Tax optimization through Paraguay: how to legally pay zero tax on foreign income in 2025

Paraguay's territorial principle of taxation

The defining feature of Paraguay's tax system is that only income from sources inside the country is taxable. In practice this means that income earned abroad is not taxed at all - neither for individuals nor for companies.

The principle is enshrined in Paraguay's Tax Code (Ley 6380/19), and it is precisely what makes the country such an attractive jurisdiction for international tax planning.

How to become a Paraguayan tax resident

To take advantage of tax optimization in Paraguay legally, a few conditions have to be met.

1. Obtain permanent residency or citizenship

• With permanent residency, you can become a tax resident by spending at least 183 days a year in the country.
• With Paraguayan citizenship, no physical presence is required. You can use the passport and a local structure to register a business or open bank accounts.

2. Not be a tax resident of any other country

If you do not run a business or spend more than 183 days in another jurisdiction, you can fall entirely outside the global taxation net. It also means you stay out of CRS - the automatic exchange of financial account information.

3. Open a Paraguayan bank account (if needed)

Confirming tax residency calls for:

• an account with a Paraguayan bank;
• documents from the tax authority: a RUC (tax identification number) and a Constancia de Residencia Fiscal (certificate of tax residency).

A worked example of tax optimization through Paraguay

Suppose you earn income through a company in Hong Kong or a US LLC, while personally holding Paraguayan citizenship and no tax residency anywhere else. In that case:

• your personal income is not taxed;
• you can use a personal account without the risk of automatic CRS reporting - provided the bank is located in Paraguay;
• you remain outside the reach of global taxation.

Other ways to use the Paraguayan tax system

To broaden the planning options, several combined structures are commonly used:

• a sole proprietorship in Paraguay - if you need a local business, taxation starts at 10% of profit;
• hybrid strategies - for example, living in Argentina or Brazil while keeping the tax base in Paraguay;
• an individual with Paraguayan residency who lives in countries outside the CRS system, such as Georgia or Serbia.

Potential risks and limitations

Although tax optimization through Paraguay is legal and effective, a number of constraints are worth keeping in mind:

• if you physically live in another country for more than 183 days, that country has the right to challenge your tax residency;
• Paraguay is formally part of CRS, but many banks are not connected to the system, so information exchange works poorly in practice;
• you need a solid legal footing - permanent residency or citizenship, tax documents, and bank accounts.

Paraguay tax rates in 2026

• personal income tax on employment and services - 8% to 10% depending on the amount;
• tax on Paraguayan capital income, such as rent or the sale of property and shares - 8%;
• corporate income tax - 10%;
• dividend tax - 8% for residents and 15% for non-residents, withheld by the company on payment;
• VAT - 10%, with 5% on certain goods such as basic foodstuffs and medicines.

Interest on deposits in Paraguayan banks is exempt from personal income tax. More on rates and payment rules on the Paraguay taxes page.

Tax residence certificate: documents required

The certificate confirming Paraguayan tax residence is issued by Paraguay's national tax authority. The procedure is set by General Resolution No. 65 of 17 September 2020. An individual needs:

• a valid Paraguayan identity card;
• a tax number and no outstanding taxes or filings, if you are already registered as a taxpayer;
• a migration record of entries and exits for the year the certificate is requested for.

The certificate confirms residence for a specific tax year. If approved, it is issued within 10 business days. You present it to banks, to the tax authority of your former country and to tax authorities of countries that have a double tax treaty with Paraguay.

How your former country sees the move: the Russian example

A Paraguayan certificate does not by itself release you from tax in the country you left. Russia treats as tax resident anyone who spends 183 days or more in the country within 12 consecutive months and taxes their worldwide income. Since 2025 the resident scale runs from 13% to 22% depending on income. That is why counting days matters in the year of the move. If you spent fewer than 183 days in Russia, Russia taxes only your Russian-source income, and foreign income falls outside its reach. Most countries use similar day-count rules.

Step by step

1. Obtain a temporary residence permit or go straight to permanent residence in Paraguay and get an identity card.
2. Register with the tax authority and get a tax number.
3. Open an account with a Paraguayan bank.
4. Keep track of your days in each country and request a record of entries and exits from the migration service.
5. Apply for the tax residence certificate and notify your banks of your change of residence.

Murblz handles the whole path, from the residence permit and tax number to the certificate, counts your days and checks how your income will be taxed in your former country. The first consultation is free.

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