The real advantage of Paraguay

0% tax on foreign income

In an era when governments seem more focused on emptying taxpayers' pockets than creating value, finding a stable, legal, and advantageous jurisdiction has become imperative for those who want to protect their assets. And this is where Paraguay comes into play, offering something that very few countries can boast today: pure territorial taxation and 0% tax on foreign income.

Yes, you read that right: zero taxes. But beware, it’s not magic. It’s simply an intelligent, clear, and accessible tax system, provided you know how to properly structure your tax residence.

What is territorial taxation in Paraguay?

Paraguay adopts a fully territorial tax system.

In simple terms: you only pay taxes on the income you generate within the country.

Everything you earn abroad – consulting, dividends, e-commerce, crypto, royalties, rents – is not taxed.

This makes it a concrete alternative to oppressive systems like those in Spain, France or Italy, where taxation is global: if you are a resident, you are taxed wherever you earn.

In Paraguay, however, if your money comes from abroad, the tax authorities do not care at all.

Here is what this means in practice

Are you a freelancer working online with clients in Europe? 0% taxes

Do you have a business registered in Dubai or Panama? 0% taxes

Do you earn from stock investments, dividends or crypto? 0% taxes

Do you sell products on Amazon or have an e-commerce with customers outside Paraguay? Still 0% taxes

This is the real power of the Paraguayan system, which is turning it into one of the most interesting emerging destinations in the world for those seeking legal tax optimization.

What is needed to benefit from 0%

To fully enjoy Paraguay's tax advantages, there are three fundamental conditions:

1. Obtain tax residency (not just legal residency)

Having a temporary or permanent residence is not enough. To be fiscally recognized in Paraguay, you must:

Register with the RUC (Unique Taxpayer Registry)

Open an economic activity, even minimal, such as a consulting activity or a simplified business

2. Breaking tax residency with your country of origin

Especially if you come from countries like Italy, Spain, France, or Belgium, you must clearly demonstrate that you are no longer tax resident there. How?

Not spending more than 183 days per year in your country

Not having a family that is tax resident there

Not maintaining strong economic interests in your country (e.g., operating businesses or rental properties)

3. Demonstrating that your income comes from abroad

Income must come from foreign clients, companies, or investments. If the money enters from outside Paraguay, it is not taxed. However, if you start operating inside the country, then things change.

When you pay taxes in Paraguay

The Paraguayan tax system is simple, but it is not a tax haven without rules. Here are the cases in which taxes apply:

You start a local business with Paraguayan clients → you pay 10% IRE + 10% VAT

You work for a company in Paraguay → your salary is taxed

You rent properties in Paraguay → you pay 8% on rental income

You have a company with local operations → you pay like any other local business

So, if you really want to make the most of the system, you need to operate internationally, keeping your sources of income outside Paraguay, even if you physically reside there or in other countries.