Paraguay is a land-locked nation centrally located in the heart of South America that has emerged as an increasingly attractive destination for expatriates seeking a more affordable and relaxed lifestyle. With its welcoming immigration policies, abundant natural resources, and low cost of living, Paraguay offers a unique and compelling opportunity for those considering a relocation.
A Quick History Lesson
Originally inhabited by the indigenous Guaraní people who still reside in the area today, the area now known as the República del Paraguay was originally a Spanish colony that declared its independence from Spain in 1811.
Shortly after officially establishing itself on the world stage in 1842, Paraguay was attacked by its neighbors (Argentina, Bolivia & Brazil) in the “Triple Alliance War” (1864-1870) which saw Paraguay losing roughly 30% of its territory and the majority of its male population. The country’s subsequent years were marked by authoritarian rule, the last of which under dictator Alfredo Stroessner who held power from 1954 to 1989 when he was ultimately overthrown.
In 1992, Paraguay established a new constitution and has operated as a democracy ever since. Modern Paraguay has blossomed economically and GDP per capita has skyrocketed since 2002.
Visitors to Paraguay quickly notice that the vast majority of Paraguay is homogenous — with 95% of the country considered “mestizo” (mixed) race as during the country’s early years, intermarriage between the Europeans and the Indigenous population was compulsory by government decree. As a result, Paraguayan culture is quite literally the fusion of both European and Guaraní ancestry and traditions.
Two Official Languages
While it is no surprise that a former Spanish colony uses Spanish as its official language, it may come as a surprise to some that Paraguay also maintains the Guaraní language of its indigenous heritage as its second official language in all official capacities. Young children are taught the Guaraní language from an early age and throughout their primary/secondary education.
Over 90% of Paraguayans speak Guaraní alongside Spanish and all Government websites and publications commonly have Guaraní translations.
Residency in Paraguay
One of Paraguay’s most significant advantages is its relatively straightforward process for obtaining permanent residency. The country’s immigration laws are generally welcoming to foreigners, making it a less bureaucratic option compared to many other nations. This ease of entry has contributed to Paraguay’s growing popularity among expatriates seeking long-term residency or investment opportunities.
As of 2024, Permanent Residency can be obtained in as short as 2 years with no up-front financial investment requirements (previously a $5,000 USD bank deposit was required) and minimal income requirements.
Tax Benefits
Paraguay employs a territorial tax system — meaning that only income generated within the country of Paraguay itself is taxed — and income generated abroad is not taxed.
For example, a retiree/pensioner from a foreign country is not subject to taxation within Paraguay when retirement income is transferred into the country. In fact, it is not unheard of that retirees from countries like the United States are able to retire in Paraguay and live exclusively off US Social Security income.
Any income generated within Paraguay is taxed at a flat 10% personal income tax rate — which can further be reduced by claiming certain deductions that lower one’s overall effective tax rate.
Paraguay assesses a ‘Value Added Tax’ (VAT) of 10% on most goods and services (essentially a national sales tax) — with the exception of foodstuffs and healthcare items which carry at 5% VAT tax.
Favorable Cost-of-Living
Paraguay’s affordability is another major draw for those considering relocation. The cost of living is substantially lower than in many Western countries, allowing residents to enjoy a comfortable lifestyle on a modest budget. Housing, food, transportation, and healthcare are all relatively inexpensive, making it possible to stretch income further.
More specific data on actual cost of living can be found in our separate article on the topic available here.
Abundant Natural Resources
Paraguay is blessed with abundant natural resources, including significant water reserves and hydropower potential. The country’s location along the Paraguay River and its numerous tributaries ensures a reliable supply of drinking water and supports agriculture and other industries. Additionally, Paraguay’s hydropower resources have helped to keep electricity prices affordable, providing a significant economic advantage.
Water
Paraguay largely sits atop the Guaraní Aquifer — the second largest known aquifer system in the world — which is estimated to possess enough water to supply every human on the planet with up to 9 liters per day of water for the next 200+ years
Electricity
Paraguay is the only country in all of South America that receives 100% of its electricity from renewable sources including three separate hydroelectric dams, two of which are bi-national projects in conjunction with its neighbors Brazil and Argentina.
The Itaipu Dam, which produces the majority (86%) of Paraguay’s energy needs, is located in the northeastern border between Paraguay and Brazil on the Paraná River.
Completed in 1984 in partnership with Brazil, the dam holds the distinction of being the third largest hydroelectric dam in the world — producing a peak design capacity of 14,000 MW, averaging 89.22 TWh per year. From 2016 until 2020, the dam held the world record for hydroelectric output at 101.6 TWh until it was surpassed by the Three Gorges Dam in China.
Paraguay shares Itaipu’s output on a 50/50 basis with Brazil with each country receiving up to 7,000 MW of capacity. at any given time. Any unused excess output from the Paraguayan side has historically been sold back to Brazilian electrical utilities.
The Yacyretá Dam, a bi-national project in partnership with Argentina, is further downstream on the Paraná River and produces up to 900 MW or approximately 11% of Paraguay’s needs.
A third hydroelectric dam, located in Acaray, Paraguay produces up to 210 MW or approximately 3% of the country’s electrical demand.
Food
One of Paraguay’s most significant economic assets is its agricultural industry. Paraguay produces far more food than it needs domestically and despite being a relatively small country, it has ascended to be a top-tier exporter of agricultural commodities.
For example, as of 2022 Paraguay is the #1 exporter of organic sugar, the 2nd largest producer and exporter of stevia, 3rd worldwide exporter of soybeans, the 8th largest exporter of beef products and the 10th largest exporter of corn — worldwide.
Wheat, rice, sugarcane and cotton are also grown in the country along with other fruits and vegetables largely for domestic consumption.
Unsurprisingly, food is generally less expensive than many other parts of the world, contributing to the overall lower cost-of-living experience.
Real Estate in Paraguay
Paraguay’s real estate market offers a unique blend of affordability, natural beauty and a growing economy. Depending on lifestyle preference — think urban vs. rural/country living — Paraguay offers a wide range of options, all at price points that may surprise you.
Can you imagine a modern high-rise apartment near trendy shopping areas for less than $80,000 USD?
How about a 1BR apartment/condominium for under $400 USD per month?
Or a 3 bedroom home over 3,000 sq. ft. in an urban neighborhood for $1,100 USD per month?
Prefer country living? Build a 2,100 sq. ft. home on 1+ acres of land for less than $140,000 USD
All of these things are possible in Paraguay.
Want to know more? Check out our article on Cost-of-Living in Paraugay.
Conclusion
Paraguay offers a unique and compelling proposition for expatriates seeking a more affordable and relaxed lifestyle. With its favorable immigration climate, abundant natural resources, and low cost of living, Paraguay is an increasingly attractive destination for those considering relocation. Whether you are seeking a peaceful retirement or a new business opportunity, Paraguay may be the perfect place for you to call home.
