Residence, citizenship & investing

Paraguay for under the radar residence, citizenship & investing!

Paraguay, a little known land-locked country in South America, is certainly not one of the mainstream expat havens like Ecuador, Uruguay, Panama or even now Colombia.

But for the intrepid PT investor, who wants to live semi-isolated from the rest of the world but in a place with great business potential, Paraguay is worth a close look.

Although this country is huge in land area, by South American standards it’s very small, and historically it has often been forgotten. It’s full of friendly people and great investment opportunities.

They are, however, the kind of investment opportunities that take a bit of work… not the ‘point and click’ type that you find promoted to expats in more developed markets.

Interestingly, it’s still relatively easy to obtain permanent residence, leading to citizenship of Paraguay and the coveted Paraguayan passport that boasts excellent visa-free travel.

PERMANENT RESIDENCE IN PARAGUAY: EASY!

Let’s talk about the residence first.

Paraguay welcomes immigrants and offers Permanent Residence from the very beginning. The process takes some weeks to finalize, but only requires physical presence of the client for a few days.

After perhaps 6-8 weeks you will receive your permanent residence permit and your Paraguayan cedula (National ID card) – if you are not in the country to pick these up, your lawyer can pick them up under a power of attorney and courier them to you.
To some people, the most attractive part of this process is that your residence is classified as ‘Permanent’ from day one.

You don’t have to return to renew it if you don’t want to – ever!

It will never routinely be cancelled, although of course this is not citizenship and there are some provisions in law to cancel it if you are, for example, convicted of a crime.

This document is ideal for perpetual travelers who simply need a piece of paper issued by a government showing that they live somewhere. Different nationalities have different uses for Paraguay Permanent Residence.

For example, some western Europeans have to show their home governments a paper from a foreign government when they leave, so as to escape the tax nets in their country of origin. Chinese citizens like to hold a foreign Permanent Residence because it allows their kids to get into China’s elite schools and universities that are reserved for ‘foreigners.’ Middle Eastern citizens find having residence in a South American country makes it much easier to get visas to travel elsewhere in the world. Others, attracted by Brazil’s booming economy, see Paraguay as a back door, tax-free alternative to Brazilian immigration that is much more complicated and expensive.

PARAGUAY: THE UNDER THE RADAR TAX HAVEN

Oh, and yes, that reminds me – income tax. Paraguay has long had absolutely no income tax, so Paraguayans certainly don’t have that unpleasant ‘taxpayer culture’ that has permeated many western nations.

You don’t need to worry here about being perceived as anti-social or evil because you don’t pay taxes – Paraguay is like the US decades ago, where citizens are used to standing on their own two feet.

That said, this year, after much debate, Paraguay introduced a 10% income tax. However, it only covers income generated within Paraguayan territory – so this still qualifies very much as a tax haven residence for anyone who generates their income online, or through any kind of international activity.

But because Paraguay is not known as a tax haven, it is not blacklisted anywhere.

SECOND PASSPORT IN PARAGUAY: GETTING MUCH HARDER

What about citizenship? This has certainly got harder, much harder, in the last few years.

It used to be that you could get your Permanent Residence, leave for three years, then return and apply for Paraguay citizenship by naturalization on the basis of holding the residence card for three years. The Paraguayans didn’t care at all. A number of my clients did this and are now proud holders of Paraguay passports.

Unfortunately, word got out on the internet and the Paraguayan authorities were deluged with citizenship applications from people who were, quite frankly, idiots.

They didn’t respect Paraguayan culture or the country. They didn’t know how to behave (basic stuff like in South America you don’t go to government offices dressed in shorts and sandals – it shows disrespect), they didn’t know the language. They were applying for citizenship in a country they knew nothing about.

This turned into quite a big political scandal, hitting the front pages of Paraguayan newspapers. Now, many of those applications are in the pipeline.

Quite a few of them have probably paid large amounts of money to facilitators abroad who claim to have high-level government connections. I believe those people will be disappointed and it is almost certain that their citizenship applications will be rejected. These days, the Paraguayan Supreme Court, the authority which ultimately makes the decision on citizenship, is looking for real ties to the country, such as business, investment or family connections. I just hope that this bunch of disappointed characters can get their money back from the said facilitators, but I suspect that will be an uphill struggle.

I talked about this yesterday with our trusted contact there – a lawyer there who really does have high level government connections and who is not about to abuse them.

He told me that he is still processing citizenship applications, but the process can be expected to take at least 1-2 years and it requires constant follow-ups from his office to the Supreme Court.

Basically, you can still get Paraguayan citizenship, but it requires some effort. For example, starting a company there (even just a small internet business) and spending some time in situ, and learning a bit of the language. And there are absolutely no guarantees.

INVESTMENTS IN PARAGUAY: UNDISCOVERED GEMS

One great way to establish a connection with the country is to buy agricultural land and start a farm, or buy an existing functioning ranch.

Land is of excellent quality and is still much cheaper than in neighboring Brazil and Argentina.

Wealthy Argentine landowners, however, persecuted by their own crazy government, are flocking to Paraguay and driving up prices. For those who dream of getting away from it all on a big ranch in the middle of nowhere, Paraguay is the place to go.

In town (Paraguay’s capital, Asuncion) there are some great opportunities too.

Real estate is cheap, and the cost of living is cheaper – the lowest in Latin America.

Paraguay’s financial sector is new but growing – one of the European private banks we work with, incidentally, just bought a Paraguayan stock brokerage. Prices can be volatile, but the Paraguayan stock exchange could be a great way to invest and to raise funds. Even local currency deposits in strong foreign-owned banks can show a healthy rate of return… as well as a connection with the country and its business community.

The great thing is that in Paraguay, you don’t have to have a fortune for it to go a long way.

So, aside from the fact that easy citizenship has come to an end, Paraguay has lots to offer the investor who is looking for something a little different. And I haven’t even mentioned that Paraguay potentially has huge natural gas reserves rivaling those of neighboring Bolivia, as well as gold and various rare earth metals…