Asunción Taxes Guide
Asunción taxes are among the most favorable for expats globally. Paraguay's territorial tax system means 0% tax on foreign-sourced income—only income earned within Paraguay is taxed at competitive 8-10% rates.
Territorial Taxation System
Tax liability determined by source of income, not residency status.
🌍 How It Works
Key Principle: Source-Based Taxation
Only income generated within Paraguay is subject to local taxation. Defined by Article 6 of Law 6380 of 2019.
- → Remote workers with foreign clients
- → Digital nomads earning abroad
- → Investors with foreign portfolios
- → Retirees with foreign pensions
✅ Foreign Income (0% Tax)
💼 Paraguayan Income (Taxed)
📊 Local Tax Rates
8-10% on income above ~$12,000 annually
10%
10% (5% on essential goods)
8-10%
None
Freelancers & Contractors
RUC registration and tax compliance for independent workers.
📝 RUC Registration
Registro Único de Contribuyentes—mandatory tax ID for anyone conducting business in Paraguay
- → Freelancers & independent workers
- → Anyone issuing invoices (facturas)
- → Business owners & entrepreneurs
- → Property owners conducting transactions
- → Online via SET (tax authority) website
- → Required: ID/passport, proof of address
- → No registration fees
- → Timeline: 3-4 business days
🎯 IRE Simple Regime (Popular)
Best for Digital Nomads & Freelancers
Pay just 3% tax on gross revenues instead of 10% on profits
Available for businesses earning less than ~$270,000 annually
- → Simplified accounting requirements
- → No complex profit calculations needed
- → Lower compliance burden
- → Popular choice for remote workers
💳 VAT/Sales Tax
10% VAT applies to services provided within Paraguay
0% VAT per General Resolution 73/2020
- → VAT declarations by 10th of following month
- → Must file even with zero income
- → Reflect on all invoices
📄 Invoicing Requirements
- → Register with SET and obtain RUC
- → Use official invoice formats (facturas)
- → Keep detailed transaction records
- → File monthly declarations (even with $0 income)
Can invoice without VAT if services consumed abroad
US & European Expat Considerations
🇺🇸 US Expats
Exclude up to $130,000 of foreign-earned income for 2025
No Tax Treaty Between US & Paraguay
Generally advantageous—combine Paraguay territorial benefits with FEIE
🇪🇺 European & UK Expats
Obtained by having legal residency status—no statutory minimum day requirement
Most EU countries follow 183-day rule when no tax treaty exists with Paraguay
Focus on properly exiting your home country's tax system
No Bilateral Social Security Agreement
EU social security coordination rules don't apply to Paraguay
Choosing an Accountant
ExpatSettle does not recommend specific accounting firms. For expat tax compliance, choose a firm experienced with international clients and your home-country obligations (FEIE/FBAR for Americans), confirm pricing and scope in writing, and ask for references before engaging. Local bar/professional registries and expat groups are good places to vet a firm.
Calculate Your Tax Savings
See exactly how much you could save by moving to Paraguay. Compare your current tax burden to 0% foreign income tax.