INDIVIDUAL TAXATION

Nonresidents are taxed on their income sourced from Paraguay. Married couples are taxed separately. For couples married under the marital community property regime, each spouse must declare 50% of the income.

INCOME TAX

Taxable income is gross income less income-generating expenses, personal and family expenses, and investments.

Paraguayan-source taxable income occasionally derived by nonresident individuals is subject to withholding taxes.

RENTAL INCOME
Rental income earned by nonresident individuals from Paraguayan real property is subject to 20% withholding tax levied on 50% of the gross rent (i.e. 10% withholding tax on the gross income).

VALUE ADDED TAX (VAT)

Leasing real estate in Paraguay is liable to VAT at the reduced rate of 5%.

CAPITAL GAINS
Occasional capital gains realized by nonresidents from selling Paraguayan property are taxed at the standard withholding tax rate of 20%. Taxable capital gains are generally 50% of the sales price (i.e. effective capital gains tax of 10% on the gross capital gains).

Taxpayers may calculate the taxable capital gains by deducting acquisition costs from the sales price, if there is a written agreement registered in a public registry.

PROPERTY TAX

Real Estate Tax impuesto inmobiliario)

This tax rate is reduced to 0.5% for rural properties smaller than five hectares used for small scale farming. In the case of rural properties, improvements or buildings are not computed in the tax base.

Surtax (impuesto adicional al inmueble de gran extension)