Permanent residence in Paraguay

[Marzio]

Are you saying that the address and ID is enough to not be taxed anywhere if you strategically travel between 3-4 countries?

 

[JustAnotherNomad]

Are you saying that the address and ID is enough to not be taxed anywhere if you strategically travel between 3-4 countries?

That would depend on a lot of factors. But most likely it’s not possible, no. But you might be able to fly under the radar.

 

[Outlander]

Are you saying that the address and ID is enough to not be taxed anywhere if you strategically travel between 3-4 countries?

Address and ID are enough to open bank accounts around the world while self-certifying that you are a resident and a tax resident of Paraguay because 1) You have ties to the country; 2) You don't have stronger ties to any other country, including spending over 6 months per year anywhere else.

Banks won't typically ask for tax residency certificates - that's what revenue authorities in your home country might ask to prove you have really moved out, depending on your home country. For banks, asking for your tax residence is part of KYC and compliance, and as long as you show evidence of your claim, that's enough.

And what could be stronger evidence than a certified address and an ID?

Once the bank believes you live where you say you live, you have built a CRS shield around you. And Paraguay, unlike Panama, isn't regarded as a place where people establish dummy residence to escape CRS, so enhanced compliance on your tax status is much less likely

 

[Outlander]

That would depend on a lot of factors. But most likely it’s not possible, no. But you might be able to fly under the radar.

On a strictly technical level @JustAnotherNomad could be right - meaning if you are spending 3 or 4 months in each country and your home country doesn't have a treaty with where you are staying, then you are due taxes on your current location.

In practice I don't think that there is a single human on Earth paying taxes for doing remote work while hopping from one spot to another under a tourist visa. And frankly there is no way local authorities could track that.

And if on top of everything you have a corporate structure, you can time when and how you get paid with profit distributions. If you don't get paid, no taxes are due (I know there are exceptions and that's not the point here).

So really, as of today I see this scheme as safe as drinking mineral water.

 

[JustAnotherNomad]

Not quite. Some countries can claim you as a tax resident for things like having “closest ties to their country” or a “fixed place of dwelling” (a key is enough), or a certain number of days (like the US substantial presence test, but some countries have much lower thresholds).
Also if you keep doing business physically in a country, either every year for a certain time, or over an extended period of time, then there also is a risk of permanent establishment.
In practice, especially if you can travel visa-free, it’s highly unlikely that this would become an issue.
But if you work physically at an office for months at a time and your client is audited, they may very well start asking questions. And then you should probably have a little more to show than just an ID from Paraguay.

 

[Marzio]

there also is a risk of permanent establishment.

Well let's do a practical example. I have a permanent residence in Paraguay and spend 90 days in Swiss, 90 days in Spain, 90 days in Italy and 90 days in France. What are the chances of getting in trouble by working 90 days in each of those countries?

 

[Outlander]

Not quite. Some countries can claim you as a tax resident for things like having “closest ties to their country” or a “fixed place of dwelling” (a key is enough), or a certain number of days (like the US substantial presence test, but some countries have much lower thresholds).
Also if you keep doing business physically in a country, either every year for a certain time, or over an extended period of time, then there also is a risk of permanent establishment.
In practice, especially if you can travel visa-free, it’s highly unlikely that this would become an issue.
But if you work physically at an office for months at a time and your client is audited, they may very well start asking questions. And then you should probably have a little more to show than just an ID from Paraguay.

Well of course. But use your judgment! Don't have a key in your current location, don't use a WeWork t-shirt and don't go regularly to an office.

When an airplane falls it's always a confluence of factors. Same here! Be discreet, strengthen your ties to your "residence" country (buy a property, get a driver's license, a local phone number, maybe even a girlfriend) and weaken the ties to your current country, especially if it's a high tax one, and you'll be fine.

 

[Outlander]

Well let's do a practical example. I have a permanent residence in Paraguay and spend 90 days in Swiss, 90 days in Spain, 90 days in Italy and 90 days in France. What are the chances of getting in trouble by working 90 days in each of those countries?

Assuming you don't create obvious ties to none of these countries and that you're not a citizen of any of them, I'd say pretty low. Been there done that.

 

[Marzio]

you're not a citizen of any of them

Well i am in a peculiar situation because with a short 2 hour car trip i could be in Swiss and Italy from my place in France. Well not "my" place rather my dad's place. So i am French citizen and i was hoping of living near enough to the border to come visit my parents as i wish and returning back in the same day as this doesn't count as a day spent in France. Am i playing with fire?

 

[Outlander]

Well i am in a peculiar situation because with a short 2 hour car trip i could be in Swiss and Italy from my place in France. Well not "my" place rather my dad's place. So i am French citizen and i was hoping of living near enough to the border to come visit my parents as i wish and returning back in the same day as this doesn't count as a day spent in France. Am i playing with fire?

If it's just a quick visit to your parents once in a while and you correctly de-register as a resident of France and you don't have kids/wife/assets/bank accounts/club memberships/subscriptions/etc in France, I don't see much of a problem with France per se.

But I do see a slight risk in the fact that you are planning to stay basically around countries which are part of EU and have a lot of information sharing. It'd be hard to argue you're a resident of Paraguay if it ever came to that. Try spending time outside the EU.

 

[JustAnotherNomad]

Well let's do a practical example. I have a permanent residence in Paraguay and spend 90 days in Swiss, 90 days in Spain, 90 days in Italy and 90 days in France. What are the chances of getting in trouble by working 90 days in each of those countries?

Very high if as a French citizen you work physically in France for a French customer during those 90 days. Especially France has extremely vague rules for tax residency.

Also for example Norway has 180 days in any rolling 36 month period to consider you tax resident. So spending 90 days there every year would definitely make you tax resident.

There is also one other risk with using your Paraguay ID for online brokers:
If there is a tax treaty with for example the US, tax residents of Paraguay may pay less US withholding tax. So your broker might only withhold take 15% in taxes on US dividends (for example) instead of 30%. But since you are not a tax resident of Paraguay (only Paraguay), you are not entitled to use such treaty benefits. So you might get in trouble with the IRS as it might constitute tax fraud. So you need to be very careful with such things.

I still think it’s really interesting and thank the OP very much for sharing. Just be aware of all consequences and risks.

 

[Outlander]

I hadn't seen you planned to stay 90 days in France as a French citizen - I thought it was an occasional visit to your parents. If that's your plan that's a big no.

 

[Outlander]

There is also one other risk with using your Paraguay ID for online brokers:
If there is a tax treaty with for example the US, tax residents of Paraguay may pay less US withholding tax. So your broker might only withhold take 15% in taxes on US dividends (for example) instead of 30%. But since you are not a tax resident of Paraguay (only Paraguay), you are not entitled to use such treaty benefits. So you might get in trouble with the IRS as it might constitute tax fraud. So you need to be very careful with such things.

I still think it’s really interesting and thank the OP very much for sharing. Just be aware of all consequences and risks.

Good point but how about "forgetting" to claim tax benefit under the scope of a tax treaty between the US and your residence country when filling up the W8-BEN form?

 

[JustAnotherNomad]

I didn't even check if there is a tax treaty between the US and Paraguay, it was just an example. If they give you form W8-BEN to fill, I think there is a box where you can check you don't want to claim treaty benefits. But other brokers may want to make it easier for you and implicitly fill the form for you.

Or say you own European stocks through an EU broker. The broker may only ask you for where you are tax resident. They may not give you the option to give an address without also saying you are tax resident and claim treaty benefits. Simply because EU countries might not have an equivalent to form W8-BEN - the broker will simply handle the tax reports for you automatically. You might be able to avoid that by explicitly telling the broker you don't want to claim treaty benefits. You may also be able to avoid that by not trading under your own name, but using a company/trust/foundation. I'm sure there are solutions. But it's something to be aware of.

 

[Outlander]

I didn't even check if there is a tax treaty between the US and Paraguay, it was just an example. If they give you form W8-BEN to fill, I think there is a box where you can check you don't want to claim treaty benefits. But other brokers may want to make it easier for you and implicitly fill the form for you.

Or say you own European stocks through an EU broker. The broker may only ask you for where you are tax resident. They may not give you the option to give an address without also saying you are tax resident and claim treaty benefits. You might also be able to avoid that by not trading under your own name, but using a company/trust/foundation.
It's just something to be aware of.

I understood, and I wasn't being specific about Paraguay. But 100% of US brokers will make you fill a W8-BEN in addition to asking your tax residence. So even if you're trading under your own name, you can just leave that checkbox blank. At the end of the day, no one can blame you for not knowing about a tax treaty (if one exists).

Agreed that trading under a corporation is a sound advice.

 

[Konstanz]

Move to Andorra? They have a good regime to traders and low tax, but it's expensive to move there. Or Cyprus non dom?

 

[LiberJoseph]

Move to Andorra? They have a good regime to traders and low tax, but it's expensive to move there. Or Cyprus non dom?

I'm there and I think it's great. The only trouble is that you have to deposit € 15.000 to andorran institutions by their face if you want to get the residency by opening a business, and that's almost a scam.

But if you don't worry to live few months in the same country, your business is so geographical-independent and digital, and you don't mind not having a beach it's a good choice. Here you can see how to move to Andorra and the different residency proceeding that are there.

https://andorrainsiders.com/en/residence-immigration-live/

 

[geonove]

Hi guys thanks for all the information. I reached out to ParaguaySolutions and they said the country is still closed for foreigners so I guess I'll be checking out when it opens.

Last question... may I live in Argentina using the Paraguayan ID under a Mercosur agreement?

 

[Outlander]

Last question... may I live in Argentina using the Paraguayan ID under a Mercosur agreement?

You may not. You need to be a citizen for that.

 

[coq]

Hi guys thanks for all the information. I reached out to ParaguaySolutions and they said the country is still closed for foreigners so I guess I'll be checking out when it opens.

Last question... may I live in Argentina using the Paraguayan ID under a Mercosur agreement?

If your objective is to live in Argentina, you are doing it wrong. There is no need for convoluted schemes, just fly to Argentina and then apply for residency... or not! Argentina might be one of the most -if not the most- immigrant friendly country in the world to the point that the concept of "illegal immigration" officially doesn't exist anymore. So you can technically just fly in and just live in Argentina.

And the cherry on the top, you can get an Argentinean citizenship by living in the country just for 2 years... in any condition... even if you squatted illegally in the country for those 2 years... (of course, getting a temporary/permanent residency in Argentina would simplify greatly the process of naturalization; not having a proof of legal residency will definitely complicate the process, but in the end sooner or later if you prove that you have taken residency and lived uninterrupted for 2 years even illegally in the country nothing will impede getting a citizenship anyway. No one will kick you out of the country.)

Fiscally, it doesn't have much benefits, but Argentina might be the easiest gateway to Mercosur, so you can get residencies in all South America in a much more simplified regime. From Argentina you can pivot very easily to Paraguay or Uruguay.