Paraguay ranks sixth globally as a retirement destination in 2026, according to The Asunción Times, and for foreign retirees the usual path is temporary residency followed by permanent residency under Law 6984/2022. Your tax outcome depends on both Paraguayan rules and the rules of the country you are leaving, so settle those questions before you move.
What the 2026 retirement ranking does and does not tell you
The Asunción Times reported on Paraguay's sixth-place finish among top retirement destinations for 2026. That puts the country on many retirees' shortlist. It is not proof that Paraguay fits your finances, health needs or family situation.
Rankings of this kind generally combine several factors into one score, and every publication weighs them differently. A high placement tells you the country deserves a closer look. It does not tell you how residency works for your passport, how your pension is taxed, or whether you will enjoy living far from your grandchildren. Treat the ranking as the start of your research, not the end.
Residency for retirees under Law 6984/2022
Migration Law No. 6984/2022 replaced the old Law 978/1996. It sets a path from temporary residency (up to 2 years) to permanent residency. The authority that processes both is the Dirección General de Migraciones (DGM).
Temporary residency (up to 2 years) and the move to permanent residency
Temporary residency is the first formal status. It lets you live in Paraguay legally while you build a record of presence and paperwork. After that, you can apply to move to permanent residency. The documents the DGM asks for, the way pension income is evidenced and any related fees can change, so check the current requirements with the DGM or a licensed Paraguayan professional before you file. Do not rely on a forum post from two years ago.
For a more detailed walkthrough of the sequence, see our guide on the temporary and permanent residency process and the cédula.
Getting the cédula: Departamento de Identificaciones of the Policía Nacional
The cédula is Paraguay's national identity card. It is issued by the Departamento de Identificaciones of the Policía Nacional. Once you have it, it becomes the main identity document for everyday procedures as a resident, so it is worth planning for early rather than treating it as an afterthought.
Doing it yourself or with support
Residency involves several agencies, certified and apostilled documents and a Spanish-language process. Some retirees handle it alone; others prefer professional coordination, which we offer with collaborating lawyers on a quoted basis through our services page.
Taxes on pensions and investment income: the territorial rule as a general principle
Law 6380/2019, IRP up to 10% and the DNIT: what "territorial" means in practice
Law No. 6380/2019, in force since 2020, applies a general principle of territoriality to income tax: Paraguayan-source income is taxed. The personal income tax (IRP) follows a progressive scale up to 10%. The tax authority is the DNIT (Dirección Nacional de Ingresos Tributarios), created by Law No. 7143/2023, which merged the former SET and the customs directorate. Its online system is Marangatu.
In plain terms, the starting point is that income earned from Paraguayan sources is what falls within the tax base. That is why Paraguay appears so often in second-residency conversations. But "territorial" is a starting point, not a blanket exemption.
Why foreign-source capital income needs professional review
Certain foreign-source capital income may receive specific treatment under IRP. For that reason, "0% on all foreign income" is not an absolute rule, and you should not plan around it. Pensions, dividends, interest and rental income from abroad can each raise different questions. A licensed accountant or tax lawyer in Paraguay can map your actual income streams against the current rules before you commit to anything.
Home-country rules that do not disappear
Moving to Paraguay changes where you live. It does not automatically change what your country of citizenship or former residence expects from you.
US citizens: citizenship-based taxation, FEIE, FBAR and FATCA in general terms
The United States taxes its citizens on worldwide income wherever they live. Retiring abroad does not end that. Depending on your situation, tools such as the Foreign Earned Income Exclusion (FEIE) may or may not apply (it is aimed at earned income, so its relevance to pensions and investment income is limited). Reporting rules for foreign accounts, commonly known as FBAR and FATCA, may also apply. Speak to a US tax professional who works with expats. Our guide on Paraguay residency and US tax obligations covers the topic in general terms.
Canada, UK and Australia: residency ties and departure rules to confirm with an advisor
Canadians, Britons and Australians each face their own tests for when someone stops being a tax resident. These usually look at ties to the home country, such as a home, family or property, and some countries have departure rules for certain assets. The details are specific and change over time. Confirm them with an advisor in your home country before you sell, move or cancel anything. Our checklist for leaving Canada or the UK is a good starting point for the questions to ask.
Practical objections: healthcare, Spanish, safety and family distance
Retirees rarely decide on tax alone. The objections we hear most are practical.
- Healthcare: Coverage is a decision, not an afterthought. Compare private insurance, local providers and whether your existing plan works abroad. Ask for the policy wording and any exclusions in writing, and think about how you would handle a serious event far from home.
- Spanish: Daily life, paperwork and medical appointments are mostly in Spanish (and Guaraní is widely spoken). Plan for language support, at least at the beginning.
- Safety: Experiences vary by area and by habits. Visit before committing, talk to people who live there and judge for yourself rather than relying on a headline.
- Family distance: Think honestly about how often you will travel and how you will stay in touch. This is often the deciding factor.
A long visit before you commit is usually the cheapest way to test all four.
Banking and a documented address in Asunción while you decide where to live
Many retirees keep accounts in their home country and add local banking in Paraguay. Banks and fintechs often ask for proof of address and expect your documents to tell a consistent story. A lease agreement together with a signed address certificate is commonly used for that purpose, though final acceptance always depends on each institution. Ask your bank which documents it requires before you rely on any one of them. For a deeper look, see our article on proof of address for banks and fintechs.
Our service provides a 12-month lease agreement on a real apartment in Asunción's Eje Corporativo, assigned by us, plus a signed address certificate. It is a documented legal and tax address, not a right to live in the unit, and it does not include utility bills in your name. If you are still deciding where to actually live, it can keep your paperwork consistent in the meantime. You can see the details in our pricing section.
A step-by-step plan for the first 12 months
The order below is a sensible sequence, not a guaranteed schedule. Timelines depend on the agencies involved, and we have deliberately left them out.
| Step | What it involves | Who handles it | What to confirm first |
|---|---|---|---|
| 1. Home-country tax and pension advice | Understand how your country treats you after you move | Advisor for IRS, CRA, HMRC or ATO matters | Residency ties, reporting duties and pension treatment |
| 2. Temporary residency application | Filing under Law 6984/2022 with the DGM | You, or a lawyer you appoint | Current document list and how income is evidenced |
| 3. Documented address in Asunción | Lease agreement plus signed address certificate | Address provider | Whether your bank accepts it for its own checks |
| 4. Cédula | National ID card for residents | Departamento de Identificaciones, Policía Nacional | Which documents the office requires from you |
| 5. RUC with the DNIT, if needed | Taxpayer registration through Marangatu | You, or an accountant | Whether your income or activity requires one |
| 6. Bank account | Local or international account opening | The bank | Each bank decides which documents it accepts |
| 7. Transition to permanent residency | Moving from temporary status under the same law | DGM | Current requirements and conditions |
| 8. Healthcare coverage decision | Choosing insurance or providers | You, with an insurer or local provider | Exclusions, pre-existing conditions and coverage abroad |
FAQ
Can I retire in Paraguay on a foreign pension?
Many foreign retirees pursue residency under Migration Law No. 6984/2022, which sets a path from temporary to permanent residency through the DGM. Requirements for evidencing pension income can change, so confirm the current list with the DGM or a licensed Paraguayan professional.
How do foreign retirees get permanent residency in Paraguay?
The usual route starts with temporary residency, valid up to 2 years, and then moves to permanent residency. The authority is the Dirección General de Migraciones. Confirm exact documents and conditions before filing.
Does Paraguay tax my US Social Security or foreign pension?
Law No. 6380/2019 applies a general territorial principle, meaning Paraguayan-source income is taxed. Certain foreign-source capital income may receive specific treatment under IRP, so 0% on all foreign income is not an absolute rule. Have a professional review how your specific pension is treated.
Do US citizens still file US taxes if they retire in Paraguay?
Yes, as a general rule. The United States taxes citizens on worldwide income wherever they live, and reporting rules such as FBAR and FATCA may apply. Moving does not end US obligations.
Do I need a Paraguayan address before opening a bank account as a retiree?
It depends on the bank. Institutions set their own requirements, and a lease agreement with a signed address certificate is commonly used as proof of address. Acceptance is decided by each bank, so ask which documents it requires.
This content is informational and does not constitute legal or tax advice. Consult a licensed professional in Paraguay and in your home country.