Paraguay Investment Income Tax Guide 2026 — Dividends 0%, Interest 0%
Paraguay offers exceptional tax treatment for investment income: dividends are 0% (no withholding), interest is 0% for residents, capital gains on securities are 0%, and all foreign investment income is fully exempt under the territorial system. Paraguay is one of the most tax-friendly jurisdictions for passive investors.
Under Paraguay's territorial tax system, investment income is categorised based on source. Foreign investment income (dividends from foreign companies, interest from foreign banks, gains on foreign securities) is completely exempt from Paraguayan tax. Domestic investment income receives highly favourable treatment with zero or minimal tax rates.
Example: A Paraguayan resident receives USD 50,000 in US dividends, USD 20,000 in EU bond interest, and USD 100,000 in gains from selling UK stocks. Total Paraguayan tax: USD 0. All of this is foreign-source income.
Dividend Taxation
- Dividends from Paraguayan companies: 0% withholding tax — dividends paid by a Paraguayan company to any shareholder (resident or non-resident) are tax-free
- Dividends from foreign companies: 0% — foreign dividends are foreign-source income and fully exempt under the territorial system
Interest Taxation
- Interest from Paraguayan sources: 0% for individual residents on most bank interest and bond interest. Non-residents face 5-10% withholding on bank interest
- Interest from foreign sources: 0% — foreign interest is foreign-source income, fully exempt
- Interest paid to non-residents: Generally 0% except for certain bank interest to non-residents (5-10%)
Capital Gains on Investments
- Shares and securities: 0% for residents on gains from any shares or securities
- Foreign investments: 0% — all foreign capital gains are exempt
- Non-residents: 10% on Paraguayan property gains only (not on securities)
FAQs
Does Paraguay tax foreign dividends?
No. Foreign dividends received by a Paraguayan resident are foreign-source income and are completely exempt from Paraguayan tax.
Is there a withholding tax on interest paid by Paraguayan banks to residents?
No. Interest paid by Paraguayan banks to individual residents is not subject to withholding tax. Interest earned on Paraguayan bank accounts is taxed at 0% for residents.
Can I invest through a Paraguayan company to hold foreign assets?
Yes, but with the territorial system, there is generally no tax advantage to holding foreign assets through a Paraguayan company versus holding them personally, as both are exempt on foreign-source income.
Disclaimer
This guide is for informational purposes only and does not constitute investment or tax advice. Consult a qualified professional for advice specific to your situation.