Regime Rate
10%
Under the Territorial Taxation
Standard Top Rate
10%
without this regime
Duration
Unlimited
No expiry — permanent regime
Target Profile
Territorial Taxation
Paraguay
Tax Savings Illustration
Example: €150,000 Annual Gross Income
Under Territorial Taxation
€0
Standard Rate
€10 500
Annual Saving
+€10 500
Eligibility Requirements
Who qualifies?
- All residents
How the Regime Works
Full details
Only income generated within Paraguay is subject to Paraguayan tax. Foreign-source income (dividends, capital gains, rental abroad) is not taxed. 8% on dividends (IRACIS withholding).
Regime vs Standard Rates in Paraguay
| Tax Type | Standard Rate | Under This Regime | Saving |
|---|---|---|---|
| Income Tax (top rate) | 10% | 10% | — |
Frequently Asked Questions
What is the Territorial Taxation in Paraguay?
The Only Paraguay-Source Income Taxed is a special tax regime in Paraguay that provides 10% flat rate to qualifying individuals or entities. Only income generated within Paraguay is subject to Paraguayan tax. Foreign-source income (dividends, capital gains, rental abroad) is not taxed. 8% on dividends (IRACIS withholding). Legal basis: Ley N° 6380/2019 (Modernización y simplificación del sistema tributario).
Who is eligible for the Territorial Taxation?
Eligibility for the Territorial Taxation is limited to: All residents. Applicants typically must not have been Paraguay tax residents during a specified prior period. Always verify current conditions at the source: Ley N° 6380/2019 (Modernización y simplificación del sistema tributario).
How much tax do you pay under the Territorial Taxation?
Under the Territorial Taxation, you pay 10% flat rate on qualifying income — significantly lower than Paraguay's standard top rate of 10%. On €150,000 gross, you save thousands of euros per year.
How long does the Territorial Taxation last?
The Territorial Taxation is a permanent regime with no set expiry — it applies for as long as you continue to meet the eligibility criteria.
How do I apply for the Territorial Taxation?
Only income generated within Paraguay is subject to Paraguayan tax. For complete application procedures, refer to: Ley N° 6380/2019 (Modernización y simplificación del sistema tributario).
Other Special Regimes to Compare
Disclaimer: This information is for general guidance only and does not constitute tax advice. Tax laws change frequently. Always consult a qualified tax professional before making residency or tax planning decisions.