Paraguay for Expats: All You Need to Know

Discover the allure of Paraguay for expats seeking business opportunities and a welcoming relocation experience. Learn about the easy process of obtaining a residence permit and a local passport, enjoy the warm climate, friendly locals, and a lower cost of living compared to Europe.

Paraguay is becoming more and more popular with expats as the country offers a lot of opportunities for business and does not set many barriers for those who wish to relocate here. You will not find it hard to obtain a residence permit here, and the local passport can be issued to you in just several years. Take advantage of the excellent warm climate, friendly locals, and affordable cost of living. And if you are used to European tax rates, you will be relieved to find out that they are much lower in Paraguay!

If you need more information about the country or other popular destinations for relocation, business, or tax optimization, please visit our website and take advantage of our knowledge base of articles. You can also get in touch with our experts for an initial session (for free!) to discuss your needs and find the best option in your situation that is currently available in the market. And if you need any help with obtaining a residence permit, starting a company, opening a bank account, and any other local administrative matters, we will be happy to help you at an affordable fee. Click on the link to talk to us!

Paraguay: Quick Facts

1. The state became independent in 1811.
2. This South American country borders Brazil, Bolivia, and Argentina. The word “Paraguay” is translated as “horned river” from one of the local Indian dialects.
3. The centrally-located country is rightfully considered to be the heart of South America.
4. The area of Paraguay can be compared to Germany or Sweden.
5. There is no sea access in the country, but there are many rivers, with the main one (called Rio Paraguay) dividing it into two parts: the sparsely populated Gran Chaco that takes 60% of the country, and the Paramenya region where the majority of the population lives.
6. The capital of Paraguay, Asuncion, is home to about 500,000 people, and the agglomeration has a population of about 2 million people, with 10% of them being expats (many of these are from Italy, Brazil, Portugal, Argentina, and Germany).
7. The official languages are Guarani and Spanish, and English is not widely used. If you decide to relocate here, you’d better learn basic Spanish to avoid possible challenges! 
8. Paraguay’s national currency is Guarani, and its exchange rate has not changed much over the past 20 years.
9. The country offers high-speed Internet connection, which may be important for digital nomads and other remote employees.
10. If you are interested in Paraguay’s main economic indicators, the unemployment rate is 6.3%. the inflation rate equals 5.3% a year, and GDP per capita is USD 6,265 with a 2% annual growth.
11. Agriculture and industry are the major sectors of the local economy that account for 25% of the budget.

Location and Weather

Paraguay is a tropical country located in the southern hemisphere. It means that the country boasts a warm climate, and the seasons are inverted. The average temperature in summer is 27°C, while the average winter temperature is 16°C. There are no earthquakes, eruptions, or hurricanes here. You will find a lot of areas with virgin nature where the air is fresh and clean and the water in rivers is perfectly drinkable.

Cost of Living

Paraguay scores 8th out of 112 countries where the cost of living is the most affordable. If you live in the suburbs, the monthly income of USD 1,000 – 1,500 will provide a comfortable living. The local average monthly salary is 320 US dollars. The cost of entertainment, food, and transport is about 30% lower in Paraguay than in neighboring countries.

Renting real estate is lower than in Turkey or Serbia, for instance: you will need just 500 US dollars a month to rent a 50 sq.m. centrally located apartment in the capital, and 300 US dollars will suffice for small towns. If you decide to buy an apartment, the cost of 1 sq.m. ranges between 650 and 1,500 US dollars.

Agriculture is one of the most popular businesses here, and you will need to pay about 15,000 US dollars per hectare for a plot of land suitable for such activities.

Tax Rates for Individuals

Paraguay is very popular with expats seeking to optimize their taxes as it offers low tax rates and the territorial taxation principle. You will be considered the country’s tax resident if you live in Paraguay for more than 120 days a year.

Let’s look at the tax rates:

1. The personal income tax amounts to 8% if your income does not exceed 120 minimum wages (USD 1,560) or 10% for anything above that figure.
2. Real estate is taxed at 1% of the value specified in the cadastral register.
3. Capital gains and inheritance tax equal zero.
4. The standard VAT rate is 10%.
5. The dividend tax is 5%.

As for business taxes, they are not very high, either: for instance, the corporate income tax amounts to 10%.

Paraguay: Main Disadvantages

It is important to know the downside as well to make the right decision. Drawbacks exist in any country, but they may range from critical to unimportant for you personally. Anyway, let’s take a look at them:

1. Hot weather. The country is not cooled by any sea breeze, so the temperature may rise to 32°C in winter and 40°C in summer (that’s when the locals take a siesta).
2. Healthcare system. If you are used to advanced healthcare services, you will need to address private hospitals. As for expats, health insurance is highly recommended. Public healthcare institutions often lack staff and equipment, and wealthy Paraguayans fly to Mexico to get surgical treatment, for instance.
3. Water and power cuts. Paraguay is a developing country, so its infrastructure may experience sudden failures or other accidents – and even luxury hotels are sometimes subject to power cuts! If any part of the country is hit by a thunderstorm, electricity may be cut off to prevent accidents, and rationed water supply may be introduced in case of a drought.

Interested in relocating to Paraguay? Even if you have doubts, we strongly recommend that you get in touch with our experts by clicking on the above link to discuss them. We are sure to find the way out! Feel free to explore our portal to find other exciting opportunities.