New rules for Paraguayan residency status
The law was expected to enter into force immediately, but has since been delayed to February 2023, allowing a six-month grace period. The updated law does not affect permanent residents or applicants who have already submitted their documentation for permanent residence status.
In this article we will look at the main changes to the application process, and how it affects foreigners looking to become permanent residents in this fantastic, yet often overlooked, Latin American country.
Main changes to the Paraguay Permanent Residency Program
When applying to settle in Paraguay, foreigners will now be considered temporary residents first, rather than permanent residents straight away. Following two years of temporary residency, they can apply for permanent resident status or can extend their temporary resident status in Paraguay for another two years. This is the case for all applicants, including so-called “digital nomads”, location-independent travellers who take advantage of the country’s residency laws to live elsewhere while remaining exempt from local taxes.
According to the law (Art 46), temporary resident status “will be granted for a period of up to two years, extendable for an equal period, and will be a prerequisite for granting permanent residence.”
This latest development brings Paraguay in line with the example residency programs set by several European countries. Portugal, for example, shares a similar approach with its Golden Visa (ARI) residency by investment scheme, which involves two years of temporary residence, followed by three years of permanent residency to qualify for citizenship.
Once the law comes into force, temporary residents will be issued with an ID card and, to all intents and purposes, will be treated no differently than permanent residents in terms of basic rights and everyday necessities. The updated law is not expected to prompt any changes to the tax residency, tax number or international tax compliance issues of temporary residents.
While the updated legislation does not practically affect the rights of foreigners applying for residency in the country, it does mean that four processes are now necessary to become a permanent resident – confirmation of temporary residency and issuing of an ID card, followed by confirmation of permanent residency and issuing of new ID card – rather than just the latter two processes, as was previously the case.
Practically nothing will change in terms of the application process with Paraguayan Immigration. The process to obtain temporary or permanent residency permit is virtually the same, notwithstanding the difference in status which applicants will receive upon completion. The official fee for the temporary residence permit remains the same as the fee for the permanent residence permit, but both fees have been raised to 2,452,225 Guaranís, equivalent to approx. 340 USD.
Required documentation
The updated legislation has not made any alterations to the documentation required to apply for residency in Paraguay, which includes the following documents:
- original birth certificate (apostilled)
- original, clean police certificate (apostilled)
- certificate of marriage or divorce, where applicable (apostilled)
- your passport.
Proof of solvency
The new legislation does not include any updates to the requirements for the financial status of applicants. Previously, permanent residency applicants had to prove solvency by submitting either a deposit, or details of a pension or university degree.
This remains the case for permanent residency, but temporary residency applicants will not be expected to make a deposit during the initial process. Instead, they will be asked to declare their profession, and that they have sufficient funds to survive in the country, and this will be cross-referenced two years later if they decide to go forward with an application for permanent residency.
Similarly, temporary residency applicants wishing to use a university degree to prove solvency will need to declare their degree during the initial application phase, but not provide proof. They will, however, be required to present an apostilled copy of their university degree when the time comes to apply for permanent residency.
Finally, a previous, additional option for proving solvency – which involved qualifying for residency status by renting or purchasing more than ten hectares of land in the country – was removed from the official government page of requirements, before the amendment to the legislation was introduced. So it is safe to assume that this is no longer an option for residency applicants.
Permanent Residency by Investment
Paraguay’s residency by investment program – a.k.a the SUACE residency program, named after the simplified mechanism introduced by the country’s government for the opening and closing of companies – is not affected by the latest legislation, so investors in the country can still become permanent residents without spending two years as temporary residents.
Although this option has long been overlooked by citizens from developed countries due to the relaxed laws around permanent residency, it is arguably the most straightforward way to become a permanent resident in light of the new amendments to the law, and is definitely worth considering if you are planning to move to Paraguay to invest, or to register a company and start a business.
Foreigners who immigrate to Paraguay and register a company are entitled to apply for the SUACE residency program, and skip temporary residency altogether. As before, the minimum amount to be invested is 70,000 USD, however applicants are not obligated to directly invest this amount, nor do they have to prove they have this amount in their bank account. Applicants merely have to pledge to spend the full amount within ten years of their application, since the program was designed to keep companies and create jobs within the country.
So for example, foreigners looking to set up a restaurant who can testify that the venue’s rental costs alone will exceed 70,000 USD over ten years – and can legitimately claim to be contributing job opportunities and other benefits to the local economy – will be considered eligible for the SUACE program. The application cost is the same as for a temporary residency application, or for registering a unipersonal company or other company type.
As we have seen, the latest amendments to the legislation surrounding Paraguayan residency for foreigners shouldn’t substantially affect applicants, but anyone interested in taking advantage of this fantastic country’s relaxed approach to residency should be aware of the latest changes, and consider contacting a specialist organisation to assist with their application. Get in touch with Strategicasa today to find out how we can help!