Moving to Paraguay 2026: Residence under the New Migration Law, Tax, Costs and Daily Life

Why Paraguay?

Paraguay lies in the heart of South America between Brazil, Argentina and Bolivia and has around 6.9 million inhabitants. The country has a long history of immigration from German-speaking countries: San Bernardino was founded by German settlers in 1881, Hohenau and other towns in the south followed, and Mennonite colonies speaking Plautdietsch and German live in the Chaco.

• ✛Residence: a comparatively simple procedure, no minimum stay during temporary residence
• ✛Tax: territorial principle for individuals, rates of 8 to 10%
• ✛Costs: much lower living costs than in Germany, Austria or Switzerland
• ✛Economy: stable currency, low public debt; investment-grade rating from Moody's since 2024

The World Bank regularly analyses the economic environment in Paraguay, including development indicators and the investment climate. How Paraguay compares with other territorial countries is shown in our article on territorial taxation.

Residence under Law 6984/2022

The migration law Ley 6984/2022 entered into force in October 2022 and replaced the old Law 978/96. The Dirección Nacional de Migraciones is responsible and publishes current requirements and fees.

Temporary residence in detail

For the Residencia Temporal, newcomers generally submit these documents:

• ✛passport with sufficient validity
• ✛birth and, if applicable, marriage certificate, apostilled and translated into Spanish
• ✛police certificate from the country of origin or residence, apostilled
• ✛Interpol certificate issued in Paraguay
• ✛proof of income or means and accommodation in Paraguay

With the residence card you apply to the police for the cédula de identidad, the Paraguayan ID. It is required for a tax number (RUC), bank accounts and many contracts. EU and Swiss citizens can enter without a visa for up to 90 days and apply locally.

The SUACE route for investors

Anyone investing around USD 70,000 or more in Paraguay through the Sistema Unificado de Apertura y Cierre de Empresas (SUACE) can apply directly for permanent residence. A business plan, evidence of source of funds and, as a rule, local job creation are required. Additional investor routes with higher amounts have been under discussion since 2026; details should be checked before any decision.

Taxes in Paraguay

The tax system is based on Law 6380/2019, in force since 2020. The tax authority is DNIT.

When is foreign income really tax-free?

For individuals the territorial principle applies: foreign salaries, dividends, pensions and gains on foreign assets fall outside IRP. What matters, however, is where the work is performed. A freelancer or consultant working from Asunción for foreign clients generally earns Paraguayan income under Paraguayan rules – even through a foreign company. How source rules work is explained in our article on territorial taxation.

Double tax treaties

Paraguay has only a few treaties, including with Chile, Uruguay, Taiwan, Qatar and the UAE. There is none with Germany, Austria or Switzerland. The KPMG country profile of Paraguay provides further information on the tax rules for individuals and companies.

Leaving Germany, Austria and Switzerland

Without a treaty there is no tie-breaker rule. Whether tax liability in the home country ends is decided solely by its own law.

• ✛Germany: an available home (section 8 AO) or a habitual abode of more than six months (section 9 AO) creates unlimited tax liability on worldwide income – regardless of residence in Paraguay.
• ✛Extended limited tax liability (section 2 AStG): anyone moving to a low-tax country such as Paraguay while keeping substantial economic interests in Germany remains subject to extended tax for up to ten years.
• ✛Exit tax (section 6 AStG): for shareholdings of 1% or more in corporations, the increase in value is taxed on departure; business assets may be subject to German exit taxation.
• ✛Switzerland and Austria: tax liability ends when residence is actually given up. Documented residence in Paraguay makes the departure robust.

Paraguay issues a tax residence certificate on application. It is important evidence but does not replace giving up the home and centre of life in your home country. The steps are explained in our article on emigrating. If you want to travel without a fixed base, the risks are covered in perpetual travel.

Banking and finance

A bank account in Paraguay generally requires the cédula and a tax number. Banks ask for evidence of source of funds and often local references. In the first months, an international account – for example a bank account in Georgia with multi-currency features – helps bridge the time until a local account is opened. The documents required are listed in our KYC checklist.

• ✛accounts in guaraní (PYG) and US dollars are common
• ✛cash still plays a big role in daily life; transfers from Europe sometimes take several days
• ✛declaration duties in your home country continue as long as you are taxable there – regardless of information exchange

What the tax office learns about foreign accounts is covered in foreign accounts and the tax office 2026.

Cost of living

A single person lives comfortably in Asunción on around USD 1,200 to 2,000 a month, a couple on USD 1,800 to 3,000. Outside the capital it is cheaper; imported goods and electronics, by contrast, are often more expensive than in Europe.

Regions at a glance

Asunción has around 500,000 inhabitants, the metro area over two million. The German Goethe School and American and British schools offer international qualifications; fees are usually between USD 400 and 1,200 a month.

Health and safety

Most expatriates use private hospitals and clinics in Asunción, which offer a good standard. According to the WHO country profile for Paraguay, care has improved, but gaps remain in rural areas. Private health insurance is essential; statutory insurance in the home country usually ends on departure.

Safety varies by region. In Asunción and Ciudad del Este the usual big-city precautions apply; the north on the Brazilian border is riskier in places. The UK government provides comprehensive travel advice on Paraguay, including on safety and local laws.

Company formation and work

A Paraguayan company (S.A., S.R.L. or the single-member EAS available since 2020) can be formed in a few weeks with local support. Costs are usually between USD 1,500 and 3,000.

• ✛10% corporate income tax (IRE) on profit, including certain foreign financial income
• ✛8% dividend tax for resident and 15% for non-resident shareholders
• ✛accounting and filing obligations with DNIT; VAT 10%
• ✛interesting sectors: agriculture and livestock, real estate, logistics, services for the Mercosur market

Anyone working online for international clients does not necessarily need a Paraguayan company. What matters is where the service is performed and where the company is managed. Foreign structures are compared in UK LLP vs Hong Kong vs EU; how quickly a foreign company becomes taxable where you live is shown in permanent representatives and CFC taxation. SWICOR handles company formation and accounting and tax in numerous jurisdictions.

Language and culture

The official languages are Spanish and Guaraní. Without Spanish, daily life outside the German-speaking communities is difficult – with authorities, doctors, contracts and in business. Private lessons cost around USD 10 to 20 an hour.

The culture is shaped by family, hospitality and personal relationships. Appointments are handled more flexibly than in German-speaking Europe, and tereré (cold mate) and asado are part of everyday life.

Checklist: to Paraguay in eight steps

1. 1Clarify tax consequences: check your home, exit tax, section 2 AStG and exit taxation
2. 2Obtain documents: birth and marriage certificates, police certificates – apostille and translate them, e.g. via documents and legalisation
3. 3Entry: visa-free for up to 90 days; secure accommodation for the first weeks
4. 4Apply for temporary residence: with Interpol certificate and proof of income
5. 5Cédula and RUC: ID from the police, tax number from DNIT
6. 6Bank account, health insurance, home: set up locally
7. 7Deregister at home: give up your home, apply for a tax residence certificate in Paraguay
8. 8Permanent residence: apply after about 21 months and observe absence rules

For local advice and support, budget USD 1,500 to 3,000 for temporary residence including fees and translations. Processing usually takes two to six months.

Conclusion

In 2026 Paraguay remains one of the most accessible emigration destinations in South America: a clear residence procedure, territorial taxation at rates of 8 to 10% and low living costs. Since Law 6984/2022, however, the route almost always leads through temporary residence, and tax benefits only arise with a clean departure, as there is no tax treaty with German-speaking countries. Anyone working from Paraguay also generally earns Paraguayan income.

SWICOR . SWISS CORPORATE SOLUTIONS supports you in planning your residency abroad, tax optimisation, the bank account and company formation – fully remote and at transparent fixed prices.

Frequently asked questions