Tax Residency Guide

How to Become a Tax Resident in Paraguay

Paraguay's territorial tax system means 0% tax on foreign-source income. Here's exactly how to establish tax residency—including the myths most guides get wrong.

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Quick Answer

To become a tax resident in Paraguay, you need to: (1) obtain legal residency and your Cédula, (2) register for a RUC with the tax authority (SET), and (3) maintain ongoing compliance. The entire process takes approximately 60-90 days. The 120-day physical presence rule is a myth—it establishes domicile, not tax residency.

See Full Process Below

0%

Foreign Income Tax

4

Step Process

~60

Days Timeline

Low

Government Fees

The 120-Day Rule is a MYTH

Many sources—including PwC—incorrectly claim you need to spend 120 days in Paraguay for tax residency. This is wrong.

Law 125/1991 Article 152 states that 120 days establishes domicile (domicilio), which is a separate legal concept from tax residency (residencia fiscal).

Tax residency requires: Cédula + RUC registration + center of vital interests proof + ongoing compliance with SET filings.

Step-by-Step

The 4-Stage Process

Follow these steps to establish your tax residency in Paraguay. Each stage builds on the previous one.

1

Apply for Temporary Residency

3-5 Days

Submit your apostilled documents to Migraciones in Asunción. This grants you permission to live in Paraguay legally.

2

Obtain Your Cédula de Identidad

~45 Days

After residency approval, apply for your Paraguayan ID card (Cédula-chip). This is processed by Identificaciones.

3

Register with SET (RUC)

5-10 Days

Register for your Registro Único del Contribuyente (RUC) with the tax authority. This is required for tax residency recognition.

4

Request Tax Residency Certificate

~10 Days

When needed for your home country, request your official Certificate of Tax Residency from SET to prove your fiscal domicile.

See Required Documents →

Understanding Each Stage

Stage 1: Temporary Residency Application

Your journey begins at Migraciones (Immigration) in Asunción. You'll submit your apostilled documents and application to receive temporary residency status.

What You'll Need:

  • ✓ Original passport + color copy of all pages
  • ✓ Apostilled birth certificate (translated to Spanish)
  • ✓ Apostilled police clearance/FBI background check (translated)
  • ✓ Apostilled marriage certificate if applicable (translated)
  • ✓ 4 passport-style photos (white background)
  • ✓ Completed Migraciones application form
  • ✓ Proof of income or financial solvency

Pro Tip: Skip the $5,000 Deposit

As of October 2024, the $5,000 bank deposit requirement has been eliminated. You no longer need to prove a minimum bank balance for residency.

Stage 2: Cédula de Identidad

After residency approval, you'll apply for your Cédula de Identidad (Paraguayan ID card) at Identificaciones. This is your official ID within Paraguay.

New Cédula-Chip Processing Time

As of October 15, 2024, Paraguay transitioned to a new chip-based ID card (Cédula-chip). Processing time is approximately 45 days—longer than the old paper-based system.

Stage 3: RUC Registration

This is the critical step most people miss. Without a RUC (Registro Único del Contribuyente), you are NOT recognized as a tax resident by Paraguay's tax authority (SET), regardless of how long you've lived in the country.

The RUC is Paraguay's taxpayer identification number. You can register online through the Marangatú portal or in person at SET offices.

Why RUC Registration is Essential:

  • ✓ Required to file tax returns (mandatory, even with zero local income)
  • ✓ Needed to obtain Tax Residency Certificate
  • ✓ Proves your tax status to your home country
  • ✓ Required for any local business activity

See our complete RUC Registration Guide →

Stage 4: Tax Residency Certificate

The Certificate of Tax Residency (Certificado de Residencia Fiscal) is an official document from SET proving your tax domicile in Paraguay. You don't always need this—but it's essential when:

  • Breaking tax ties with your home country
  • Claiming treaty benefits
  • Opening certain international bank accounts
  • Your home country's tax authority requests proof

Learn how to obtain your Tax Residency Certificate →

Proving Your Center of Vital Interests

Beyond legal registration, SET may ask you to demonstrate that Paraguay is genuinely your primary home—your "center of vital interests." This is especially important if you're claiming 0% tax on foreign income.

Evidence SET May Request:

  • ✓ Rental contract or property deed
  • ✓ Utility bills in your name (ANDE, ESSAP)
  • ✓ Local bank account statements
  • ✓ Entry/exit stamps showing regular presence
  • ✓ Local phone/internet contracts
  • ✓ Vehicle registration
  • ✓ Children enrolled in local schools

What Raises Red Flags:

  • ⚠ No local activity or invoicing
  • ⚠ Never actually visiting Paraguay
  • ⚠ Large international transfers without local presence
  • ⚠ Inconsistencies between declared and actual activity
  • ⚠ "Paper residency" with no substance
  • ⚠ Maintaining primary home elsewhere

Build Real Substance

Don't treat Paraguay as a "paper" residency. Even if you travel frequently, establish genuine ties: rent an apartment, open bank accounts, build local relationships. This protects you if SET—or your home country—ever questions your tax status.

What You'll Need

Government Requirements:

  • • Residency Application - Submit to Migraciones
  • • Cédula de Identidad - Your Paraguayan ID card
  • • RUC Registration - Tax ID with SET (free)
  • • Tax Certificate - When needed for your home country
  • • Apostilled Documents - From your home country

Government fees are minimal. Contact us for current fee schedules.

Optional Professional Services:

  • Gestor (Facilitator): Handles paperwork and office visits
  • Immigration Lawyer: Full legal representation
  • Accountant: RUC registration and initial filings

Ongoing Obligations

Becoming a tax resident is just the beginning. To maintain your status and the 0% foreign income benefit, you must stay compliant with SET.

Annual Requirements

  • File Tax Return (Declaración Jurada)
    Even with zero local income. Due date varies by your Cédula number.
  • Maintain Active RUC Status
    Don't let your registration lapse or be suspended.
  • Keep Records
    Document your foreign income sources for potential audits.

Presence Requirements

  • Temporary Residency
    Visit at least 1 day per year to maintain status.
  • Permanent Residency
    Visit at least 1 day every 3 years.
  • Center of Vital Interests
    More presence = stronger tax position.

Don't Skip Your Tax Returns

Filing is mandatory even if you owe nothing. Non-compliance can result in penalties, RUC suspension, and could jeopardize your tax residency status—not to mention complications if your home country investigates.

Required Documents Checklist

Before Arrival (Prepare in Your Home Country)

  • □ Birth Certificate - Apostilled and translated to Spanish
  • □ Police Clearance / FBI Check - Apostilled and translated (must be recent, typically <6 months)
  • □ Marriage Certificate - If applicable, apostilled and translated
  • □ Passport - Valid for at least 6 months + copies of all pages

In Paraguay

  • □ 4 Passport Photos - White background, recent
  • □ Proof of Address - Rental contract or utility bill
  • □ Proof of Income - Bank statements, employment letter, or business documentation
  • □ Migraciones Forms - Application forms (available at office or online)

Get Your Apostilles First

Apostilles can take weeks to obtain depending on your country. Start this process before you plan to travel to Paraguay. The apostille proves your documents are authentic for international use.
Common Questions

Frequently Asked Questions

The entire process typically takes 60-90 days from arrival, including 3-5 days for the residency application, approximately 45 days for Cédula processing (as of October 2024), and 5-10 days for RUC registration. The tax residency certificate, if needed, takes an additional 10 business days.
This is a common myth. The 120-day rule in Law 125/1991 establishes domicile, not tax residency. Tax residency requires: (1) legal residency status (Cédula), (2) RUC registration with SET, (3) proof of center of vital interests, and (4) ongoing compliance with tax filings. Even reputable sources like PwC incorrectly conflate domicile with tax residency.
No. The physical presence requirement for maintaining temporary residency is minimal—just 1 day per year. For permanent residency, it's 1 day every 3 years. However, to substantiate your center of vital interests (which SET may request), you should have real presence and ties to Paraguay.
Legal/migratory residency is permission to live in Paraguay, granted by Migraciones and evidenced by your Cédula. Tax/fiscal residency is being recognized as a taxpayer by SET, requiring RUC registration and ongoing compliance. Getting a Cédula does NOT automatically make you tax resident—you must also register with SET and demonstrate substance.
No. As of October 2024, the $5,000 bank deposit requirement has been eliminated for residency applications. This was confirmed by multiple immigration law firms and makes the process more accessible.
Yes. Even if all your income is from foreign sources (which is taxed at 0% under Paraguay's territorial system), you must file annual tax returns through the Marangatú platform. Failure to file can result in penalties and could jeopardize your tax residency status.
Required documents include: apostilled birth certificate, apostilled FBI background check (or equivalent), apostilled marriage certificate (if applicable), passport copies, passport-style photos, completed application forms, and proof of address in Paraguay. All foreign documents must be apostilled and translated into Spanish by a certified translator.
You can complete the process yourself if you speak Spanish and are comfortable navigating government offices. Many expats hire a gestor (facilitator) or immigration lawyer to handle the paperwork for convenience.
RUC (Registro Único del Contribuyente) is Paraguay's taxpayer identification number, required by SET to recognize you as a tax resident. Without a RUC, you cannot file tax returns, obtain a tax residency certificate, or be officially considered a tax resident—regardless of how long you've lived in Paraguay.
SET may ask for evidence that Paraguay is your primary home. This includes: rental or property purchase contracts, utility bills in your name, local bank account activity, business relationships in Paraguay, family presence, entry/exit stamps showing regular presence, and local phone/internet contracts.
See All Tax Questions →

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