Paraguay is often described as purely territorial. The general rule is territorial, but Ley 6380/2019 contains three exceptions that matter a great deal if you live there and own a US LLC. Here is what the law says and what to watch.
The general rule: Paraguayan-source income
Two income taxes are relevant to you:
- IRE (business income tax) taxes Paraguayan-source income from all kinds of economic activity, except income taxed under IRP. The rate is 10% of net income.
- IRP (personal income tax) is an annual tax on individuals' capital income and gains and income from personal services, and it taxes only Paraguayan-source income.
Paraguayan-source income is income from activities carried out in Paraguay, from assets located there or from rights economically used there. As a rule, activity carried out abroad is outside the tax.
The three exceptions that reach your LLC
1. Foreign dividends and interest. For IRE, interest on deposits with foreign banks, exchange differences and dividends from foreign entities are Paraguayan-source when the investing entity is incorporated or resident in Paraguay. If you plan to hold your LLC through a Paraguayan company, this rule comes into play.
2. Foreign activities of an IRE taxpayer. Activities carried out abroad by an IRE taxpayer are Paraguayan-source unless foreign income tax was paid on them at a rate equal to or higher than the IRE rate, which is 10%. If you operate in Paraguay as an IRE taxpayer, for example through a sole-proprietor business (empresa unipersonal), and run foreign activities through a zero-tax LLC, you do not meet that condition.
3. Personal services rendered from abroad to Paraguayan clients. For IRP, pay for personal services performed outside Paraguay is Paraguayan-source if the services are rendered to IRE or IRP taxpayers. Invoicing Paraguayan clients from abroad does not take that income out of the tax.
Rates worth knowing
- IRE: 10% of net income.
- IRP on personal services: 8% up to PYG 50,000,000 of net income, 9% up to PYG 150,000,000 and 10% above. If your gross income from personal services does not exceed PYG 80,000,000 in the year, no tax is payable, although the formal obligations still apply.
- IRP on capital income and gains: 8%.
- IDU (dividend tax): 8% if the recipient is Paraguayan resident, 15% if not.
Tax residence in Paraguay
IRP taxpayers are individuals, Paraguayan or foreign, resident in Paraguay. The law does not define individual residence and sets no day count. The tax administration itself states that Ley 6380/2019 introduced a residence definition only for legal persons and legal structures.
The administration issues a tax residence certificate. For an individual, the application must include the migration movement record (Constancia de Movimiento Migratorio) from the Directorate General of Migration for the relevant fiscal year. The certificate is valid for one year from issue.
A foreign entity that establishes its domicile in Paraguay is resident from its registration in the Public Registry. That applies to your LLC too if you domicile it there.
What the law leaves open
The source rules refer to activities carried out in Paraguay. How Paraguay treats the profits of a transparent LLC whose only member works physically from Asunción for foreign clients is not settled by any official source we have verified. It is an open question, and one to review with your actual structure before you move.
Leaving Spain? Read first what Spain still claims when you leave. Paraguay is not on Spain's list of non-cooperative jurisdictions.
Sources
Checked 26 October 2026.
- Ley N.º 6380/2019 (Modernisation and Simplification of the National Tax System), text published by the DNIT: dnit.gov.py
- Resolución General N.º 65/2020 (tax residence certificate): dnit.gov.py
This page is general information, not advice for your case. Your individual situation is checked in the consultation, held in English.
Form your LLC