Taxes in Paraguay for foreigners: the principle of territoriality

In brief: In Paraguay, only income sourced within the country itself is taxed. Foreign dividends, stock or crypto trading, and remote contracts are exempt from Paraguayan income tax (0%).

One of the reasons why people consider Paraguay is the tax principle of territoriality. Let's analyze what it means.

What is the essence of the principle

The Paraguayan tax code states: only income whose source is physically located within Paraguay is subject to taxation. If money is earned abroad, it is not subject to Paraguayan income tax.

What this means in practice

The following income is legally exempt from income tax in Paraguay (0% rate) if its source is not located in Paraguay:

• foreign dividends;
• stock and cryptocurrency trading;
• remote contracts with foreign clients.

What remains taxable

Income with a source in Paraguay is taxed under the general procedure. If you start a local business or work for local clients, obligations should be clarified with a local accountant.

Why is the RUC tax number needed

The RUC tax number is issued based on the Cédula, the identity document issued after Residencia Temporal is approved. It is required for conducting business and operations related to the tax system.

Important warning

Tax residency and obligations in your former country of residence are determined by its laws and may persist regardless of your move. Consult with a tax professional in both jurisdictions before making a decision.

Important

This material is for informational purposes only and does not constitute legal advice. Requirements and deadlines may change; please verify current rules with the Dirección Nacional de Migraciones of Paraguay (migraciones.gov.py).