Paraguay vs Panama
Compare Paraguay and Panama for expats. Both have territorial taxation, but costs and residency differ. Which is better for digital nomads and retirees?
Paraguay and Panama are both popular destinations for expats seeking territorial taxation—meaning foreign income isn't taxed. But they offer very different value propositions. Panama has world-class infrastructure, the US dollar, and easier international access. Paraguay offers significantly lower costs, easier residency, and a more authentic Latin American experience. This guide helps you choose between these two territorial tax havens.
At a Glance
Paraguay Advantages
- 40-50% lower cost of living than Panama City
- No income requirements for residency
- Simpler, faster residency process
- Less bureaucratic government
- More authentic cultural experience
- Lower crime rates than Panama City
- Less expensive real estate
Panama Advantages
- US dollar economy (no currency risk)
- World-class infrastructure
- Major international hub (flights everywhere)
- Larger expat community
- Better English accessibility
- Pensionado visa for retirees
- More developed banking sector
Detailed Comparison
Taxes
TieBoth countries use territorial taxation—foreign-sourced income is not taxed. Neither has an advantage here. Local income is taxed at 10% in Paraguay and 25% in Panama.
Cost of Living
Paraguay winsParaguay is 40-50% cheaper than Panama City. Rent, food, and services cost significantly less. This is one of Paraguay's biggest advantages.
Residency
Paraguay winsParaguay has easier requirements—no income proof needed. Panama's visas require either employment, business formation, or pension income.
Citizenship
Paraguay winsSimilar timelines, but Paraguay's path is more straightforward with fewer bureaucratic hurdles.
Safety
Paraguay winsAsunción is generally safer than Panama City. Panama has higher violent crime rates, though safe areas exist in both.
Infrastructure
Panama winsPanama has significantly better infrastructure—modern roads, reliable utilities, international airport, and developed services. Paraguay is developing but less advanced.
Climate
TieBoth are hot and humid. Panama is tropical year-round; Paraguay has seasons with hot summers and mild winters. Personal preference decides.
Lifestyle
TiePanama offers more cosmopolitan, international lifestyle. Paraguay offers more authentic, local experience. Depends on what you seek.
The Verdict
Choose Paraguay for lower costs and easier residency. Choose Panama for infrastructure and international access.
Choose Paraguay If...
- Budget is a priority
- You want the easiest residency process
- You prefer authentic cultural immersion
- You don't need frequent international travel
- Lower crime rates matter to you
Choose Panama If...
- You want US dollar stability
- International travel is frequent
- You prefer established expat infrastructure
- You're a retiree with $1K+/month pension (Pensionado visa)
- Modern infrastructure is essential
Frequently Asked Questions
Do both Paraguay and Panama have 0% tax on foreign income?
Yes, both use territorial taxation. Foreign-sourced income is not taxed in either country. For digital nomads and remote workers, this means 0% income tax on earnings from outside the country.
Which is cheaper: Paraguay or Panama?
Paraguay is significantly cheaper—40-50% lower cost of living. A comfortable lifestyle in Asunción costs $1,200-1,800/month vs $2,500-3,500 in Panama City.
Which has easier residency?
Paraguay has easier residency with no income requirements. Panama's visas require employment, business formation ($5K+), or pension proof ($1K/month). Paraguay is accessible to anyone regardless of income.
Which is safer?
Asunción is generally safer than Panama City. Panama has higher violent crime rates, though both have safe neighborhoods for expats.
Which is better for retirees?
Panama if you have $1K+/month pension—the Pensionado visa offers great benefits. Paraguay if you want lower costs and simpler process without income proof.
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