Moving from Paraguay Tax Guide 2026: SET Exit, IRP Income Tax & IPS Pension on Departure

KEY INSIGHT

Paraguay taxes residents at a flat 10% IRP (Impuesto a la Renta Personal) on Paraguayan-source income only — foreign income is exempt under Paraguay's territorial tax system. There is no capital gains tax on real estate at the individual level. IPS (social security) contributions create future pension rights but no lump-sum withdrawal. Paraguay is popular with foreign HNWI seeking a simple, low-tax territorial system. The PYG (Paraguayan guaraní) has been relatively stable. There is no formal exit tax.

At a glance

Key Facts

Paraguayan IRP and Territorial Tax System

Paraguay's IRP (Impuesto a la Renta Personal — Ley 6380/2019, the new tax code modernisation): flat 10% on net personal income from Paraguayan sources. Territorial scope: Paraguay taxes only Paraguayan-source income. Foreign-source income (dividends from foreign companies, foreign rental income, foreign employment income) is 0% taxable in Paraguay for residents — this is the key attraction. IRP taxable income: wages and salaries from Paraguayan employers; professional fees for services rendered in Paraguay; Paraguayan-source dividends; Paraguayan-source rental income; Paraguayan-source interest. Deductions: personal allowance of 50 minimum wages (approximately PYG 65 million/year in 2026 — verify at set.gov.py); dependant deductions; social security contributions; medical expenses (up to 10% of income). Annual IRP return: due March 31 for prior year income. Electronic filing: Marangatu system at set.gov.py. SET (Subsecretaría de Estado de Tributación — set.gov.py): Paraguay's tax authority. RUC (Registro Único de Contribuyentes): Paraguay's tax ID. Obtain RUC via SET. On departure: notify SET of change of residence to foreign address. File a final IRP return for the departure year. Non-resident withholding: 15% on Paraguayan-source dividends, interest, and royalties for non-residents. Employment income from Paraguayan employer as non-resident: IRP 10% on Paraguayan-source portion withheld by employer. Tax residency: Paraguayan tax residency if present 120+ days per year in Paraguay, or if Paraguay is the habitual residence.

IPS Pension and Social Security on Departure

IPS (Instituto de Previsión Social — ips.gov.py): Paraguay's mandatory social security system for formal sector employees. Contributions: employee 9%; employer 14%. Total: 23% of salary. IPS pension entitlement: requires minimum 750 weekly contribution weeks (approximately 15 years) to qualify for an old-age pension at age 60 (men) or 55 (women, with full career). Early withdrawal: IPS does not provide a lump-sum refund of contributions to departing residents (unlike AFP systems in Chile, Peru, or Bolivia). Contributions remain in the system as a deferred pension right. If you have fewer than 750 contribution weeks: your IPS benefits may be limited — consult IPS (ips.gov.py) for your specific entitlement summary. Alternative private pension: Paraguay's private pension insurance (Seguros Previsionales) and voluntary savings plans may have different withdrawal terms — check with your specific insurer. Bilateral social security agreements: Paraguay has bilateral agreements with Argentina, Brazil, Uruguay, Chile, and Spain — allowing totalisation of contribution periods under MERCOSUR social security protocols. If moving to Argentina or Brazil: Paraguayan IPS periods may count toward qualifying periods in those systems.

PYG Currency and International Transfers

Paraguay's guaraní (PYG) has been broadly stable compared to neighbouring Argentina. Approximate rate: PYG 7,500–8,000/USD (verify at bcp.gov.py — Banco Central del Paraguay). No capital controls: Paraguay has no foreign exchange restrictions. International transfers are freely permitted for documented legal funds. Banking system: Paraguayan banks (Banco Continental, Banco Itaú Paraguay, Banco Regional, Banco GNB Paraguay, Interfisa Banco) provide international SWIFT transfers. USD accounts: widely available in Paraguay — hold savings in USD. City East (Ciudad del Este): significant informal economy and cross-border trade with Brazil — DUAT informal transfers exist but bank wire is preferable for documented funds. Wise from Paraguay: verify current PYG support. For most transactions: USD bank account + SWIFT wire is the cleanest route. IPS pension proceeds: paid in PYG to your Paraguayan bank account — convert to USD at your bank. Property sale proceeds: often already denominated in USD in practice — verify with notary. AML requirements: origin-of-funds documentation for large international transfers — Paraguay has strengthened AML enforcement under FATF recommendations (Paraguay was on the FATF grey list 2021–2023; removed in 2023 after reforms).

Paraguayan Real Estate: No Capital Gains Tax

Paraguay does not impose a personal capital gains tax (CGT) on real estate sales at the individual level. Gains from property sales by individuals are not subject to IRP. This applies to both residents and non-residents for Paraguayan property. Business-level disposals: if property is held in a corporate structure, the IRACIS (corporate income tax at 10%) or IRPC (small business regime) may apply on company-level gains. Transfer costs: Impuesto a los Actos y Documentos (IAD) — stamp duty of approximately 1.5% of property value. Notarial fees: approximately 0.5–1.5% of value. DGRP (Dirección General de los Registros Públicos): property transfers require notarial deed and DGRP registration. IVA (VAT) on property: first sale of new construction may attract IVA (10%) — resales are generally IVA-exempt. Non-resident property ownership: fully permitted. Paraguayan property can be owned by foreign nationals without restriction. Annual property tax (Impuesto Inmobiliario): levied by local municipality on registered cadastral value — rates are generally low (1–2% of fiscal value, which is often below market value). Rental income as non-resident: 15% IRP withholding on Paraguayan-source rental income.

Introduction

Paraguay is one of South America's most tax-efficient jurisdictions for internationally mobile individuals. Its territorial tax system (combined with a 10% flat IRP rate on local income and zero tax on foreign income) makes it genuinely competitive with zero-tax jurisdictions. The country has attracted a growing community of digital nomads, Argentine and Brazilian HNWI seeking tax optimisation, and retirees attracted by Paraguay's Jubilación de Rentista visa programme. Paraguay's departure tax process is straightforward — the SET (tax authority) deregistration is administratively simple, and the IPS (social security) pension system, while not offering a lump-sum, operates predictably. This guide covers what departing Paraguayan tax residents need to know in 2026.

Section 01

Moving from Paraguay: Argentina, Brazil, and Spain

Argentina: Paraguay is a common destination for Argentines optimising their tax position — and reverse migration is also common. No Paraguay-Argentina income tax treaty (MERCOSUR has protocols but no comprehensive DTA). Argentine tax residency resumes on return to Argentina — AFIP applies full worldwide income tax. AFIP note: Paraguay is not on Argentina's paraíso fiscal list (as of 2026 — verify current list), so the 5-year anti-avoidance period does not apply to Paraguay-originated income. MERCOSUR residence: Paraguayan nationals (and Argentine nationals in Paraguay) benefit from MERCOSUR residence arrangements.

Brazil: No Paraguay-Brazil income tax treaty. Brazilian resident moving from Paraguay: Receita Federal worldwide taxation applies. Paraguay income (IRP 10%) received by Brazilian residents: declare on DIRPF; FTC under unilateral provisions. DARF tax payment. Paraguay-Brazil border zone: Ciudad del Este / Foz do Iguaçu cross-border community — specific economic zone rules may apply.

Spain: Paraguay-Spain DTA: in force. Spain taxes residents on worldwide income. Paraguayan rental income: 15% non-resident withholding; DTA credit in Spain. IPS pension received by Spanish residents: declare as pension income; DTA Article 18 may apply. Beckham Law: may apply for qualifying arrivals to Spain.

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FAQ

Frequently Asked Questions

How does Paraguay's territorial tax system work for foreign income?

Paraguay's territorial tax system means that only income sourced within Paraguay is subject to Paraguayan tax (IRP at 10%). Foreign-source income is completely exempt. Practical examples: (1) You live in Paraguay but receive dividends from your Argentine company — 0% Paraguayan IRP on those dividends. (2) You have UK rental income while resident in Paraguay — 0% Paraguayan IRP. (3) You work remotely for a US company from Paraguay — if the services are considered rendered outside Paraguay (i.e., your employer is abroad), 0% Paraguayan IRP may apply (verify the sourcing rules with a local contador). (4) You have a Paraguayan employer — 10% IRP applies on that salary. Key requirement: genuine physical presence (120+ days/year) is needed to establish Paraguayan tax residency. The territorial system only benefits you while you are a Paraguayan tax resident. On departure: once you become non-resident, only Paraguayan-source income is taxed at 15% withholding — you lose the residency-based territorial benefit, but you also no longer need to be in Paraguay.

What is Paraguay's Jubilación de Rentista visa and who qualifies?

Paraguay's Jubilación de Rentista (Retiree/Rentier Visa) is a popular immigration option for HNWI and retirees: (1) Requirements: proof of a monthly foreign income of approximately USD 1,500/month (pension, investment income, or rental income from abroad). (2) Application: via DNM (Dirección Nacional de Migraciones) with apostilled documentation. (3) Benefits: permanent residency eligible after 3 years; access to Paraguayan banking; path to citizenship after 3 years of residency (one of the fastest in the world). (4) Tax implications: as a Rentista resident, you are subject to Paraguayan IRP at 10% on Paraguayan-source income only — your qualifying foreign income (that funds the visa) is 0% taxable in Paraguay under the territorial system. (5) Cost of living: Paraguay, particularly Asunción, has a low cost of living relative to Argentina, Uruguay, or Brazil. (6) Note: Paraguay citizenship and passport has grown in appeal for visa-free travel access — verify current Paraguayan passport ranking.

Disclaimer:This guide provides general tax information for educational purposes only. Paraguayan IRP rates, SET filing requirements, IPS pension rules, and FATF compliance status are subject to change. Paraguay's territorial tax system rules should be verified at set.gov.py. Nothing in this guide constitutes tax or legal advice. Consult a licensed Paraguayan contador público or tax advisor before departing Paraguay.

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