Tax Residency in Paraguay 2026: Complete Guide for Digital Nomads & Investors
How to become a tax resident in Paraguay: 120-day rule, RUC registration, territorial system (foreign income untaxed), rates, treaties and common mistakes.…
Taxes in Paraguay 2026: IVA, IRP, IRE and IDU Explained for Residents and Companies
The 10-10-10 system and the territorial principle
Paraguay’s tax system, reformed by Law 6380/19 and administered by the DNIT (the former SET), is known for its 10-10-10 structure: 10% VAT, 10% corporate income tax and a top 10% personal income tax. The second pillar is territoriality: as a general rule only Paraguayan-source income is taxed. Salaries, dividends, pensions or capital gains earned abroad by a resident are outside the scope of IRP, which is the reason so many remote workers and retirees choose the country; see our guide to the territorial tax system.
Two caveats: some foreign financial income is treated as Paraguayan-source when the capital is placed from Paraguay, and your home country may keep taxing you until you break tax residency there. Migration residency and tax residency are different things; a RUC and, in general, 120 days of presence make you a Paraguayan tax resident.
Overview of the main taxes
| Tax | Who pays | Rate | Filing |
|---|---|---|---|
| IVA (VAT) | Businesses and professionals with RUC | 10% general; 5% basic basket, medicines, rents, real estate | Monthly |
| IRP – personal services | Individuals with annual income above 80 minimum wages (~Gs. 243 million) | 8%, 9%, 10% progressive on net income | Annual (March) |
| IRP – capital income | Individuals: rents, interest, capital gains | 8% on net or presumed base | Annual |
| IRE (corporate) | Companies and businesses | 10% on net profit; SIMPLE and RESIMPLE regimes for small taxpayers | Annual + advances |
| IDU (dividends) | Shareholders | 8% residents / 15% non-residents | Withheld |
| INR (non-residents) | Foreign providers and non-resident sellers | 15% on a presumed base | Withheld |
| Impuesto inmobiliario | Property owners | 1% of fiscal value | Annual, municipal |
IVA: the tax you meet every day
VAT is 10% on most goods and services and 5% on the basic food basket, medicines, real estate sales (on a reduced base), rents of residential property and some agricultural products. Anyone who invoices in Paraguay, employee salaries excepted, needs a RUC and files VAT monthly through the DNIT’s Marangatu system, offsetting input VAT. Exports are zero-rated. For a resident who only receives foreign income, VAT is a consumer tax: you pay it in prices and never file it.
IRP: who has to file and how it is computed
The personal income tax has two baskets. Personal services income (salaries, professional fees, business activity as an individual) is taxed only once annual gross income exceeds 80 minimum wages, about Gs. 243 million or USD 31,000 in 2026; from then on you register for IRP and pay 8% on the first 50 million of net income, 9% up to 150 million and 10% above, after deducting documented personal and family expenses. Capital income (rents, interest, dividends not covered by IDU, capital gains) is taxed at a flat 8%, often on presumed bases: 30% of the price for real estate sales, for example. The annual return is filed in March for the previous year.
IRE and IDU: how companies and shareholders are taxed
Companies pay IRE at 10% on net profit, with monthly or quarterly advances. Small taxpayers can opt for the SIMPLE regime (turnover up to Gs. 2,000 million, tax on real or presumed income) or RESIMPLE (up to Gs. 80 million, fixed monthly amount). When profits are distributed, the shareholder pays the dividend tax IDU: 8% if resident, 15% if non-resident, withheld by the company. An investor who becomes a tax resident therefore faces a combined 17.2% on distributed profits, one of the arguments behind the Investor Pass. See also our EAS company formation service.
Non-residents, property and other taxes
- INR: non-residents providing services to Paraguay or selling assets here pay 15% on a presumed base, withheld by the payer.
- Impuesto inmobiliario: 1% of the fiscal value of real estate, collected by the municipality.
- ISC: selective consumption tax on fuel, alcohol, tobacco and some luxury goods, embedded in prices.
- Municipal licences (patente comercial) for businesses and vehicles.
- No wealth tax, no inheritance tax, no exit tax.
Practical calendar and common mistakes
- RUC registration through Marangatu before invoicing; tax returns are electronic.
- VAT and withholdings: monthly, according to the RUC’s last digit.
- IRP: annual return in March; keep invoices in your name to deduct expenses.
- IRE: annual return by April with advances during the year.
Common mistakes: registering for IRP when income is below the threshold, assuming that residency alone makes you a tax resident, and forgetting that foreign banks will ask for a Paraguayan tax residency certificate under CRS. We coordinate the tax side with the migration file; see how we work.
Frequently Asked Questions about Taxes in Paraguay
Does Paraguay tax foreign income?
As a general rule no: Paraguay applies a territorial system and only taxes Paraguayan-source income. Some foreign financial income placed from Paraguay and income effectively connected with local activity can be taxed.
What is the VAT rate in Paraguay?
10% general and 5% for the basic food basket, medicines, residential rents, real estate sales on a reduced base and certain agricultural products.
Who has to file the personal income tax (IRP)?
Individuals whose annual income from personal services exceeds 80 minimum wages (about Gs. 243 million in 2026), and anyone with Paraguayan-source capital income such as rents or capital gains.
How much tax does a company pay?
10% IRE on net profit. Distributed dividends pay IDU at 8% for resident shareholders and 15% for non-residents.
Is there a wealth or inheritance tax?
No. Paraguay has no wealth tax, no inheritance or gift tax and no exit tax.
When do I become a Paraguayan tax resident?
When you register a RUC and, as a rule, spend at least 120 days a year in the country. Migration residency alone does not make you a tax resident.
Want to review your case with a specialist?
Tell us your situation and we will explain the exact route, costs and timeline for your residency or company in Paraguay.
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