“How long do I need to stay in Paraguay to maintain my personal and tax residency?” This is one of the most common questions we receive from our clients, and we aim to provide clarity in this guide.
Currently, Paraguay does not have a minimum stay requirement to maintain residency rights. That’s right: you can keep your temporary or permanent residency rights without actually residing in Paraguay or even visiting the country once a year.
However, the issue of how long to stay in the country is more complex. If you miscalculate, you could end up paying taxes twice: in Paraguay and another country. We will clarify this issue in our guide, but if you need further assistance, feel free to contact our team.
Is there a minimum stay requirement in Paraguay?
Once you have obtained residency in Paraguay, you do not need to stay in the country for a certain number of days each year to maintain it. The only thing to note is that temporary residency must be renewed every 2 years, while permanent residency must be renewed every 10 years. Since these procedures must be done personally in Paraguay, you will need to be in the country when it’s time to renew your residency.
However, having the right to reside in a country is different from being recognized as a tax resident in that nation. And it’s when talking about taxes that the amount of time you spend in a country becomes very relevant.
If you plan to leave Paraguay for an extended period, it means you are living elsewhere during that time. This can lead to problems with double taxation.
There are two types of situations:
- Countries with a double taxation agreement with Paraguay – In this case, it’s sufficient to read the double taxation agreement to discover the conditions that determine whether a person should pay taxes in one country or the other.
- Countries without a double taxation agreement – In this case, each person is subject simultaneously to the laws of both countries. Usually, a person is considered a tax resident if they spend more than 183 days a year within its territory. This means that if you spend 183 days a year in a country other than Paraguay, you might have to pay taxes in both that nation and Paraguay.
That’s why, at least from a tax perspective, how long you stay in each country is important.
Practical Examples
All this is easier to understand with practical examples. Suppose an American citizen decides to take a second residence in Paraguay but lives in the United States all year round: they can continue to be a resident in Paraguay, but will be subject only to the U.S. tax system.
Consider another case of a French citizen who takes up residence in Paraguay and then decides to live 7 months a year in Paraguay and the other 5 months in France. In this case, they will be subject exclusively to Paraguayan taxation.
Also, consider a digital nomad who decides to move their business to Paraguay, take up residence, and continue to travel the world without staying in any country for more than 6 months a year. In this case, except for rare exceptions, this person will continue to pay taxes exclusively in Paraguay.
The exceptions concern American citizens, who also remain subject to the U.S. tax system. The United States applies a taxation system based on citizenship rather than residency. However, there’s a threshold of $120,000: if an American citizen earns less than this figure, they don’t have to pay even $1 in income tax to the IRS; if they earn more, they will be taxed only in Paraguay on the first $120,000 of income and in both countries for the excess amount.
Do you need help with obtaining residency in Paraguay?
If you need help obtaining residency in Paraguay, you can email us anytime. Over the years, we have helped over 300 foreign citizens obtain Paraguayan residency, start businesses in the country, and optimize their tax situation. We speak English, Spanish, Portuguese, and Italian, and respond to all inquiries within 24 hours, even on holidays.