Comparison Guide

Paraguay vs Panama

Both countries offer territorial taxation and 0% foreign income tax. Here's how they compare.

🇵🇾

Paraguay

Timeline60-120 days
Bank DepositNot Required
Min. StayNone
Foreign Tax0%
🇵🇦

Panama

CostFrom $5,000+
Timeline3-6 months
Bank Deposit$5,000+ Required
Min. StayVaries
Foreign Tax0%

Detailed Comparison

Factor Paraguay Panama
Residency Cost $2,290-4,495 $5,000-7,000+
Investment Required None $200,000
Timeline 60-90 days 3-6 months (2-yr provisional first)
Minimum Stay Once per year Varies by program
Path to Citizenship 3 years 5 years
Foreign Income Tax 0% 0%
Local Income Tax 10% flat Up to 25% progressive
Currency Guaraní (USD accepted) US Dollar
Work Permit Included Included with FNV
Monthly Living Cost $1,500-2,500 $3,500-5,000

Panama's 2021 Changes: What Happened?

Panama Friendly Nations Visa Is Harder Now

Since 2021, Panama requires proof of "genuine economic ties" to qualify:

  • Employment: Job offer from Panama company with 10+ local employees
  • Real Estate: $200,000 minimum property purchase
  • Bank Deposit: $200,000 CD for 3+ years

Previously: Immediate permanent residency with minimal requirements.
Now: 2-year provisional residency first, then permanent.

Cost of Living Comparison

Expense Asunción Panama City
2BR Apartment (nice area) $400-700 $1,200-2,000
Restaurant meal (mid-range) $8-15 $15-30
Groceries (monthly) $200-350 $400-600
Private health insurance $150-300 $200-400
Domestic help $300-400 $500-700
Monthly Total (comfortable) $1,500-2,500 $3,500-5,000

Panama City costs 2x+ Asunción for a similar lifestyle.

Lifestyle: Who Wins?

Paraguay Wins If You Want:

  • ✓ Lower cost of living (50%+ cheaper)
  • ✓ No investment required for residency
  • ✓ Faster processing (60-90 days vs 3-6 months)
  • ✓ Simpler process (fewer requirements)
  • ✓ Faster citizenship path (3 vs 5 years)
  • ✓ Lower local tax rates (10% vs 25%)

Panama Wins If You Want:

  • • US Dollar economy (no currency risk)
  • • Larger international expat community
  • • Better international flight connections (hub)
  • • More developed infrastructure
  • • Familiar US chains and brands
  • • English more widely spoken

Pros & Cons

Paraguay

Pros

  • Lower cost ($2,290 vs $5,000+)
  • No bank deposit required
  • Faster processing (60-120 days)
  • No minimum stay required
  • Path to EU-strength passport

Cons

  • Less developed infrastructure
  • Smaller expat community
  • Limited international flights
  • Spanish required locally

🇵🇦 Panama

Pros

  • US Dollar economy
  • Larger expat community
  • Better infrastructure
  • More international flights
  • Banking hub

Cons

  • More expensive ($5,000+)
  • Bank deposit required
  • Longer processing time
  • Stricter compliance

Our Verdict

Paraguay is the better choice for most applicants seeking a cost-effective residency with territorial taxation. It's cheaper, faster, and requires no bank deposit. Panama makes sense if you want a USD economy, larger expat community, or plan to actually live there.

Choose Paraguay for value and simplicity. Choose Panama for lifestyle and infrastructure.

Get Started with Paraguay

FAQ

Which is cheaper: Paraguay or Panama?

Paraguay is significantly cheaper. Packages start at $2,290 vs Panama's $5,000+ for Friendly Nations. Panama also requires a bank deposit.

Which has better tax benefits?

Both have territorial tax systems with 0% foreign income tax. Paraguay has slightly lower local tax rates (10% vs Panama's 25% max).

Which is faster to obtain?

Paraguay is faster at 60-120 days. Panama's Friendly Nations takes 3-6 months, and their economic options can take longer.

Which is cheaper: Paraguay or Panama residency?

Paraguay is significantly cheaper. Total cost: $2,290-4,495 with no investment required. Panama: $5,000-7,000+ in fees PLUS $200,000 investment (real estate or bank deposit) required since 2021 reforms. Paraguay saves you $200,000+ upfront.

Which has a faster path to citizenship?

Paraguay: 3 years of permanent residency. Panama: 5 years of residency. Both require some physical presence. Paraguay's total timeline from application to citizenship can be as short as 5 years vs Panama's 7+ years.

Is Panama's Friendly Nations Visa still easy to get?

No. Since 2021, Panama requires proof of "genuine economic ties"—either employment with a local company (10+ Panamanian employees), $200,000 real estate purchase, or $200,000 bank deposit for 3 years. It's no longer the easy option it once was.

Which country has lower cost of living?

Paraguay is 50%+ cheaper. Monthly budget: Asunción $1,500-2,500 vs Panama City $3,500-5,000 for similar lifestyle. Rent alone: $400-700 in Asunción vs $1,200-2,000 in Panama City for a nice 2BR apartment.

Can I have residency in both Paraguay and Panama?

Yes. Many expats hold residency in multiple countries. Paraguay's minimal presence requirement (once per year) makes it easy to maintain alongside other residencies. This provides geographic diversification and backup options.

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