Question I've a Paraguayan residency - What're my real advantages now ?

[OffshoreResearch]

Hi All,
I'm a Paraguayan resident since 3 years and now I've submitted a demand for the local passport/citizenship.

In the past some noises moved me here with the belief this was an extraterritorial tax country (taf free for my foreign income) but this wasn't fully correct.
After having heard a couple of local tax advisors, I discovered that only income already taxed abroad will be exempted in Paraguay.

I worked a lot for my residency and I'm working to get the passport.
I've invested a lot in terms of time and money but what're the real advantages for my online activity ?
Now I'm buying/selling domain names ... but this income is taxed at 10% if carried to a Paraguayan bank.
I'll be also forced to issue an invoice for any incoming payment or the bank won't accept my funds.

Am I doing something wrong ? Or am I missing some other advantages ?
Ok the local passport is a great thing but it won't beat the advantages of my European passport ...

So I spent months of hard work hoping to have found a tax-free country while now I see I should pay a net 10% but at that point it was much easier opening an European company taxed at 10% ...

I'm collecting some feedback having still the belief I'm missing some possible advantages related to my position.
Thank you.

 

[JohnnyDoe]

Some people collect passports. You can start a new hobby.
Perhaps next time it would be better to hear tax advisors before moving.

 

[Sols]

10% tax is a lot less than most other countries. This combined with (at least previously) easy immigration and easy naturalization made Paraguay interesting for a lot of people.

But you don't go to Paraguay for zero tax, if you plan to also run a business.

The territorial tax system in Paraguay is one of the least permissive. The intent of it seems to be to tax any business activities that take place in Paraguay (albeit at a rather modest 10%). But if you are receiving income from a genuinely foreign company (e.g. you are a passive shareholder), you might be able to legally avoid paying tax on it.

 

[Golden Fleece]

So I spent months of hard work hoping to have found a tax-free country while now I see I should pay a net 10% but at that point it was much easier opening an European company taxed at 10% ...

I am not sure how you could have missed this fact, especially if you consulted a local attorney. This ten percent tax has been in place for a while, although Paraguay did not enforce it for some time.

In August 2012, the government enacted the long-delayed personal income tax bill, instituting a 10% rate on taxable income in excess of 10 times the monthly minimum wage. A differential tax rate of 8% is applied when income is below 10 times the minimum monthly wage.

The 2004 reforms introduced a new personal income tax and lowered the corporate income tax rate from 30% in 2004 to 20% in 2005, and to the current rate of 10% by 2006. The reform also established a new small business tax of 10% and a 1% property tax. The law’s passage was controversial and spurred protests, prompting the government to postpone implementation until 2013.

https://pdf.usaid.gov/pdf_docs/PA00M9HV.pdf
If your information about obtaining citizenship is as erroneous as it was about paying taxes, then you should be very concerned. Obtaining Paraguayan citizenship is much harder to obtain than the local lawyers and fixers claim when they facilitate residency. I discussed this issue at length in another thread. You must pay to play.

 

[jjrapy]

Hmm quite strange.
Regarding to bank transfer it’s correct, you must have the SOF.
AFAIK foreign income is exempt but I don’t know if bank will request tax returns of your foreign income. At least for citizens isn’t requested, I just sent to my bank my interactive brokers account statement when I received a withdrawal.

 

[HelloMyDroogs]

I also live in Paraguay. My plan is to make Paraguay my tax home for 4 months of the year and then live in other countries for the other eight months. The hardest thing about Paraguay is the banks. I have to sell my crypto p2p here and slowly funnel it into the banks while keeping under the limit for reporting requirements. I am no expert but if you don't bring any foreign income into the banks here they have no way of charging you the 10% tax. You just have to find banking from overseas banks.

 

[jjrapy]

I also live in Paraguay. My plan is to make Paraguay my tax home for 4 months of the year and then live in other countries for the other eight months. The hardest thing about Paraguay is the banks. I have to sell my crypto p2p here and slowly funnel it into the banks while keeping under the limit for reporting requirements. I am no expert but if you don't bring any foreign income into the banks here they have no way of charging you the 10% tax. You just have to find banking from overseas banks.

Exactly.. but if you funnel into the banks, send abroad and the back to Paraguay also I think you won’t pay taxes.

 

[OffshoreResearch]

Thanks anyone for the usual advice.
Ok I'll pay taxes where I'll be forced to move part of my funds to Paraguay which's acceptable of course. Honestly I like a lot this country and its nice people.

So I should either try to become a passive shareholder of a reputable company to have some tax-free income ... But I'll double check this info with a local lawyer.
I should also be able to move trading funds here as loon as the bank won't ask for a tax return proof ... Again I'll double check with a lawyer.

That's a good starting point for my research on the best ways to take advantage of my Paraguayan residency.

I've also started the naturalization process to hopefully get a passport within an year from now but it's a quite complex process and my citizenship isn't absolutely guaranteed.
Don't believe when you read it's extremely easy getting a passport here because it isn't.

Again Paraguay is a nice peaceful country where staying at least for few months per year and I'm honestly thinking to invest in a big villa as well (just for my personal residency) and there're many fantastic properties here.
Prices are honestly very low today.

 

[fortunespeculator]

I also live in Paraguay. My plan is to make Paraguay my tax home for 4 months of the year and then live in other countries for the other eight months. The hardest thing about Paraguay is the banks. I have to sell my crypto p2p here and slowly funnel it into the banks while keeping under the limit for reporting requirements. I am no expert but if you don't bring any foreign income into the banks here they have no way of charging you the 10% tax. You just have to find banking from overseas banks.

How much is the limit for reporting requirements??

 

[JackAlabama]

How much is the limit for reporting requirements??

Due to very low cost and salary, 1k$ transactions will already draw attention and bank compliance employees (highly bored apes, pun intended) will soon peep in.
Compare this with e.g. Panama which has a more sizable transaction volume just derived from the much higher cost of living in the capital and generally more $ floating around (unless out in the countryside).

 

[HelloMyDroogs]

How much is the limit for reporting requirements??

I can put 6.5million Guarani (950USD) a month into my bank accounts without providing evidence of proof of funds. Anymore and the banks wont accept without providing the paperwork. They also wont accept it if they hear it is from crypto. Many people including myself have several accounts with different banks and deposit this amount to several banks accounts at the start of the month.

Like I said, it's an annoying and manual situation. The debit cards they give you also have taxation built into them so if I buy things with them online for example netflix they add a 10% tax immediately which is sent to the government. If I were to buy for netflix with an international bank card obviously this tax wouldn't be charged.

The banks are so bad here to me they seem to perpetuate a cycle of poverty that most Paraguayans are stuck in.

 

[jjrapy]

I can put 6.5million Guarani (950USD) a month into my bank accounts without providing evidence of proof of funds. Anymore and the banks wont accept without providing the paperwork. They also wont accept it if they hear it is from crypto. Many people including myself have several accounts with different banks and deposit this amount to several banks accounts at the start of the month.

Like I said, it's an annoying and manual situation. The debit cards they give you also have taxation built into them so if I buy things with them online for example netflix they add a 10% tax immediately which is sent to the government. If I were to buy for netflix with an international bank card obviously this tax wouldn't be charged.

The banks are so bad here to me they seem to perpetuate a cycle of poverty that most Paraguayans are stuck in.

It depends on your profile but if you only have income from crypto, sadly you’ll have to spread between several banks.
Unless you create a company, pay a salary trough the bank and then they wouldn’t ask so much questions

 

[Marie Manila]

Like I said, it's an annoying and manual situation. The debit cards they give you also have taxation built into them so if I buy things with them online for example netflix they add a 10% tax immediately which is sent to the government. If I were to buy for netflix with an international bank card obviously this tax wouldn't be charged.

Does this tax also apply to payments made abroad?

 

[fortunespeculator]

I can put 6.5million Guarani (950USD) a month into my bank accounts without providing evidence of proof of funds. Anymore and the banks wont accept without providing the paperwork. They also wont accept it if they hear it is from crypto. Many people including myself have several accounts with different banks and deposit this amount to several banks accounts at the start of the month.

Like I said, it's an annoying and manual situation. The debit cards they give you also have taxation built into them so if I buy things with them online for example netflix they add a 10% tax immediately which is sent to the government. If I were to buy for netflix with an international bank card obviously this tax wouldn't be charged.

The banks are so bad here to me they seem to perpetuate a cycle of poverty that most Paraguayans are stuck in.

So if you were to buy with a foreign card will it be cheaper??

 

[HelloMyDroogs]

Does this tax also apply to payments made abroad?

Yes, specifically this was a tax on foreign digital purchases.

So if you were to buy with a foreign card will it be cheaper??

On items that the digital tax is added yes.

 

[fortunespeculator]

Ok so basically what i understand is in most territorial tax countries they will tax you in your trading income although it is in a different exchange outside the country - just stating it as business income and professional activity.And that will include Paraguay.

 

[jafo]

I am not sure how you could have missed this fact, especially if you consulted a local attorney. This ten percent tax has been in place for a while, although Paraguay did not enforce it for some time.


https://pdf.usaid.gov/pdf_docs/PA00M9HV.pdf
If your information about obtaining citizenship is as erroneous as it was about paying taxes, then you should be very concerned. Obtaining Paraguayan citizenship is much harder to obtain than the local lawyers and fixers claim when they facilitate residency. I discussed this issue at length in another thread. You must pay to play.

Which thread? Do you have a link?

Hi All,
I'm a Paraguayan resident since 3 years and now I've submitted a demand for the local passport/citizenship.

In the past some noises moved me here with the belief this was an extraterritorial tax country (taf free for my foreign income) but this wasn't fully correct.
After having heard a couple of local tax advisors, I discovered that only income already taxed abroad will be exempted in Paraguay.

I worked a lot for my residency and I'm working to get the passport.
I've invested a lot in terms of time and money but what're the real advantages for my online activity ?
Now I'm buying/selling domain names ... but this income is taxed at 10% if carried to a Paraguayan bank.
I'll be also forced to issue an invoice for any incoming payment or the bank won't accept my funds.

Am I doing something wrong ? Or am I missing some other advantages ?
Ok the local passport is a great thing but it won't beat the advantages of my European passport ...

So I spent months of hard work hoping to have found a tax-free country while now I see I should pay a net 10% but at that point it was much easier opening an European company taxed at 10% ...

I'm collecting some feedback having still the belief I'm missing some possible advantages related to my position.
Thank you.

How is it going in Paraguay? Can you update us since you have boots-on-the-ground experience?

 

[Golden Fleece]

Which thread? Do you have a link?

Just use the search function with my name and the key word "Paraguay." All my posts regarding Paraguay will appear.

 

[jjrapy]

Does this tax also apply to payments made abroad?

Only in digital services: Netflix, Spotify, App Store or playstore, software purchase, online courses and I don’t remember if kindle books are included too.
Physical stuff from Amazon, eBay, etc are not taxed.

Ok so basically what i understand is in most territorial tax countries they will tax you in your trading income although it is in a different exchange outside the country - just stating it as business income and professional activity.And that will include Paraguay.

Not quite sure about that.. I’ll try to check it out current regulation for non-citizens.
At least for me as a Paraguayan is not taxed since I already pay the 10% on my yearly income.
Only distributed dividends from companies, banks and unions banks registered and operating in Paraguay whether it is listed or not in the local exchange (an “distributed” is very well explained in the law) pays 8% without exception.
Interest earned in bonds (registered in the local exchange) and CD’s are exempted.
All foreign gains made with money taxed here are exempted.

 

[crypto7figs]

I am curious who ever have a successful case with Paraguay, of going there, setting up an offshore company, and getting 0% tax from income abroad.