How to Set Up a Company in Paraguay: The Complete 2026 Guide to SRL, SA, and EAS Formation

Paraguay has quietly become one of the most compelling jurisdictions in the world for company formation. A 10% flat corporate tax, zero tax on foreign-source income, full foreign ownership with no local partner requirements, and a digital registration system that has been transformed over the past three years. This guide covers everything you need to know — legal structures, step-by-step registration, real costs, timelines, and the tax framework — based on current 2026 regulations.

Why Paraguay Is Attracting International Entrepreneurs

The combination of factors Paraguay offers in 2026 is genuinely unusual. Very few jurisdictions globally can match all of the following simultaneously:

Territorial taxation — Paraguay only taxes income generated within its borders. Revenue earned from international clients, remote services, digital products, crypto trading, offshore investments, or foreign employment is legally subject to 0% corporate tax in Paraguay. This is not a gray area or a special regime — it is the standard operation of Paraguay’s tax code as written and enforced for decades.

The “Triple 10” tax system — Corporate Income Tax (IRE) at 10%. Value Added Tax (IVA) at 10%. Dividend Distribution Tax (IDU) at 5% (commonly described as part of a 10-10-10 framework, though the dividend rate is technically 5%). This stacks to an effective combined rate of approximately 13.5% on profits distributed to foreign shareholders — among the lowest legitimate corporate tax burdens in the world.

Full foreign ownership — 100% foreign ownership of Paraguayan companies is standard. No local partner is required. No minimum local shareholding. This applies to all three major entity types.

Mercosur market access — A registered Paraguayan company operates within the Mercosur trading bloc, providing preferential access to a combined market of approximately 260 million consumers across Argentina, Brazil, Uruguay, and Paraguay.

Recent reform wave — Law 7548/2025 replaced the previous investment incentive framework (Law 60/90) and introduced long-horizon tax exemptions for qualifying investments. A new capital markets law (Law 7572/2025) is aligning Paraguay’s financial framework with OECD standards. The EAS digital company formation system has been transformative: since its implementation in February 2021 through December 2025, over 21,891 Empresas por Acciones Simplificadas have been incorporated in Paraguay, with total investment capital exceeding USD 1 billion.

The Three Company Structures You Need to Know

Paraguay’s commercial code offers several entity types, but three are practically relevant for foreign entrepreneurs and investors:

SRL — Sociedad de Responsabilidad Limitada (Limited Liability Company)

The SRL is the most widely used structure by foreign entrepreneurs in Paraguay and the direct equivalent of a limited liability company in most common law jurisdictions. Key characteristics:

Ownership and shareholders: Requires a minimum of 2 partners and a maximum of 25. All partners hold “quotas” (membership interests), not tradable shares. Partners can be individuals or legal entities, domestic or foreign. One individual can simultaneously be a shareholder and director in an SRL.

Capital requirements: No legally mandated minimum capital requirement. In practice, amounts from USD 1,000 are accepted. Capital is defined in the bylaws and does not need to be deposited in a bank as a precondition to incorporation.

Liability: Partners are liable only up to the value of their contributed capital. Personal assets are protected beyond that limit.

Management: Administered by one or more directors (gerentes). At least one resident director is required — but this can be a locally engaged attorney serving in a nominal director capacity.

Restrictions: Cannot issue publicly tradable shares. Not suitable for public market fundraising. Share transfer between partners requires consent of the majority.

Best for: Digital businesses, service companies, consulting firms, holding structures, e-commerce, crypto entities, remote-operated businesses, and expats wanting a flexible yet established structure.

Timeline: Budget 18–21 weeks from start to finish for a complete SRL registration.

SA — Sociedad Anónima (Corporation / Joint-Stock Company)

The SA is Paraguay’s full corporate structure, equivalent to a corporation or public limited company. It is more complex and expensive to establish, but carries greater institutional weight.

Ownership and shareholders: An SA requires at least one Paraguayan shareholder. Shares are tradable and can be issued in different classes.

Capital requirements: SA corporations require a minimum capital equivalent to approximately 1,000 times the monthly minimum wage — approximately USD 368,000 as of 2026. This capital must be deposited or demonstrably backed prior to incorporation.

Regulatory burden: SA companies must register with SISA (Sistema de Información de las Sociedades Anónimas) through the Abogacía del Tesoro, adding an additional registration step and publication requirements. Annual audits may be required for larger SAs.

Best for: Large investments, real estate development companies, institutional joint ventures, businesses planning to participate in public tenders, companies with complex shareholding structures, or those planning to raise external capital.

Timeline: Generally longer than SRL or EAS — expect 6+ months for a complete SA setup.

EAS — Empresa por Acciones Simplificadas (Simplified Shares Company)

The EAS is the most significant corporate law reform in Paraguay in recent decades, introduced under Law 6480/2020 and fully operational since 2021. The EAS is the only structure that allows for a single shareholder and can be managed 100% digitally.

The critical advantage: A foreigner can own and operate an EAS with a single shareholder and without a second local or foreign partner. For solo entrepreneurs and digital nomads, this eliminates the need to find a partner or use a nominee arrangement.

Registration process: The EAS allows entrepreneurs to complete the incorporation process 100% online through the unified government portal (SUACE), eliminating the need for physical presence during the initial legal formation.

Capital requirements: No minimum capital required.

The residency requirement: The Legal Representative must have Paraguayan nationality or a Paraguayan cédula de identidad, without exception. Foreign shareholders without permanent residency must appoint a Paraguayan resident as their legal representative — typically an attorney who provides this service as part of an incorporation package.

Restrictions: EAS cannot operate in financial intermediation (regulated by the Central Bank), higher education, or NGO activities. Cannot be listed on public stock exchanges. Acquires legal personality from the moment of inscription with the Ministry of Finance, and does not require inscription in the Public Commercial Registry to operate.

Popularity: In 2025 alone, 7,618 EAS companies were incorporated in Paraguay — a 28% increase from the previous year. The 2025 cohort mobilized USD 363 million in investment capital, of which USD 45 million came from foreign investors.

Best for: Solo entrepreneurs, digital nomads, freelancers wanting a formal legal structure, crypto entities, online businesses, IP holding companies, and anyone who wants to incorporate quickly without finding a second partner.

Head-to-Head Comparison

Step-by-Step: How to Register a Company in Paraguay

For an SRL (standard process)

Step 1 — Define your structure Before engaging a notary, you need clarity on: the company’s commercial purpose (objeto social), the number of partners and their contribution percentages, proposed company name, and who will serve as the resident director.

Step 2 — Name reservation Your notary verifies name availability through the Directorate of Intellectual Property and Business Management (DIPYGE) or the General Directorate of Public Registries (DGRP). The name must be unique and cannot be confusingly similar to existing registered entities.

Step 3 — Drafting the Articles of Incorporation (Escritura Pública) The Articles of Incorporation (Estatutos Sociales) are formalized as a Public Deed signed before a licensed notary public (escribano público). This document covers the company’s purpose, management structure, capital distribution, partner contributions, and operational framework.

If you are outside Paraguay, this step can be handled via an apostilled Power of Attorney (POA) granted to your Paraguayan attorney, who signs the deed on your behalf.

Step 4 — Registration with the Public Registry The notary submits the Public Deed to the General Directorate of Public Registries (DGRP). This is the step that formally gives the SRL its legal personality. Without this registration confirmation, you cannot proceed to tax registration.

Step 5 — RUC registration The RUC (Registro Único del Contribuyente) is Paraguay’s tax identification number — equivalent to a tax ID or EIN. It is essential for invoicing, paying taxes, opening a bank account, hiring employees, and since 2025, for issuing electronic invoices through the e-Kuatia or e-Kuatia’i systems. Registration is done with the Subsecretaría de Estado de Tributación (SET) via the Marangatu online platform.

Step 6 — Electronic invoicing setup (SIFEN) SIFEN electronic invoicing has been mandatory since April 2025 for all newly registered entities. You must enroll in either the e-Kuatia’i system (suitable for low-volume invoicing) or the e-Kuatia system (for ERP integration). A digital signature from an authorized provider is required for all electronic invoices to have legal validity.

Step 7 — Corporate bank account Opening a corporate bank account requires the RUC, the registration certificate from the Public Registry, and identification documents for all shareholders and directors. Most major banks require the in-person presence of the legal representative for account opening. The main banks for foreigners in Paraguay include Banco Continental, Sudameris, GNB, and Banco Regional.

Step 8 — Municipal operating license (patente) Required for businesses with a physical location. Purely digital companies without a declared physical premises may be able to operate without a municipal license, depending on the activity declared in the RUC.

For an EAS (accelerated digital process)

The EAS process is fundamentally different — it bypasses the notary-Public Registry sequence entirely and takes place exclusively through the SUACE portal.

Your Paraguayan legal representative (who must hold a Paraguayan cédula) creates an electronic identity on the SUACE platform and submits the incorporation documents using a standard statutory form. Foreign shareholders without a Paraguayan cédula grant a special Power of Attorney to the representative; for documents issued abroad, the POA must be apostilled (or legalized at the Ministry of Foreign Affairs) and translated into Spanish if in another language.

The SUACE system notifies you by email as the application progresses through each review stage. Publication of the EAS formation is done on the SUACE website itself — no newspaper publication is required, unlike traditional structures.

Once approved, the EAS acquires legal personality immediately and proceeds to RUC registration with the SET.

Real Costs: What You Will Actually Pay

This is where most guides are vague. Here is a breakdown based on 2026 data:

Government and registration fees (hard costs)

Company registration fees in Paraguay generally amount to between 2.5 and 3.5 million guaraníes — approximately USD 350–490 in total. This includes registration with the DGRP and statutory publication fees where applicable.

EAS registration through SUACE using the standard statutory form is free — no government fee is charged for the basic incorporation process.

Legal and professional fees

This is where costs vary significantly depending on the service provider and complexity:

For a remote SRL formation via an all-inclusive service provider, expect USD 1,500–3,500 covering: notary drafting, registration, legal address, resident director appointment, RUC registration, and delivery of all corporate documents.

For an SRL with a law firm doing full legal work (custom bylaws, complex shareholding structures, multiple foreign shareholders, corporate purpose requiring careful drafting), expect USD 3,000–6,000 in legal fees alone, plus registration fees.

For a complete first-year setup of an SRL or SA through a law firm including all professional fees, notary costs, registration, accounting setup, and banking: the overall first-year setup cost generally falls within a range of USD 12,000 to 15,000. This is the high-end, full-service figure.

For an EAS through a professional service provider: USD 1,000–2,500 all-inclusive given the simplified process.

Ongoing annual costs

Accounting and tax filing services cost between 1 and 3 million guaraníes per month — approximately USD 140–420 — depending on the size and complexity of your activity. Annual business license renewal costs approximately USD 28. Mandatory annual audits for qualifying companies start from approximately USD 700.

A lean digital business operating through an EAS or SRL with low local turnover can realistically maintain full legal compliance at USD 1,500–3,000 per year in accounting and ongoing professional fees.

SUACE investor track (residency-linked)

If you are forming a company as part of the SUACE investor residency pathway, the minimum committed investment is USD 70,000 over ten years (USD 7,000 per year), with a requirement to create at least five local jobs. The total professional service fees for SUACE incorporation including company formation and residency processing range from USD 5,000 to USD 10,000.

Paraguay’s Tax Framework for Companies

Understanding Paraguay’s tax system is essential before incorporation — the specific way you structure your company and how you classify income determines your effective tax burden.

IRE — Business Income Tax (Impuesto a la Renta Empresarial)

The standard corporate tax rate in Paraguay is 10% on net income from Paraguayan sources. Foreign-source income — revenue generated outside Paraguay — is 0%. This is the core of Paraguay’s tax attractiveness for international entrepreneurs.

The critical practical detail: how income is classified matters enormously. Your accountant must correctly categorize international revenue in annual filings. Mistakes here — either over-reporting Paraguayan-source income or failing to document the foreign origin of revenue — are the most common compliance failure among newly incorporated companies.

IDU — Dividend and Profit Distribution Tax

When your company distributes profits to shareholders, a 5% withholding tax applies. Combined with the 10% corporate tax, the effective rate on distributed profits for foreign shareholders is approximately 13.5% — calculated as: (100% – 10% IRE) × 5% IDU, leaving approximately 85.5% after both taxes.

An additional 15% withholding tax applies to payments made to foreign service providers, unless a tax treaty applies. Paraguay has active double taxation treaties with Spain and Chile, and negotiations ongoing with several other jurisdictions.

IVA — Value Added Tax

Paraguay’s VAT rate is 10% on standard goods and services. A reduced rate of 5% applies to certain essential goods and services. VAT is applicable only to transactions within Paraguay. International sales of services to foreign clients are generally zero-rated.

IRP — Personal Income Tax

Individual income tax is progressive at 8–10% on Paraguayan-source personal income. Foreign-source personal income is exempt for individuals who are Paraguayan tax residents. For foreign income, the territorial principle applies equally to individuals and companies.

New compliance requirements in 2026

Since 2026, DNIT Resolution 47/2026 requires platforms and residents exceeding an activity threshold of USD 5,000 per year to report all crypto transactions in detail. This does not create a new tax on crypto activity, but signals Paraguay’s alignment with OECD reporting frameworks (CARF) and means crypto-focused entities need proper accounting from day one.

The Residency-Company Connection

One of the most strategically important aspects of Paraguay company formation is its relationship with residency. This is the intersection where most of GetResidencyParaguay.com’s clients operate.

Residency + company = complete tax optimization. The territorial tax system only eliminates double taxation on foreign income if you are both a Paraguay tax resident and operating through a Paraguayan entity. If you form a Paraguayan company but remain a tax resident of Germany, Australia, or the United States, your home country will likely tax your Paraguayan company’s distributed profits as foreign-source income under its own rules. The combination of Paraguayan residency plus Paraguayan company is what closes that gap.

Company formation as a residency pathway. Paraguay offers a dedicated investor residency track — SUACE — specifically for entrepreneurs who form a company and commit to creating local employment. Separately, the newer Investor Pass program allows residency through passive investment (USD 150,000 in tourism or USD 200,000 in real estate or securities) without the employment requirement. Both grant immediate permanent residency.

The Investor Certificate (Constancia de Inversionista). Companies formed under the SUACE pathway — with a minimum foreign investment of USD 70,000 and commitment to five local jobs — can obtain this certificate, which accelerates cédula processing and immigration procedures for the investor.

Important for US citizens: IRS Form 5471 is required for any US person owning 10% or more of a foreign corporation. The penalty is USD 10,000 per unfiled form per year with no statute of limitations. GILTI (Global Intangible Low-Taxed Income) and Subpart F income rules may also apply to an SRL’s earnings. US citizens considering Paraguayan company formation should consult a cross-border tax specialist before proceeding.

Common Mistakes to Avoid

Choosing the wrong structure for your situation. The SRL is not always the right answer. Solo founders need either a second partner (real or nominee) for an SRL, or should use an EAS. Investors with large capital deploying into Paraguay’s economy should evaluate the SA or specific investment law frameworks.

Neglecting the accounting obligation from day one. A company that is incorporated but without regular accounting activity can have its RUC suspended by the SET, which prevents the issuance of invoices and can generate retroactive fines. Keeping accounting up to date is an obligation, not optional. Many expats form a company, set it aside, and discover months later that the RUC has been suspended.

Not setting up electronic invoicing correctly. Since April 2025, electronic invoicing via the SIFEN system is mandatory for all new companies. Using paper invoices or failing to enroll in e-Kuatia is a compliance violation from day one.

Confusing the minimum investment for the Constancia de Inversionista with the EAS investment requirement. The USD 70,000 investment threshold with five local jobs is specifically for the SUACE residency investor track — it is not a requirement to form an EAS or SRL as a standalone company.

Assuming “territorial tax” means “no reporting.” Zero tax on foreign income does not mean zero reporting. You still need to file annual returns, declare foreign-source income (even though it is exempt), maintain formal accounting, and meet all SET reporting requirements. Paraguay is increasingly aligning with international transparency standards.

Special Investment Regimes Worth Knowing

Maquila regime — Companies operating under the Maquila framework pay just 1% tax on value added for manufacturing or service processes performed in Paraguay for export. Over USD 1 billion in exports have been generated under this regime. Relevant for manufacturers, assembly operations, and certain service exporters.

Law 7548/2025 (new investment incentive regime) — Replaces Law 60/90 and offers long-horizon exemptions from customs duties on capital goods, exemption from VAT on capital goods for productive use, and IDU exemption for up to 10 years for qualifying investments above USD 13 million.

Free Trade Zones — Paraguay has operational free trade zones where companies can import, store, repackage, and re-export goods with significant tariff advantages. Relevant for trading companies, logistics operators, and import/export businesses.

Summary: Which Structure Should You Choose?

Choose EAS if you are a solo entrepreneur, digital nomad, freelancer, crypto operator, or e-commerce founder who wants to incorporate quickly, with minimal capital, and 100% digital process — and you are comfortable appointing a Paraguayan legal representative.

Choose SRL if you have a business partner (or spouse) who can serve as the second shareholder, want the most widely recognized and banked structure in Paraguay, and are not in a rush. The SRL is the standard default for most foreign-owned SMEs in Paraguay.

Choose SA if you are deploying significant capital, need institutional investor appeal, require publicly tradable shares, or are building a structure that may eventually participate in public tenders or seek external financing.

Combine with residency if your goal is genuine tax optimization — the company structure alone is not sufficient without establishing Paraguay as your personal tax residence. The combination is what makes the 0% foreign income environment fully defensible to foreign tax authorities.

GetResidencyParaguay.com helps international entrepreneurs and investors navigate the full Paraguay setup — from residency application to company formation, banking, and ongoing compliance. Contact our team for a consultation.

Frequently Asked Questions

Can a foreigner own 100% of a Paraguayan company? 

Yes, for both SRL and EAS structures. 100% foreign ownership is fully legal under Paraguayan law and requires no local partner, no minimum local shareholding, and no government approval beyond standard registration. The SA structure is the only entity type where a restriction exists — it requires at least one Paraguayan national as a shareholder. For an SRL or EAS, a foreigner with a valid passport can own the entire entity.

What is the difference between an SRL and an EAS in Paraguay? 

The SRL (Sociedad de Responsabilidad Limitada) is Paraguay’s traditional limited liability company, requiring a minimum of two partners and formal registration through a notary and the Public Commercial Registry. The EAS (Empresa por Acciones Simplificadas) is a newer structure introduced in 2020 that allows a single shareholder, can be incorporated 100% online through the SUACE government portal, and acquires legal personality from the moment of inscription without Public Registry involvement. For most solo entrepreneurs and digital nomads, the EAS offers speed and simplicity advantages. For businesses wanting the most established and widely recognized structure, the SRL remains the standard.

Do I need to be in Paraguay to register a company? 

No. Both SRL and EAS can be formed remotely through an apostilled Power of Attorney granted to a Paraguayan attorney, who then handles all notary appointments, Public Registry filings, and government portal submissions on your behalf. You do not need to travel to Paraguay for incorporation. However, opening a corporate bank account typically does require the in-person presence of the legal representative in Paraguay.

How long does it take to register a company in Paraguay? 

Timeline varies significantly by structure. An EAS through the SUACE portal can theoretically be incorporated within days once all documents are submitted, though practical timelines including RUC registration and banking setup run 3–6 weeks. An SRL requires physical notary drafting and Public Registry registration; budget 18–21 weeks for the full process including banking. An SA is the most complex and typically takes 6 months or more.

How much does it cost to set up a company in Paraguay? 

Government fees for company registration are modest — approximately USD 350–490 for the hard registration costs. Professional fees vary widely. An all-inclusive remote SRL package from a service provider typically costs USD 1,500–3,500. An EAS through a professional costs USD 1,000–2,500. If you engage a Paraguayan law firm for a fully custom SRL with complex bylaws and multiple shareholders, legal fees alone may reach USD 3,000–6,000. A complete first-year setup including accounting, banking, and ongoing compliance realistically costs USD 3,000–6,000 for a lean digital business.

Do I pay tax on income from foreign clients if I have a Paraguayan company? 

Under Paraguay’s territorial tax system, income generated outside Paraguay is subject to 0% corporate tax. Revenue earned from foreign clients for services delivered outside Paraguay is foreign-source income and is excluded from Paraguay’s taxable base. The 10% corporate tax (IRE) applies only to income generated within Paraguay. This tax treatment is standard Paraguayan law and has been consistently applied for decades. The key compliance requirement: your accountant must correctly classify international revenue in your annual tax filings. Working with a Paraguay-experienced accountant is essential.

Does my Paraguayan company need an accountant or auditor? 

Yes to accounting — no to audit (in most cases). All Paraguayan companies must maintain formal books of account and file annual tax returns with the SET (Subsecretaría de Estado de Tributación) through the Marangatu platform. Annual mandatory audits are required for larger SAs; for most SRLs and EAS entities operating below the statutory threshold (approximately USD 200,000 in annual revenue for simplified regimes), formal audits are not mandatory. However, informal accounting review by a local CPA is strongly advisable for all entities regardless of size. Monthly accounting costs run approximately USD 140–420 depending on transaction volume and complexity.

Is electronic invoicing mandatory for Paraguayan companies? 

Yes. Since April 2025, electronic invoicing via Paraguay’s SIFEN system is mandatory for all newly registered entities. Companies must enroll in either the e-Kuatia’i system (suitable for low-volume operations and simpler invoicing needs) or the full e-Kuatia system (for ERP integration and higher volume). A digital signature certificate from an authorized provider is required for all electronic invoices to be legally valid. Failure to comply with SIFEN from day one of company operation constitutes a regulatory violation and can result in RUC suspension.

Can I open a Paraguayan company without Paraguay residency? 

Yes. There is no legal requirement to be a Paraguayan resident to form an SRL or EAS. You can own shares in a Paraguayan company using only your foreign passport. The mandatory requirement is a resident legal representative — a person with a Paraguayan cédula de identidad who can sign on behalf of the company before the tax authority (DNIT). This function is commonly provided by Paraguayan attorneys as part of a company formation and maintenance service. However, note that without Paraguayan residency, the tax optimization benefits of the territorial tax system may not fully apply to you personally, as your home country may still tax your Paraguayan company’s distributed profits as foreign income.

Can I form a Paraguayan company and use it to apply for Paraguay residency? 

Yes, through the SUACE investor pathway. This requires establishing a Paraguayan company (SRL, SA, or EAS), committing a minimum of USD 70,000 in investment capital over ten years (USD 7,000 annually), and creating at least five local jobs. Meeting these requirements allows you to obtain a Constancia de Inversionista (Investor Certificate), which grants access to an accelerated residency track with immediate permanent residency. The newer Investor Pass program offers an alternative route through passive investment (USD 150,000 or USD 200,000 depending on the asset class) without the employment requirement.

What bank account can my Paraguayan company use? 

The main banks that actively work with foreign-owned Paraguayan companies include Banco Continental, Sudameris, GNB (Grupo Financiero), and Banco Regional. Most require in-person presence of the legal representative for account opening — not necessarily the foreign shareholders themselves. Banks require the RUC, registered articles of incorporation, and KYC documents for shareholders and directors. Account opening timelines vary; budgeting 4–8 weeks from the start of the banking process is realistic. Companies operating in crypto, high-risk international payment flows, or with multi-jurisdictional shareholders may encounter additional compliance questions from local banks.

What is the minimum capital required to set up a company in Paraguay? 

For an SRL: no minimum capital is legally prescribed. In practice, any nominal amount (USD 1,000 or equivalent) is accepted by notaries and registrars. For an EAS: no minimum capital required. For an SA: approximately USD 368,000, equivalent to 1,000 times the monthly minimum wage. This capital must be demonstrably committed or deposited as part of the SA formation process. The SA’s capital threshold makes it impractical for most small and medium foreign investors, who gravitate toward the SRL or EAS instead.

Are there restrictions on what a Paraguayan company can do? 

For most commercial, industrial, and service activities, no special restrictions apply. EAS entities specifically cannot operate in financial intermediation (regulated by the Banco Central del Paraguay), higher education, or NGO activities. Companies wanting to operate in financial services, securities, telecommunications, mining, energy, or other regulated sectors will need sector-specific licenses in addition to standard company registration. Paraguay’s commercial law is permissive by default — restrictions are the exception rather than the rule.

How does company formation in Paraguay compare to Panama, Uruguay, or Colombia? 

Paraguay compares favorably on several dimensions. On tax rate: Paraguay’s 10% corporate rate beats Panama (25%), Uruguay (25%), and Colombia (35%). On foreign income: Paraguay’s territorial system with 0% on foreign income matches Panama and is more favorable than Uruguay (which taxes foreign income after 11 years of residency) and Colombia (which taxes worldwide income). On cost: Paraguay is among the lowest-cost jurisdictions to incorporate in the region. On time: EAS registration in Paraguay is among the fastest in Latin America. Panama offers stronger international banking access and more established offshore reputation; Uruguay offers more political stability and OECD alignment; Colombia offers a larger domestic market. Paraguay’s advantage is the combination of low tax burden, low cost, fast residency pathway, and genuinely improving infrastructure.

What happens to my home country tax obligations when I form a Paraguayan company? 

This depends entirely on your citizenship and whether you remain a tax resident in your home country. Forming a Paraguayan company without changing your personal tax residency does not reduce your home country tax obligations. The territorial tax system is only fully effective when combined with actual Paraguayan tax residency. Until you formally establish Paraguay as your tax residence (and satisfy your home country’s exit requirements), your home country may tax the profits distributed from your Paraguayan company as foreign dividend income. US citizens face additional complexity: GILTI rules may apply to undistributed profits in the Paraguayan company, and Form 5471 must be filed for any ownership stake of 10% or more. Engage a cross-border tax specialist before assuming the Paraguayan structure eliminates your existing tax obligations.

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