Concept
Paraguay has long remained on the list of the world's cheapest residences with territorial taxation. The 2022 reform restructured the mechanics of obtaining status, but did not kill its attractiveness: foreign income is still not taxed here, and the entry threshold remains one of the lowest in Latin America.
2022 Reform: What Changed
Previously, status was granted almost immediately with a bank deposit of around 5,000 USD. Law 6984/2022 introduced a two-tier model: first temporary residence for 2 years, and only after that—permanent residence. At the same time, temporary status no longer requires proof of income, investment, deposit, or even opening an account in the country—this lowered the formal threshold but stretched the path to permanent residence over time.
Investor Route
For investors, there is a shortcut. Under Article 46 of the migration law, the holder of a foreign investor certificate (CIE), issued by the SUACE agency, bypasses the two-year temporary status stage and goes directly to permanent residence. The minimum investment is 70,000 USD, and it can be contributed not all at once, but over up to ten years: business, real estate within a business plan, production activities. Separately, an Investor Pass has appeared with permanent residence for a real estate investment of 200,000 USD or more.
⚙️ Two routes: standard (temporary residence for 2 years without capital requirements, then permanent residence) and investor (CIE certificate directly to permanent residence, investment from 70,000 USD with installment plan up to 10 years).
Taxes: 0% on Foreign Income
The tax system is territorial: foreign income—dividends, interest, capital gains, pensions, earnings from remote services abroad—is not taxed; local income is taxed at a flat rate of 10%. There is no minimum stay requirement: having obtained residence and a tax number (RUC), you are considered a tax resident of Paraguay, even if you are almost never in the country.
💡 This ease conceals the main risk. "Paper" tax residence in Paraguay may not sever your actual ties to your former country: the tie-breaker based on center of vital interests looks at where you actually live. A certificate is not an indulgence; for it to work, you need to actually live in Paraguay.
Who Is It Suitable For
Paraguay is an inexpensive Plan B and a second base in Latin America with a clear path to naturalization after several years of residence (timelines should be verified). It works poorly as a "remote tax certificate": precisely because of the absence of presence requirements, other countries can easily challenge such residence if you are not actually there.
💡 Paraguay's strength is cheap entry and 0% on foreign income; its weakness is that residence is so lenient that it provides tax benefits only with an actual move, not on paper.
This material is for informational purposes and is an expert overview, not individual advice. The requirements of Paraguay's migration and tax legislation should be verified for your specific situation before applying.
Key factual claims
- Previously, status was granted almost immediately with a bank deposit of around 5,000 USD.
- The tax system is territorial: foreign income—dividends, interest, capital gains, pensions, earnings from remote services abroad—is not taxed; local income is taxed at a flat rate of 10%.
- Related links: Tax Residency: 183 Days · Panama Friendly Nations Visa · Uruguay: Tax Residency · Georgia: Territorial Tax · Second Passport as an Asset · Paraguay Migration (official)