Paraguay's reputation was built on two things: a territorial tax system that only reaches Paraguayan-source income, and a permanent residency you could reportedly obtain for a bank deposit in a single visit. The second part is no longer true, and most content comparing Paraguay to anywhere else has not caught up. The first part is still genuinely strong, with one honest caveat almost nobody mentions. Here is Paraguay's real position against Georgia's 1%, corrected for what actually changed.
What Paraguay actually taxes
Paraguay charges a flat 10% Business Income Tax, known as IRE, on Paraguayan-source profit, confirmed on PwC's Paraguay corporate tax summary. Personal income tax, IRP, is progressive on Paraguayan-source personal-services income: 8% up to PYG 50 million a year, 9% up to PYG 150 million, and 10% above that, confirmed on PwC's individual tax summary. Gross personal-services income under PYG 80 million a year, roughly $11,000, owes no IRP at all.
The structural feature that actually draws people to Paraguay is that both taxes are genuinely territorial: income from outside Paraguay, for both individuals and companies, sits outside the system entirely rather than being taxed at a reduced rate. That is a cleaner, more absolute territorial principle than Georgia's 1%, which is a source-based turnover regime for registered businesses rather than a blanket exemption on foreign income generally.
The headline numbers, side by side
| Georgia | Paraguay | |
|---|---|---|
| Headline small-business rate | 1% of turnover, Small Business Status, up to 500,000 GEL | No turnover regime; flat 10% IRE on Paraguayan-source profit |
| Personal income tax | 20% flat outside Small Business Status | 8-10% progressive, Paraguayan-source only |
| Foreign-source income | Taxed under separate rules outside Small Business Status | Not taxed at all |
| Double tax treaties | 58 in force | Roughly 7 |
| Stripe supported | No | No |
| Residency route | None required for the 1% | Two years of temporary residency for the standard permanent route |
| Currency | Lari (GEL) | Guarani (PYG) |
Paraguay's territorial system has a real trap most marketing skips
Paraguay's territorial principle is genuine, and it is also more specific than "foreign income is tax-free" makes it sound, particularly for the exact profile reading this comparison: someone performing remote services for clients outside the country.
Under Paraguay's tax code, personal-services income is generally sourced to where the activity is actually carried out, not to where the paying client is located. Multiple professional summaries of Law No. 6380/2019 describe this as a real risk: sitting in Asuncion and billing a client in another country can still be treated as Paraguayan-source income precisely because the work was physically performed inside Paraguay, which brings it into IRP regardless of who paid for it. This directly contradicts the "digital nomad pays zero tax in Paraguay" version of the pitch, and reputable sources disagree on how strictly it is enforced in practice, which makes it a genuine gray area rather than a settled point either way.
This matters because it inverts the comparison for exactly the reader most likely to be weighing Paraguay against Georgia. Georgia's 1% has no equivalent ambiguity: turnover is turnover, taxed at 1% regardless of where the client sits or where the work happens to be performed, which our 1% tax pillar covers as the baseline of the whole regime. Paraguay's territoriality is at its strongest for genuinely foreign passive income, foreign investment returns, a pension paid from abroad, rental income from property outside Paraguay, rather than for active remote work physically carried out on Paraguayan soil.
Georgia's 1% against Paraguay's real numbers
Take a solo consultant billing $80,000 a year with low costs, working physically from wherever they choose, and run both systems as they actually apply.
| Georgia, Small Business Status | Paraguay, resident performing the work locally | |
|---|---|---|
| Tax treatment | 1% of turnover, regardless of client location | IRP on Paraguayan-source income; personal services performed in Paraguay generally count, even for foreign clients |
| Rate that applies | 1% flat | 8-10% progressive on the relevant portion |
| Tax on $80,000 | Roughly $800 | Roughly $6,400 to $8,000, if the income is treated as Paraguayan-source |
| Clean zero-tax case | Not applicable, the 1% always applies | Only if the income is genuinely foreign-source under Paraguay's rules, which active remote work performed locally may not satisfy |
For someone who is actually doing the work while physically present in Paraguay, Georgia's 1% is both cheaper and unambiguous. Paraguay's zero-tax reputation holds up cleanly only for income that is genuinely earned outside the country in the first place, which is a different use case than "live in Paraguay and freelance for foreign clients."
Paraguay's residency: what actually changed
This is the fact most out-of-date content gets wrong, and it is worth being precise about because it used to be Paraguay's single biggest differentiator.
Paraguay's Migration Law No. 6984/2022, in force since October 2022, ended the route that let a foreign national obtain permanent residency directly, historically for a bank deposit of around $5,000, without first holding any other status. Under the current standard route, permanent residency must instead be obtained by converting an active temporary residency, and the application for permanent status can only be filed between the 21st and 24th month of temporary residency, per GoParaguay's summary of the 2022 reform. A separate SUACE investor programme, and a newer Paraguay Investor Pass launched in April 2026 starting at $70,000, both grant permanent residency directly without the temporary-residency wait, but that is a materially larger commitment than the old deposit route.
Temporary residency itself remains genuinely accessible: no minimum bank deposit, no fixed income requirement, and an official government fee of roughly $370, with a realistic all-in cost of $700 to $1,500 once translations, apostilles and processing are counted. A separate 2026 update, DNM Resolution No. 407/2026, refined the documentary categories used to prove economic solvency for the application, effective from July 2026, but did not reintroduce a direct permanent route.
Once permanent residency is actually granted, Paraguay's maintenance requirement stays genuinely light: a single visit at least once every three years, with no minimum stay and no 183-day presence rule. Combined with the territorial system, a Paraguay resident who keeps their income genuinely foreign-source, and outside the personal-services sourcing trap above, owes nothing on it whether they visit once every three years or every three months.
Where Paraguay genuinely wins
A real territorial system for genuinely foreign passive income. Foreign investment returns, foreign rental income, a foreign pension, none of it is Paraguayan-source and none of it is taxed, cleanly and without the ambiguity that applies to active remote work performed locally. That is a stronger, more absolute exemption than Georgia offers on the equivalent foreign-source income of a Georgian tax resident.
Low-touch residency maintenance once you have it. A visit every three years, with no physical presence requirement in between, suits someone who wants a residency base without committing to actually live there, more than Georgia's system does since Georgia's 1% carries no residency angle at all in either direction.
A genuinely low personal rate for Paraguayan-source income under the threshold. Gross personal-services income under PYG 80 million, roughly $11,000, owes no IRP at all, and the 8% starting rate above that is still low by regional standards.
Where Georgia genuinely wins
No sourcing ambiguity, on any client or location. Small Business Status charges 1% of turnover with no question about where the work was physically performed or where the client sits, which our georgia tax residency guide covers as a separate question entirely from the tax status itself. Paraguay's trap for remote workers simply does not exist under Georgia's system.
A far wider treaty network. Georgia holds more than 55 double tax treaties, confirmed on the Ministry of Finance of Georgia's treaty page and covered in full in our double taxation treaties guide, currently 58 in force. Paraguay's own tax authority lists only around seven agreements, per Paraguay's DNIT treaty page, covering Chile, China, the UAE, Uruguay, Qatar, Germany and Belgium, and Georgia is not among them.
A faster, cheaper path to the low rate, with no residency wait. Small Business Status is registered in days with no residency requirement at all. Paraguay's standard permanent residency route now takes roughly two years from application to conversion, a genuine cost in time that the old deposit route did not carry.
Location and banking. Georgia sits within easy reach of Europe, the Middle East and Central Asia, while Paraguay is considerably less accessible for most nomads and founders, and neither country has Stripe, so this specific comparison does not turn on payment processing the way the EU comparisons in this cluster do. Our payment processors guide covers what a Georgian company routes card payments through instead, which applies equally to a Paraguayan one.
Paraguay is far from the only territorial or low-rate option worth weighing here. Armenia runs a turnover-based regime closer to Georgia's own than most people expect (Georgia vs Armenia), while Cyprus, Bulgaria and Malta (Georgia vs Cyprus, Georgia vs Bulgaria, Georgia vs Malta) trade Paraguay's territoriality for EU membership instead.
We'll look at where your income actually comes from, whether it would count as Paraguayan-source under the sourcing rules, and where you are tax resident today, then tell you honestly which one wins. Thirty minutes, no cost.
See what it costs
So which one actually wins
Georgia wins for anyone actively performing remote work, consulting or running a service business day to day, regardless of where they happen to be sitting, because the 1% applies cleanly with no sourcing question to argue about, and registration carries no residency wait at all.
Paraguay wins for someone whose income is genuinely foreign and passive, who wants a residency base that requires almost no ongoing presence and will never tax that income, and who is willing to commit two years to temporary residency, or a larger sum through the investor route, to get there. It is a real, honest fit for a specific profile, just a narrower one than its old reputation suggested.
Key takeaways
- Paraguay taxes companies at a flat 10% IRE and individuals at 8-10% IRP, strictly on Paraguayan-source income, with genuine foreign-source income untaxed.
- The old route to instant permanent residency for a deposit was abolished in 2022; the standard route now requires two years of temporary residency first.
- Personal-services income performed physically inside Paraguay can count as Paraguayan-source even when billed to foreign clients, a real trap the "zero tax for remote workers" pitch usually skips.
- Georgia holds 58 double tax treaties against Paraguay's roughly 7, and Georgia is not one of Paraguay's treaty partners.
- Once granted, Paraguay's permanent residency needs only a visit every three years to maintain, with no minimum stay in between.
- Georgia wins on rate clarity, treaty access and setup speed for anyone actually doing remote work; Paraguay wins for genuinely foreign passive income and a low-touch residency base.
Frequently asked questions
Is Paraguay really a tax-free country?
No. Paraguay taxes Paraguayan-source income at a flat 10% for companies and 8-10% progressively for individuals. What is genuinely untaxed is foreign-source income, which is a real and valuable exemption, but it is not the same as Paraguay charging no tax at all.
Can I still get instant permanent residency in Paraguay for a deposit?
No. That route was abolished under Migration Law No. 6984/2022, in force since October 2022. The standard route now requires holding temporary residency for close to two years before applying to convert to permanent status, except through investor programmes that require a larger financial commitment.
Does Paraguay tax remote work for foreign clients?
It depends on where the work is physically performed, not just where the client is located. Personal-services income carried out while physically in Paraguay can be treated as Paraguayan-source under the tax code, even when the client and payment both come from abroad, which is a genuine gray area rather than automatically tax-free.
How does Georgia's 1% compare to Paraguay's rates?
Georgia's 1% of turnover is generally cheaper and structurally simpler, since it applies regardless of client location or where the work is performed. Paraguay's 8-10% IRP can apply to the same remote-work income if it is sourced to Paraguay under the physical-performance rule, which removes the zero-tax outcome many assume applies automatically.
How many double tax treaties does Paraguay have?
Around seven, covering Chile, China, the United Arab Emirates, Uruguay, Qatar, Germany and Belgium, according to Paraguay's own tax authority. Georgia holds more than 55, and Paraguay is not currently one of Georgia's treaty partners.
How long does Paraguay's temporary residency take?
Realistically four to six months from starting document collection to holding the residency card, once translations, apostilles and processing are counted, with an official government fee of roughly $370 and a realistic all-in cost of $700 to $1,500.
Do I have to keep visiting Paraguay to keep my residency?
Once permanent residency is granted, yes, but only lightly. A single visit at least once every three years is enough to maintain it, with no minimum stay required during that visit and no 183-day presence rule at any point.
Does Paraguay support Stripe?
No. Paraguay has never appeared on Stripe's list of supported countries, the same position Georgia is in. This is one comparison in this cluster where payment processing is not a point of difference between the two.
What is Paraguay's Investor Pass?
A route introduced in April 2026 starting at $70,000 that grants permanent residency directly, without the standard two-year temporary residency wait. It sits alongside the older SUACE investor programme as one of the few remaining direct paths to permanent status.
Is Georgia or Paraguay better for a digital nomad?
Georgia, in most cases, because the 1% applies with no question about where the work was performed, while Paraguay's territorial exemption is weakest for exactly the profile of someone actively working while physically present there. Paraguay fits better for someone whose income is genuinely passive and foreign, not for someone doing the work locally.
Which is cheaper to register, a Georgian IE or a Paraguayan SRL?
Georgia, generally. Small Business Status runs to roughly 600 GEL, about $220, with no residency requirement at all. A Paraguayan SRL has no minimum capital either, but typically costs somewhat more to set up once a local legal representative and registration steps are included, and does not by itself carry any special tax rate the way Georgia's Small Business Status does.