Updated June 2026 · Two territorial-leaning LATAM residencies
Last reviewed: ·Fact-checked against official sources
🇵🇾 Paraguay vs Costa Rica 🇨🇷
a cheap no-investment passport sprint versus a lifestyle premium with a mandatory social-security tax.
Costa Rica has sold the pura vida retirement dream for forty years — biodiversity, political stability, a real expat infrastructure. Paraguay sells something narrower and blunter: the cheapest credible second residency in the Americas, no investment, no pension proof, and citizenship in 3 years instead of seven. Both tax foreign income at zero. The difference is what you pay to get in and stay legal — and Costa Rica quietly attaches a recurring cost most guides skip: the Caja.
At a glance
Parameter
🇵🇾 Paraguay
🇨🇷 Costa Rica
Edge
Residency cost (gov fees)
~US$ 460
~US$ 250–500 in fees, plus legal/translation
Paraguay
Investment / income requirement
None on the standard route
US$ 1,000/mo pension, US$ 2,500/mo or US$ 60k deposit, or US$ 150k investment
Paraguay
Time to permanent residency
Standard route to PR; Investor Pass ~5 days to CIE
Both countries run a temporary → permanent ladder, but Paraguay's standard route has no financial gate and Costa Rica's every route does.
🇵🇾 Paraguay
Standard temporary residency under Ley 6984/2022 is administrative, not judicial — handled by the Dirección Nacional de Migraciones (DNM) for roughly US$ 460 in government fees, with no investment minimum and no income proof on the standard route. There is no language test, and you receive a cédula (national ID) at the end. Investors can skip ahead via the Investor Pass / SUACE route to direct permanent residency, with a CIE issued in as little as 5 days. See residency without a background check and the Investor Pass for the two main tracks.
🇨🇷 Costa Rica
Costa Rica's residency is granted by the Dirección General de Migración y Extranjería (DGME) and every category has a financial gate. Pensionado needs a guaranteed lifetime pension of US$ 1,000/month. Rentista needs US$ 2,500/month of stable income proven for 24 months, or a US$ 60,000 deposit in a Costa Rican bank. Inversionista requires a US$ 150,000 investment (US$ 100,000 in qualifying forestry). All three are temporary residencies that convert to permanent only after 3 years. Documents must be apostilled before submission — Costa Rica, like Paraguay, is a Hague Apostille member.
How is foreign income taxed in each?
How is foreign income taxed in each?
On paper both are territorial: live off foreign income and your headline rate is zero in either country. The honest difference is the Caja and the local brackets.
🇵🇾 Paraguay
Pure territorial under Ley 6380/2019. Foreign-source income is taxed at 0%, full stop. Local personal income (IRP) is 8–10%, corporate (IRE) 10%, and IVA is 10%. Tax residency begins at 183 days. There is no compulsory social-security contribution attached to residency — a retiree living on a foreign pension can be fully legal with zero recurring tax. See taxes and tax residency.
🇨🇷 Costa Rica
Costa Rica taxes only Costa-Rican-source income — foreign pensions, dividends and capital gains are generally exempt regardless of residency, administered by the Dirección General de Tributación (Ministerio de Hacienda). Local progressive brackets reach 25%, and IVA is 13%. The catch most guides omit: enrolment in the Caja Costarricense de Seguro Social (CCSS) is a legal condition of residency, costing roughly 7–11% of your declared income — an interview sets the figure, commonly landing around US$ 90–150/month for a pensionado and US$ 280–350/month for a rentista, indefinitely. That is a real, recurring cost Paraguay does not impose.
Cost of living — what daily life costs
Cost of living — what daily life costs
Costa Rica's price premium is the whole trade. You pay more to live in a more developed, more scenic, more expat-friendly country.
🇵🇾 Paraguay
Asunción ~US$ 1,082/month all-in for a single person — rent, food, transport and utilities. It is one of the cheapest capitals in the Americas, and that low baseline is a structural part of Paraguay's pitch. See the cost of living breakdown.
🇨🇷 Costa Rica
San José metro ~US$ 1,600–2,200/month for a careful single person, and easily US$ 2,500–3,200 in the upscale expat suburbs like Escazú and Santa Ana where modern one-bedroom rents run roughly US$ 1,000–1,500. Add the mandatory Caja contribution on top. Costa Rica is roughly double Asunción's all-in cost — money you spend on beaches, rainforest, private healthcare and a mature ecosystem, not on red tape.
How long until a passport?
How long until a passport?
This is the starkest gap. Paraguay naturalises in a fraction of Costa Rica's time, and with no special status required.
🇵🇾 Paraguay
3 years of permanent residency under Constitución Art. 148–149, by naturalization — the same clock for everyone, regardless of nationality. See citizenship and the timeline.
🇨🇷 Costa Rica
7 years of legal residency for most foreigners, reduced to 5 years for nationals of Ibero-American countries and Spaniards. You must keep continuous Caja coverage, hold a clean record, and pass tests of Spanish and of Costa Rican history and civics. Even the discounted Ibero-American track is slower than Paraguay's three-year clock — and Paraguay asks for no language or civics exam at the residency stage.
Which one fits your situation?
Which one fits your situation?
Answer one question honestly: are you buying a passport timeline and a low cost base, or a place to actually live well?
🇨🇷 Pick Choose Paraguay if…
You want the cheapest credible second residency in the Americas — ~US$ 460, no investment, no pension proof, no mandatory social-security levy — and the fastest route to citizenship (3 years) with a pure 0% territorial tax and a ~US$ 1,082/month cost base. Paraguay is the optimisation play: minimum money in, maximum legal upside out. Be honest, though — there are no direct flights from most origins (expect a full travel day via Panama City, São Paulo, Lima or Buenos Aires), and a second residency does not end your home country's worldwide-tax claim if it taxes by citizenship.
🇨🇷 Pick Choose Costa Rica if…
You actually want to live there, not just hold a card. Costa Rica buys you beaches, rainforest, a stable democracy, strong private healthcare and a deep, English-friendly expat infrastructure that Paraguay simply does not have. You accept paying for it: roughly double the monthly cost, a real income or pension gate on every route, the mandatory Caja for life, and a 7-year (or 5-year) citizenship wait. If lifestyle and biodiversity are the point and the passport is secondary, Costa Rica earns its premium.
Frequently asked
Frequently asked
Is Costa Rica really tax-free for foreign income like Paraguay?
Both are territorial, so foreign-source income — a US or EU pension, foreign dividends, capital gains abroad — is generally exempt in either country. The honest difference is that Costa Rica makes Caja (CCSS) social-security enrolment a legal condition of residency, costing roughly 7–11% of your declared income indefinitely, while Paraguay imposes no such residency-linked levy. So Costa Rica's effective recurring cost is higher even though both headline foreign-income rates are 0%.
Which is cheaper to get residency in?
Paraguay, clearly. The standard Paraguay route is about US$ 460 in government fees with no investment and no income proof. Costa Rica's cheapest route, pensionado, requires a guaranteed US$ 1,000/month lifetime pension; rentista needs US$ 2,500/month or a US$ 60,000 deposit; and inversionista needs a US$ 150,000 investment. Every Costa Rican route has a financial gate that Paraguay's standard route does not.
How much faster is Paraguayan citizenship?
Paraguay naturalises after 3 years of permanent residency under Constitución Art. 148–149, with no language or civics exam at the residency stage. Costa Rica requires 7 years (or 5 for Ibero-American and Spanish nationals), plus continuous Caja coverage and passing Spanish and Costa Rican history/civics tests. Paraguay is roughly half the wait even against Costa Rica's discounted Ibero-American track.
What about the documents and getting there?
Both countries are Hague Apostille members, so foreign police certificates and other public documents must be apostilled first; for Paraguay, sworn Spanish translation happens after apostille, by a translator matriculated with Paraguay's Supreme Court, in Asunción — see apostille. On travel, Costa Rica has far better air links; Paraguay has no direct flights from most origins, so budget a full connecting day via Panama City, São Paulo, Lima or Buenos Aires.