Last Updated May 27, 2022
Dateline: Ubud, Indonesia
A surprising land-locked country that few people have heard of, Paraguay is one of the world’s easiest countries to get a second passport and citizenship, and the process can take as little as three years.
As a free, peaceful country, Paraguay welcomes people from all nationalities, particularly foreign investors and entrepreneurs, to obtain a second permanent residency in Paraguay and become a tax resident.
One of the main things that foreign investors like about Paraguay is that one doesn’t have to live there physically — just one day every three years will suffice for you to maintain your residency. That, coupled with the relatively low investment requirement, puts Paraguay on many people’s radar.
The country doesn’t tax foreign-sourced income, and you can Paraguay permanent residency with a just small bank deposit.
With a Paraguayan passport, you can access the European Union (EU), the United Kingdom (UK), and Ireland — so it’s a pretty attractive passport. It’s also a part of the Mercosur trading bloc in South America, so you can also go anywhere in South America without a Paraguay visa; just an identification card will do.
Another commonly held belief is that Paraguay is one of the fastest ways to get citizenship. On paper, and in some instances, that may be true. Technically, you could become a naturalized Paraguay citizen in just three years, according to the Paraguayan National Constitution.
For one, you have to understand that in many countries, what is written in the letter of the law may not always follow in due process. What is said to be possible is not necessarily how things pan out — especially with regard to citizenship.
Some companies try to sell you a residence or citizenship program, and through the process, you find out that what you’re getting is not what was promised.
With laws that are constantly changing and bureaucratic countries’ slowed-down processes, companies will try to sell programs like it’s a one-size-fits-all.
We’re not trying to sell you the Paraguayan residence or citizenship. What we do is discuss what each program is and tailor a holistic plan that serves your needs and that of your family and business.
We sit down with government officials; we know what only works on papers and what doesn’t, and we know the loopholes of each program.
The fact that the law states that you can apply for Paraguay citizenship after three years doesn’t guarantee you anything. It means you can apply and that they must consider your application, but beyond that, nothing is certain.
You, of course, have to spend 183+ days there for each of those three years and pass an exam on language, geography, politics, and history in Spanish.
In 2022, it’s taking longer to get applications processed, more of them are getting denied without stating reasons, and lawyers aren’t providing much help.
So, why are people reaching out to us to get the Paraguay citizenship?
Why Get a Paraguay Residency and Citizenship?
A small and obscure country, Paraguay sure has its fair share of problems.
A decade ago, it was in the top 10 of the most corrupt countries in the world, according to Transparency International. Luckily, the situation has improved, and Paraguay ranks 53rd in the world currently — still a long way to go to an honest and democratic government but an impressive improvement.
Approximately 27% of Paraguay’s 7.4 million citizens live below the poverty line.
Essentially, the Paraguay government has tax policies that ensure very little tax is collected and no cash can be spent on social services and poverty-reducing initiatives.
The income tax is at a flat rate of 10%. Paraguay has no net worth tax, no capital gains tax, no inheritance or estate tax, and no capital acquisitions tax.
According to The New York Times, 85% of agricultural land is owned by 2.6% of the owners. — highly concentrated in the hands of the wealthy few. The government has pretty much-done nothing to implement any sort of agricultural land reform, but this might change soon.
What’s more, the main industry of agriculture is mostly automated, which means fewer laborers are needed.
And when you combine all of those factors, you’ve got a political and economic situation that’s a bit unstable.
But things are gonna turn around for Paraguay.
Firstly, the median age in the country is just over 26 years. You’ve got a workforce that’s young, fast-paced, and ready for employment opportunities.
Secondly, the country’s tax policies, some of that have unfavorable side-effects for the people in poverty, are also desirable to foreign investors.
All foreign-sourced income is completely tax-exempt, and the government has been pretty set on this, with promises to never reverse that policy.
And finally, the investment required to become a resident of Paraguay is really low, which makes it an affordable option for many.
Why get Permanent residency in Paraguay?
- You can apply for Paraguayan citizenship after three years.
- The process is straightforward.
- There are no restrictions on your nationality to getting the Paraguayan nationality.
- Paraguay residence requires only a $4,500 bank deposit and no minimum income if you are a citizen of one of the countries that have visa-free access to or visa on arrival for Paraguay. This includes you if you are a US, Canadian, Australian, or a New Zealand citizen.
- Another investment option is putting $7,290 into setting up a company. The applicant should provide a business plan that will show that they will spend $70,000 in 10 years.
- You do not need to relocate to Paraguay to maintain residency.
- Dual citizenship is allowed.
- Paraguay speaks Spanish, an easy language to learn.
How it works
Time to Citizenship: 3 years
Direct Citizenship by Investment: No
Minimum Investment for Residence: US$4,500
Physical Presence for Residency: One day in a three years period
Physical Presence for Citizenship: 183+ days/year
Nationalities Allowed: All
Taxes and Costs
Cost of living: $1,000+
Personal Income Tax Rate: 8-10%
Taxes Foreign Income: No
The Paraguayan Passport
Visa-Free Travel Countries: 145
Passport Ranking: 66th
Visa-Free Access or on Arrival to Europe: Yes
Visa-Free Access or on Arrival to the US: No
Why Get Paraguay citizenship?
Paraguay is a beautiful country in South America known for high levels of personal freedom, low taxes, and minimal regulation. Retirees from European nations such as Germany have been relocating to Paraguay for years. Simply put, Paraguay is a place where you can live your life as you see fit.
Once you obtain a Paraguayan permanent residence permit, you have the right to live and work there for life. You will also enjoy other benefits within South America’s Mercosur region.
It’s possible to obtain Paraguay citizenship after just three years of being a permanent resident, according to the Paraguayan constitution.
As mentioned, the process for acquiring residency is relatively easy, inexpensive, and quick. The process for acquiring Paraguay citizenship is far more involved.
You will need to spend at least 183 days of each of those three years in the country. Plus, you’ll need to pass a Spanish language exam, as well as know about the country’s geography, politics, and history.
You’ll also need to show that you have genuine ties to the country, such as real estate, a local company, or at least continuous fiscal residence. There is a lot of cheap property in Paraguay.
Those are the legalities of a Paraguayan passport, but consider the big picture for a minute.
And the bigger picture in Paraguay is one of the extended wait times as a result of poor legal representation and bureaucracy, coupled with the current climate of heightened security and tighter policies.
The actual process of getting Paraguayan citizenship can take several years longer than that attention-grabbing headline of 3 years.
Still, every country has a trade-off between the benefits of citizenship and the process it takes to achieve it. Paraguay has good things going for it (low taxes, a good passport, and its laissez-faire attitude), but it’s not the only (or cheapest, or fastest, or easiest) option to get a second citizenship.
Having a second passport as an insurance policy is definitely a great idea, but why not evaluate other options? Here’show to choose the best second passport.
In brief, if you’re using Paraguayan citizenship to benefit from lower taxes and to save money, then there are better places to spend your time jumping through hoops to get your second passport.
There are other countries that have lower or no tax, closer to where you want to be.
Plus, if you are looking to renounce your citizenship, there’s a world of options that may be even better suited to what you actually want and need, even if that “headline” cost is more expensive.
It seems easy but it really isn’t. Reach out to our team; we’ve served more than 1,000 high-net-worth individuals who were looking to diversify their passports.
How Do I Get Second Citizenship in Paraguay?
You must first obtain permanent residence by depositing $4,500 in a Paraguay bank if you are a US, Canadian, Australian, or New Zealand citizen, OR by an investment of $7,290 in setting up a company.
If you choose to set up a company, you should provide a business plan that will show that you will spend $70,000 in 10 years.
After three years as a permanent resident, you and your family may apply for naturalization.
First, you’re able to make a simple Paraguay bank deposit of 35 minimum monthly wages, which is approximately $4,500. The only condition required to take advantage of this option is that you have visa-free (or visa on arrival) access to Paraguay.
The deposit can be made in any Paraguayan bank and will usually be non-interest bearing. As soon as you’re granted residence, you can withdraw the deposit in full.
Second, you can opt to set up a company and invest Paraguayan Guarani 50,000,000 (approximately $7,290). It’s also possible to purchase land for agricultural activities.
You will also need to submit a business plan and show that you’ll spend $70,000 minimum in 10 years.
Finally, you can get residence in Paraguay if you’d like to retire in the country. If your monthly retirement income is at least PYG 7,015,600 ($1,022) per month, you can go this route. There is no age limit.
Also, note that you will benefit from import tariff exemptions on your personal effects, mostly your household items, as a retiree.
From start to finish, the process takes around 2-3 months and requires multiple week-long visits to the country.
You’ll be issued a permanent residence card that is valid for five years.
However, within six months of receiving the card, you must fly back to Paraguay to apply for a local ID card. Thereafter, you can apply and go through all the motions to become a tax resident, all in one visit.
Here are the documents you’ll need to apply:
- Criminal records
- Documents from the national police
- Birth certificate
- Certificate of marriage or divorce (if applicable)
- Medical certificate (must be issued in Paraguay)
- Affidavit (must be issued in Paraguay)
- Document issued by the National Police, Identifications Department of Paraguay
- Proof of residence in Paraguay (must be held throughout residency)
- Continuous fiscal residence
- A bank reference.
All of your documents from abroad must be officially translated to Spanish, apostilled, and notarized.
Paraguay dual citizenship is allowed, so you do not need to renounce your current citizenship to become a Paraguay citizen. Paraguay’s policy of jus soli – or “right of the soil” – means that children you give birth to while in Paraguay will obtain Paraguay citizenship at birth.
Paraguay is a land-locked country in South America, situated between Argentina, Brazil, and Bolivia.
Nearly 7.45 million people live in Paraguay, with more than two million living in the capital city of Asuncion. Other large cities include Ciudad del Este, San Lorenzo, and Luque.
Although it has a history as one of South America’s poorest countries, Paraguay has experienced amazing economic growth in the last ten years, ranking as one of the fastest-growing economies in the world. Paraguay also has a large informal economy.
Taxes and Cost of Living in Paraguay
Paraguay has a territorial tax system which means that only income and capital gains earned in Paraguay are taxed, and only at a flat rate of 10%.
Paraguay has no inheritance, no net worth tax, no capital tax, and estate tax is at a mere 1%.
It is not required to live in Paraguay in order to maintain your second residency or work toward your second passport.
Nevertheless, it is possible to live for as little as $1,000 to $1,500 per month. Local food is cheap and plentiful, and transportation is affordable.
Paraguay used to be a tax haven, and in many ways, it still is. If you want to take advantage of the tax optimization strategies that residency affords you, here’s a practical guide.
As soon as you obtain an ID proving your residency status, you will need to collect the documents proving that you’re a tax resident of Paraguay.
Then, you’ll need to navigate a bit more red tape, such as registering at the Treasury office and participating in the official course for self-employed people in order to receive your tax number Registro Único del Contribuyente (RUC).
These are both processes for which you must be physically present. Plus, they are both fully in Spanish, but you are allowed a translator to help you navigate through the paperwork.
As soon as you have your RUC, you will need to file for value-added tax (VAT) each month — we’d advise having a trusted accountant to help you with all that. Alternatively, you can do it yourself via an online tax system called Marangatu.
Even though you won’t be paying any tax on any money that you make abroad, you will be liable to pay tax on onshore income made in Paraguay.
However, exemptions do exist, i.e., the first $20,000 is tax-free during your first year in the country, $19,000 the next year, and so on.
You will easily be able to show your tax resident status to any tax authorities “at home” because by this point, you should have these official ties to Paraguay:
- Life and Residence certificate (the official proof of address in Paraguay from the police)
- Tax authority’s certificate (as monthly VAT filing is obligatory, you’ll have a new copy of this document every month)
- Landlord’s statement
- Mobile phone contract
- Bank account statements showing your local address
Paraguay Citizenship and Second Residence – FAQs
Does Paraguay Allow Dual Citizenship?
Yes, Paraguay dual citizenship is allowed, so there’s no need to renounce your former citizenship.
How do I get Paraguay citizenship?
There is no direct Paraguay citizenship by investment program, but you can get citizenship after 3 years of having a permanent residence permit in the country.
How do I obtain residency in Paraguay?
To qualify for the Paraguay residence, you only need to have $4,500 in a bank deposit if you are a US, Canadian, Australian, or New Zealand citizen with no minimum income restriction.
If you’re a citizen of these countries, you can invest $7,290 in setting up a company and provide a business plan that will show that you will spend $70,000 in 10 years.
You do not need to relocate to Paraguay to maintain the residence permit.
How to Immigrate to Paraguay?
Immigration to Paraguay is simple. Meet the minimum requirements for establishing residence, wait for three years, then apply to obtain citizenship if desired.
How to Get Permanent Residency in Paraguay?
You can easily obtain permanent residence by having $4,500 in a bank deposit if you are a US, Canadian, Australian, or New Zealand citizen with no minimum income restriction.
If you’re not a citizen of these countries, you can invest $7,290 in setting up a company and provide a business plan that will show that you will spend $70,000 in 10 years.
Does Paraguay Allow Dual Citizenship?
Paraguay allows dual nationality and even multiple nationalities restricted to international treaties, so you do not need to renounce your current citizenship.
Is Paraguay Citizenship for Me?
As we’ve already mentioned, many people choose Paraguay because the process of getting residency takes very little time and almost zero effort, not to mention it’s very affordable.
It’s most suited for people who are:
- Looking for a permanent residence permit with a minimal physical presence requirement. Requires that you spend only one day every three years in-country. This is one of the Paraguay PR benefits. Another way to look at this is that Paraguay isn’t exactly known for its livability.
- Unable to qualify for tax residence elsewhere because they travel too often. Similarly, if you need tax residence somewhere but you are constantly on the move, then Paraguay could be a good solution.
- Looking for a low-cost residence, tax residence, and citizenship. You can’t beat Paraguay’s prices, but don’t forget to consider the drawbacks.
So, if the country appeals to you, you’ll need to make some decisions as to how you’d like to invest in order to get your residence.
Is Paraguayan Citizenship Right for You?
Too many people believe Paraguay is such an easy road to a second passport that it must be a scam — a way to get one over on the “system” — which is what makes it worth a gamble to them just “to see” if they can get one.
If there’s one takeaway from this it’s that you need to be clear about your end goal; define it and work backward to achieve the best results.
If your goal is to renounce US citizenship to save $500,000 a year on taxes, then it’s likely that your time is far more valuable than any paltry savings that may or may not be made in seeking Paraguayan citizenship.
Our global entrepreneurial team knows the loopholes of the and, more importantly, knows why you’re going offshore.
We have been serving 1000+ entrepreneurs and investors for well over a decade.
And let us tell you, there are better options now that are a lot easier with far more guaranteed success to you. Compared to how much time you can spend with Paraguay, maybe there are cheaper programs in the long run in terms of your time investment.
Get in touch with the Nomad Capitalist team, and we will help you figure it all out.