue: where to live

Most new tax residents settle in Villa Morra, Las Mercedes or Carmelitas in Asunción, drawn by the infrastructure and the supply of dollar-denominated rentals. You can browse properties in our listings or contact an adviser to arrange a viewing.

Profiles that benefit most

The Paraguayan design fits particularly well with:

• SaaS/DTC founders with global clients. They invoice from a foreign holding company (Delaware LLC or similar), have no taxable activity in Paraguay and live part of the year in Asunción.
• Remote workers and digital nomads on contracts with employers in the United States, the EU or Asia. Overseas income is not subject to IRP.
• International pensioners drawing pensions in hard currency. Paraguay does not tax overseas pensions.
• Portfolio investors. Interest and dividends from international brokerages are not taxed where there is no Paraguayan source.
• Heirs with international estates: no national inheritance tax and no wealth tax.

Profiles where closer scrutiny is warranted

• Argentinians with significant Argentinian income (rents, fees) will continue to pay tax there as long as the source is Argentinian, unless the activity is relocated.
• US citizens are taxed on the basis of citizenship; they will continue to file IRS Form 1040 and pay federal tax. Paraguay reduces the burden only on Paraguayan-source income, but the US federal liability persists.
• Residents of countries with an exit tax (Spain, Norway and, in some cases, Canada). Model the change with an adviser in the country of origin before formalising.

Renewing and losing tax residency

Tax residency is confirmed annually with a fresh DNIT certificate. If, in a given year, the person fails to reach the 120 days and does not maintain a centre of vital interests in Paraguay, they may lose the status for that year. It is advisable to:

• Keep a current rental contract or title deed in place.
• Maintain Paraguayan bank accounts with regular activity.
• Renew the certificate at the start of each calendar year.
• Document trips abroad for specific reasons (medical, family) where they reduce days of presence.

Total set-up costs

• Immigration process through to the cédula: USD 5,000 to 7,000 (see the visas and residency guide).
• Initial rental in Asunción (3 months' deposit + month in advance): USD 1,800 to 6,000 depending on the area.
• Opening a local bank account: USD 0 to 200.
• Ongoing accounting adviser: USD 80 to 250 per month.
• Tax-residency certificate: low DNIT fee (check with the DNIT).

Tax residency for companies

A company incorporated in Paraguay is, as a rule, a Paraguayan tax resident. It pays IRE at 10% on its Paraguayan-source income, and distributions to partners pay IDU at 8% (residents) or INR at 15% (non-residents). See the detail in our tax-system guide.

The DNIT certificate: practical use

The Paraguayan tax-residency certificate is the document presented to:

• Local and overseas banks for operating accounts within their jurisdiction.
• International brokers and custodians for regulatory framing.
• Foreign tax authorities, for example to secure reduced withholding on dividends where a DTA is in place.
• Migration authorities in the country of origin, when applying for de-registration as a resident.
• Commercial counterparties that require it on compliance grounds.

Impact on CRS reporting

Paraguay has signed up to the automatic exchange of information (CRS). The Paraguayan bank where the resident holds an account reports that account to the tax authority of the country in which the person is recorded as a resident. Once correctly registered as a Paraguayan tax resident, the bank reports to Paraguay (rather than to the previous country of origin), reducing friction with the tax authority of origin.

Common myths

• "The cédula is enough." No: the cédula and tax residency are two different certificates.
• "I have to buy property." No: you can rent and keep the contract as evidence.
• "The 120 days have to be continuous." No: they may be split across the calendar year.
• "I'll save 100% of my taxes." No: you pay tax on whatever generates Paraguayan-source income and continue to pay in the country of the foreign income if that country still considers you a resident.