Quick answer: Paraguay VAT applies to the sale of goods, independent services and imports of goods. Its main rates are 10% and 5%. For foreign professionals and companies, the main question is not only the rate: you need to determine whether the transaction is performed in Paraguay, whether a statutory exemption applies and which VAT on business purchases can be used as input credit.
One misconception is particularly important for international professionals:
a foreign customer, foreign payment or online delivery does not automatically make a service VAT-free in Paraguay.
Recent DNIT rulings have confirmed that professional services physically performed from Paraguay for foreign customers can be subject to Paraguayan VAT.
What does VAT actually tax in Paraguay?
Law No. 6380/2019 defines three main taxable events:
- the sale or transfer of goods;
- the provision of services, excluding personal services performed in an employment relationship;
- the importation of goods.
VAT is a consumption tax and must be kept separate from income taxes such as IRP and IRE.
The same business activity can involve:
- VAT on the transaction;
- IRP for an individual under the applicable rules;
- IRE for a business entity;
- withholding or other obligations on cross-border transactions.
Who is a VAT taxpayer?
Current law includes, among others:
- individuals providing independent personal or professional services;
- individual landlords in the relevant cases;
- sole proprietorships;
- companies and private entities;
- branches, agencies and permanent establishments of foreign entities;
- regular and occasional importers;
- INR taxpayers in regulated cases;
- transparent legal structures.
Personal services performed in an employment relationship are excluded from the VAT taxable event.
RESIMPLE exception
Sole proprietorships validly taxed under Paraguay’s RESIMPLE regime are not VAT taxpayers under the framework established by Law 6380.
The tax answer therefore depends on the taxpayer type and regime, not merely on whether someone informally calls themselves a freelancer or a business.
The G.80 million threshold: IRP is not VAT
A common online error is to mix two separate taxes.
The G.80,000,000 gross taxable income threshold relates to payment of IRP on personal-service income.
It is not the general threshold at which an independent professional first becomes subject to VAT.
Law 6380 includes individuals providing independent personal or professional services among VAT taxpayers.
An independent professional can therefore have VAT obligations even before reaching the amount that triggers effective IRP-RSP payment.
At N30 Paraguay, we regularly see this confusion when a foreign professional first opens a RUC: VAT and IRP are assumed to start at the same moment and under the same threshold. They need to be configured and monitored separately.
What are Paraguay’s VAT rates?
Paraguay has a reduced 5% rate for specific statutory categories and a general 10% rate for the remaining cases.
| Transaction | General treatment |
|---|---|
| Non-exempt professional and commercial services | 10% |
| Most goods and services not specifically reduced | 10% |
| Residential property rental used exclusively as housing | 5% |
| Sale of real estate | 5% on the specific statutory taxable base |
| Specified basic food products | 5% |
| Specified agricultural, horticultural, fruit and livestock products | 5% |
| Registered human medicines | 5% |
The 5% rate should not be applied by analogy. If the transaction is not within a reduced-rate category, the general rule is 10%.
VAT exemptions are specific, not generic
Law 6380 contains statutory exemptions, including under their respective conditions:
- exports of goods;
- certain securities transactions;
- specified interest and financial operations;
- qualifying education and teaching services;
- specified public passenger transport;
- international freight connected with exports of goods;
- other expressly legislated situations.
An exemption requires a legal basis.
It is also important to distinguish a reduced 5% rate from an exemption. For example, registered human medicines are generally within the 5% rate; that does not mean private healthcare services are automatically covered by one broad VAT exemption.
Does invoicing a foreign customer remove Paraguayan VAT?
No, not automatically.
Article 84 of Law 6380 provides that services performed in Paraguayan territory can be taxed regardless of:
- where the contract was signed;
- the domicile or nationality of the parties;
- who receives the service;
- where payment comes from.
This is particularly relevant to consultants, developers, translators, designers, agencies, marketers, advisers and other freelancers working physically from Paraguay for foreign clients.
DNIT Binding Ruling 677/2025
DNIT considered a translator who performed the work from Paraguay for foreign clients and received international payments.
The taxpayer argued that the service should not be subject to VAT because it was used abroad.
DNIT concluded that the service was subject to Paraguayan VAT because the work was carried out from Paraguay and the taxpayer’s operational centre was located there.
DNIT Binding Ruling 827/2025
In December 2025, DNIT published another ruling specifically addressing VAT on professional services performed from Paraguay for a company headquartered in Spain.
The broader lesson is important:
the customer’s country does not, by itself, determine VAT territoriality.
A binding ruling is based on the particular facts presented by that taxpayer and should not be mechanically applied to every service. But it clearly undermines the simplistic claim that “foreign customer = exempt invoice”.
Using the internet does not automatically make a service a “digital service”
Paraguay’s tax law defines digital services as services delivered through internet technology that are essentially automated and not viable without information technology.
An automated SaaS product, cloud storage or certain online platforms may fit that category.
A consultant using Zoom, translator delivering files by email or designer sending work online is still primarily providing a human service.
DNIT used this distinction explicitly in the translator ruling.
| Situation | Correct initial question |
|---|---|
| Consultant works from Asunción for Spanish company | Where is the human service actually performed? |
| Automated SaaS subscription | Does it meet the tax definition of digital service and where is it used? |
| Freelancer performs part of the work while physically abroad | Which work was genuinely performed inside Paraguay and what rules apply to each tax? |
How does VAT work for a Paraguayan EAS or company?
An EAS, SA, SRL or other company does not receive a VAT exemption simply because of its legal form.
If it carries out taxable operations, VAT must be analysed normally.
A consulting EAS may therefore have to consider:
- output VAT on invoices;
- input VAT on qualifying purchases;
- monthly VAT returns;
- IRE separately;
- IDU when profits are later distributed.
This is why “Paraguay company = 10% tax” is incomplete.
See also our guide to opening a company in Paraguay as a foreigner.
Output VAT and input VAT
Output VAT
This is the VAT generated by taxable sales or services during the period.
Input VAT
This is VAT paid on purchases that satisfies the legal requirements to be used as a tax credit.
Not every supplier invoice automatically creates recoverable input VAT. Proper documentation and the relationship with qualifying business operations matter.
Monthly result
In simplified form:
VAT payable = output VAT – allowable input VAT
Mixed taxable, exempt and non-taxable activities can require allocation or proportionality rules.
How do you calculate VAT when the price includes tax?
Price plus VAT
Professional service:
- net price: G.1,000,000;
- 10% VAT: G.100,000;
- total: G.1,100,000.
VAT-inclusive price
If the parties expressly agree a total price of G.1,100,000 including 10% VAT, the VAT contained in the total can be extracted by dividing by 11:
G.1,100,000 / 11 = G.100,000 VAT.
For relevant 5% transactions under the general included-price calculation, the corresponding divisor is 21.
You should not add another 10% on top of a price that was already expressly agreed as VAT-inclusive.
How often is VAT filed?
DNIT currently lists General VAT as a monthly obligation.
The general return is filed through Form 120 in the applicable current version.
The exact due date depends on the taxpayer’s RUC and current administrative calendar.
A month with little or no tax payable does not necessarily remove the filing obligation while VAT remains active.
Invoices and records
Taxpayers carrying out taxable, exempt or non-taxable operations must document them under Paraguay’s tax-document rules.
This normally involves:
- issuing authorised sales documents;
- obtaining valid purchase documents;
- recording transactions;
- filing returns;
- retaining supporting records.
SIFEN and electronic invoicing continue to expand by taxpayer groups and DNIT rules.
Do not assume every new RUC is automatically assigned the same invoicing system; the applicable documentation regime should be confirmed at registration.
What if a Paraguayan business buys services from abroad?
The reverse cross-border transaction also requires review.
Paraguay has specific rules for:
- services provided from abroad and linked to IRE-taxable income;
- non-resident service providers;
- digital services used or effectively enjoyed in Paraguay;
- VAT and INR withholding where applicable.
A Paraguayan company paying for foreign software, advertising, consulting, licensing or other services should therefore not treat the outgoing transfer as a simple expense without reviewing local withholding and documentation rules.
VAT on real estate in Paraguay
Law 6380 provides a 5% rate for:
- rental of property used exclusively for housing;
- sale of real estate.
However, the taxable base can have specific rules.
For a real-estate disposal, the law generally uses a taxable base equal to 30% of the transaction value in the regulated case.
It is therefore incorrect to assume the VAT cost is simply 5% of the full purchase price without reviewing the seller, transaction and statutory base.
For commercial property rental, DNIT states that the rate is 10%.
VAT, RUC, IRP and IRE are different layers
| Item | Function |
|---|---|
| RUC | Taxpayer registration and assigned obligations |
| VAT | Consumption tax on taxable transactions |
| IRP | Income tax applying to specified individual income |
| IRE | Business income tax |
An independent professional may have VAT obligations before crossing the IRP-RSP payment threshold.
A company can have VAT and IRE at the same time.
A VAT-exempt transaction can still have income-tax consequences.
At N30 Paraguay, we prefer to configure the entire activity rather than treating each tax in isolation. An invoice can be technically correct for VAT and still sit within an incorrectly configured RUC, source-of-income position or business structure.
Practical examples
| Case | Initial VAT analysis |
|---|---|
| Consultant works from Paraguay for Spanish client | Do not assume exemption; service performed in Paraguay may be subject to 10% |
| Independent professional invoices local services | Independent service generally within VAT unless a statutory exemption applies |
| Consulting EAS has foreign customers | Foreign customers do not automatically remove VAT |
| Employee in an employment relationship | Personal dependent service excluded from VAT taxable event |
| Residential-only property rental | 5% |
| Commercial property rental | 10% |
| Sale of real estate | 5% on specific taxable base; facts must be reviewed |
| Paraguayan company purchases automated foreign software | Review digital-service use in Paraguay and withholding rules |
Are you invoicing from Paraguay or setting up a company?
We review which obligations belong on your RUC, whether your services are subject to VAT, how foreign customers should be documented and how VAT interacts with IRP or IRE.
10 common VAT mistakes in Paraguay
1. Confusing the G.80 million IRP threshold with VAT
They are separate taxes.
2. Issuing an exempt invoice just because the customer is abroad
The place where the service is performed can be decisive.
3. Treating Zoom or email as proof of a “digital service”
The tax definition requires substantial automation.
4. Applying 5% because a product resembles a reduced-rate product
The reduced rate needs a statutory basis.
5. Treating all healthcare as VAT exempt
Law 6380 does not contain a broad general exemption framed that way.
6. Adding 10% to a price that already includes VAT
The tax needs to be extracted from the agreed inclusive price.
7. Treating all purchase VAT as recoverable input VAT
Documentation and allocation rules apply.
8. Assuming a zero-payment month means no return
Formal filing obligations can remain active.
9. Paying a foreign supplier without checking withholding
Imported and digital services can create local obligations.
10. Analysing VAT without RUC, IRP or IRE
The tax configuration needs to work as a whole.
Frequently asked questions
What is Paraguay’s standard VAT rate?
10%. A 5% reduced rate applies to specified statutory categories.
Does an independent professional wait until G.80 million before VAT applies?
No. The G.80 million threshold relates to IRP-RSP payment. Law 6380 separately includes independent personal and professional service providers as VAT taxpayers.
If my customer is in Spain, should I invoice without Paraguayan VAT?
Not automatically. DNIT has treated professional services performed from Paraguay for foreign clients, including a Spanish company, as subject to Paraguayan VAT in the facts analysed.
Is a service delivered through Zoom a digital service?
Not merely because it uses the internet. The statutory digital-service concept focuses on services that are essentially automated and not viable without information technology.
What is the VAT rate on residential rent?
5% where the property is used exclusively as housing. DNIT states 10% for commercial rental.
What is VAT on the sale of real estate?
The rate is 5%, but the taxable base has specific statutory rules; it is not necessarily 5% of the full sale price.
Is VAT filed monthly?
DNIT currently lists General VAT as a monthly obligation.
What is output VAT?
The VAT generated on taxable operations during the filing period.
What is input VAT?
VAT on qualifying purchases that meets the requirements to be credited against output VAT.
Does an EAS pay VAT?
If it performs taxable operations, yes. EAS status itself does not create a VAT exemption.
Does RESIMPLE pay VAT?
Law 6380 provides that sole proprietorships validly taxed under RESIMPLE are not VAT taxpayers.
Paraguay VAT has simple rates but cross-border territoriality can be complex
The 5% and 10% rates are easy to remember.
The real work is determining:
- what transaction is taking place;
- where it is performed;
- who the taxpayer is;
- whether a statutory exemption applies;
- what taxable base applies;
- what input VAT can be credited;
- which other taxes sit alongside the VAT.
For international professionals, the key question should not be:
“Is my customer foreign?”
It should be:
“Where is the service actually being performed, and which VAT rule applies to that specific transaction?”
Configure your invoicing before you start issuing invoices
If you plan to work from Paraguay, establish a company or invoice foreign clients, we review RUC, VAT, income tax and documentation so the activity starts with the correct tax setup.
Official sources and last review
Last reviewed: August 2026.
- DNIT — Law No. 6380/2019: VAT taxable events, taxpayers, territoriality, rates and exemptions.
- DNIT — current VAT portal: rates, taxpayers, monthly obligation and compliance.
- DNIT — VAT frequently asked questions.
- DNIT — Binding Rulings, including No. 677 and No. 827 on services performed from Paraguay for foreign customers.
- DNIT — Tax returns, Form 120 General VAT.
This article is general information. VAT treatment depends on the facts, taxpayer type, transaction, documentation and current law. A binding ruling addresses the specific facts submitted by that taxpayer and does not replace individual analysis of another case.
