Paraguay tax residency. 120 days, properly counted.

The legal tests

What makes you a Paraguay tax resident.

DNIT (Dirección Nacional de Ingresos Tributarios, formerly SET) considers you a tax resident if any of these is true in a calendar year.

1. 01

   Physical presence — 120 days

   120 days or more in Paraguay during the calendar year (Jan 1 – Dec 31), continuous or interrupted. This is the most common trigger. Days of arrival and departure count as full days.

2. 02

   Center of vital interests

   Your spouse and minor children habitually live in Paraguay, OR your main professional/business activity is here. This can override the 120-day count if your family stays.

3. 03

   Habitual abode

   Even below 120 days, if Paraguay is the country where you spend the most days in the calendar year (and no other country exceeds 120), tie-breaker rules in DTAs may treat you as Paraguay tax resident.

These are the criteria for IRP (personal income tax). Paraguay has tax treaties with Argentina, Brazil, Chile, Spain, Italy, Qatar, Taiwan, UAE, Uruguay; for citizens of those countries the treaty's tie-breaker article controls.

Timing the move

When in the year to land.

Most expats want Paraguay tax residency starting Jan 1 of a target year so they cleanly cut from their old country. The mechanics:

• Move before the 4th of September of year X to clear 120 days in year X. After Sep 4, you can't trip the threshold and remain a non-resident for that year.
• If you only need permanent residency (not tax residency), date doesn't matter — the residency certificate is independent.
• If you want to be tax-resident in year X+1 instead, land November–December of year X. You'll spend 30–60 days in year X (well below 120) and start Jan 1 of X+1 fresh.
• The MigraMóvil fast track issues residency in 5–10 days, so you can shift the calendar with little notice.

Annual filing

Even at 0%, you file.

Once you're a tax resident with a RUC (Paraguay tax ID), you file the IRP form annually. Most expats with only foreign income file a return showing US$ 0 of taxable income. The penalty for not filing is small (Gs. 220,000–880,000 ≈ US$ 30–120) but the unfiled-period gap is sometimes flagged years later.

• Fiscal year = calendar year. Filing deadline = May 31 of year+1.
• RUC needed before you file. Apply at any DNIT office; takes ~2 days, free.
• Foreign-source income: declared but not taxed (territorial rule). This is the expected pattern for most expats.
• Paraguay-source income: 8–10% IRP, progressive bracket above ~Gs. 150 million (US$ 21k) annually.
• Dividends from a Paraguay company: 8% under Investor Pass, 15% standard.

Dual residency

When two countries claim you.

Becoming Paraguay tax resident does not automatically end your old country's claim. Your home country uses its own rules — sometimes time-based, sometimes citizenship-based, sometimes the 'center of life' test.

• United States (citizenship-based)

  If you're a US citizen or green-card holder, the IRS taxes you globally regardless of where you live. Paraguay's 0% does NOT shield you from US tax. Use the Foreign Earned Income Exclusion (FEIE, US$ 132k for 2025) and the Foreign Tax Credit. Paraguay-US has a FATCA Model 1 agreement (banks report). Renouncing US citizenship is the only true exit; expensive ($2,350) and triggers exit tax above ~$2M net worth.

• United Kingdom

  UK uses the Statutory Residence Test. Spend ≤16 days in UK while a non-resident → likely safe. Maintain Paraguay 120 days + sever UK ties (close UK home access, don't keep UK 'available accommodation', limit work days). HMRC P85 form to formalize departure.

• European Union (residence-based)

  EU member states tax based on residence. Each has its own rules: Germany 183 days OR habitual abode; France 183 days OR center of economic interests; Spain 183 days OR economic ties (Beckham law alternative); Italy 183 days. Cleaner break than the US — but exit tax may apply on accrued capital gains in DE/FR/ES.

• MERCOSUR (Argentina, Brazil, Chile, Uruguay)

  Paraguay has DTAs with all of these. Tie-breaker rules apply in order: permanent home → center of vital interests → habitual abode → nationality. Move family + main bank accounts to Paraguay to win the tie-break.

Banking + reporting

What Paraguay reports back to your old country.

Paraguay is OUTSIDE the OECD's Common Reporting Standard (CRS) automatic-exchange network — a key advantage for many expats. But not zero reporting:

• No CRS automatic exchange with EU/UK/most of Asia. Your Paraguay bank balances are not auto-reported to your home tax authority.
• FATCA (US): Paraguay banks DO report US-person accounts to the IRS via the Model 1 IGA. If you keep US citizenship, your Paraguay accounts are visible to the IRS.
• Information exchange on request: Paraguay's tax treaties have exchange-on-request clauses. Routine balance reporting? No. Targeted IRS / HMRC inquiry? Yes.
• Beneficial-ownership registry: Paraguay maintains one (SEPRELAD-supervised) but it's domestic-only access — not shared with foreign tax authorities.

Exit tax from old country

What leaving your old country may cost.

• United States

  Exit tax applies on net worth ≥ US$ 2.0 M OR average tax ≥ ~US$ 200k/year for 5 years. Mark-to-market gain over US$ 866k exemption (2025). Only triggers when you renounce citizenship — not when you change residence.

• Germany

  Wegzugsbesteuerung — exit tax on shareholdings ≥1% in companies. Hits gains accrued before move, taxable on departure.

• France

  Exit tax on shareholdings >50% or value >€800k. 5-year deferral if moving within EU/EEA; outside: due immediately.

• Spain

  Exit tax on holdings of significant company stakes. Beckham regime ends; gains crystallized.

• Italy

  Exit tax on shareholdings; Italy's '7% lump-sum' alternative for retirees in southern regions may be relevant before deciding to leave.

• United Kingdom

  Generally no exit tax for individuals — the Statutory Residence Test is the only gatekeeper.

Practical checklist

Steps to bulletproof a Paraguay tax-residency move.

1. Land before Sep 4 of target year if you want to be Paraguay-resident the same year.
2. Get residency certificate (DNM) — basis for everything that follows.
3. Get cédula (national ID).
4. Apply for RUC at DNIT — 2-day process.
5. Open a Paraguay bank account (Itaú, Continental).
6. Document Paraguay address — utility bills, lease, mobile phone.
7. File annual IRP return by May 31 of year+1. Even at 0%, you need the paper trail.
8. Sever home-country ties to the extent your nationality allows. Close residence claims, file departure forms, keep travel logs.
9. Keep apostilled copies of everything for 7 years.