Asunción Taxes Guide

Paraguay•South America•Territorial Taxation

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.

Foreign Income

0% Tax

territorial system

Local Income

8-10%

on Paraguayan source

Freelancer

3% IRE

simplified regime

Wealth Tax

None

no inheritance tax

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.

Perfect For

→ Remote workers with foreign clients
→ Digital nomads earning abroad
→ Investors with foreign portfolios
→ Retirees with foreign pensions

✅ Foreign Income (0% Tax)

→Remote work for foreign employers/clients

→Foreign investment income (dividends, interest, capital gains)

→International consulting performed abroad

→Foreign pension and retirement distributions

→Business profits earned outside Paraguay

💼 Paraguayan Income (Taxed)

→Services provided physically within Paraguay

→Employment from Paraguayan employers

→Business activities conducted within Paraguay

→Interest/dividends from Paraguayan institutions

→Rental income from Paraguayan property

📊 Local Tax Rates

Personal Income Tax

8-10% on income above ~$12,000 annually

Corporate Income Tax

10%

VAT

10% (5% on essential goods)

Capital Gains

8-10%

Wealth/Inheritance/Gift Tax

None

Freelancers & Contractors

RUC registration and tax compliance for independent workers.

📝 RUC Registration

What Is RUC?

Registro Único de Contribuyentes—mandatory tax ID for anyone conducting business in Paraguay

Who Needs It?

→ Freelancers & independent workers
→ Anyone issuing invoices (facturas)
→ Business owners & entrepreneurs
→ Property owners conducting transactions

Registration Process

→ 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

Eligibility

Available for businesses earning less than ~$270,000 annually

Benefits

→ Simplified accounting requirements
→ No complex profit calculations needed
→ Lower compliance burden
→ Popular choice for remote workers

💳 VAT/Sales Tax

Services in Paraguay

10% VAT applies to services provided within Paraguay

Digital Services to Foreign Clients

0% VAT per General Resolution 73/2020

Monthly Obligations

→ VAT declarations by 10th of following month
→ Must file even with zero income
→ Reflect on all invoices

📄 Invoicing Requirements

Mandatory

→ Register with SET and obtain RUC
→ Use official invoice formats (facturas)
→ Keep detailed transaction records
→ File monthly declarations (even with $0 income)

Foreign Clients

Can invoice without VAT if services consumed abroad

⚠️ Penalties apply for late filings

US & European Expat Considerations

🇺🇸 US Expats

Foreign Earned Income Exclusion (FEIE)

Exclude up to $130,000 of foreign-earned income for 2025

→ Physical Presence: 330 days outside US in 365-day period

→ Bona Fide Residence: Full calendar year abroad

No Tax Treaty Between US & Paraguay

Generally advantageous—combine Paraguay territorial benefits with FEIE

US Reporting Requirements

→ FATCA (Form 8938): Foreign assets >$200k-600k

→ FBAR: Foreign accounts totaling >$10k

→ Annual tax returns: Must file regardless of FEIE

🇪🇺 European & UK Expats

Paraguay Tax Residency

Obtained by having legal residency status—no statutory minimum day requirement

Exiting Home Country Tax

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

→ May face double social security contributions

→ Paraguay periods won't count toward EU benefits

→ Consider private international insurance

Recommended Accountants for Expats

Specialized professionals experienced with international tax compliance.

Paraguay Pathways

Top Pick

Specialized in international tax residency and digital nomad services

Clients: 750+ from 41 countries

Services: RUC setup, monthly compliance, tax residency certificates

Pricing: From $25/month for monthly filings

Language: English-speaking team

Viviir Paraguay

Personalized tax consulting for foreigners

Services: Tax planning, compliance guidance, residency advice

Pricing: $97 consultation sessions

Focus: Expat taxation issues

Baker Tilly Paraguay

Global network with local expertise

Network: 43,515 people across 143 territories

Services: Accounting, audit, tax, BPO, payroll

Best for: Corporate clients, large operations

Ecovis Paraguay

International network specializing in tax consulting

Network: 16,000+ people in 90+ countries

Contact: Lic. José Cárdenas (+595 21 68 35 25)

Services: Tax planning, compliance, international structuring

Grant Thornton Paraguay

Global firm with strong local presence

Global: 76,000 people across 156 markets

Paraguay: 3 offices, 222 people, 8 partners

Services: Audit, tax compliance, advisory

Berkemeyer (BKM)

Leading tax advisory for cross-border transactions

Focus: Foreign investors, international tax planning

Services: Corporate reorganizations, estate planning, tax litigation

Best for: High-net-worth individuals

💡 Choosing an Accountant

→Digital nomads & freelancers: Paraguay Pathways (specialized, affordable)
→Larger businesses: Baker Tilly, Grant Thornton, Ecovis
→High-net-worth individuals: Berkemeyer (estate planning focus)

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