Paraguay

Employment taxes

• Income tax: Employees pay a progressive income tax ranging from 8% to 10%, depending on income level.
• Social security contributions: Employees contribute 9% of their gross salary to social security.
• Employers contribute around 16.5%, covering retirement, healthcare, and occupational risks.
• Paraguay’s tax system is considered simple and transparent, and the country has one of the lowest overall tax burdens in Latin America.

Leave policy

• Annual leave: Employees are entitled to 12 paid vacation days after one year of service. After five years, this increases to 18 days, and after ten years, to 30 days.
• Public holidays: There are 9 national public holidays each year.
• Sick leave: Sick leave is paid based on the employee’s salary for the four months preceding the sickness up to 26 weeks. It is covered by social security (Instituto de Previsión Social - IPS). A medical certificate is required.
• Maternity leave: 18 weeks paid at 100% of salary, funded by social security.
• Paternity leave: 2 weeks paid at 100% of salary by the employer.
• Parental leave: Not legally mandated, but some employers offer it voluntarily.

Employment termination

• Any termination notice must be submitted in writing, whether it comes from the employer or the employee.
• Employees with more than 10 years of service enjoy extra protection, they can’t be dismissed without a valid, documented reason.
• Common and legally compliant ways to end employment include: dismissal with just cause, such as misconduct or serious breach of duty, dismissal without just cause, resignation by the employee, by mutual agreement between both parties, expiration of a fixed-term contract.
• Notice periods generally range from 30 to 90 days, depending on how long the person has been employed.
• Severance: If the termination happens without just cause, the employer must pay one month’s salary per year of service, up to a maximum of 25 months.

Hiring and contracts

• Common contract types: Indefinite, fixed-term, and temporary.
• All contracts must be in Spanish (and can be bilingual) and in writing.
• A valid contract should include: Employee and employer details, job description and working hours, salary and payment terms, benefits, probation, and termination clauses
• Probation period: Up to 30 days for general workers; up to 60 days for technical or administrative roles.

Payroll and salary payments

• Payroll is typically paid monthly, in Paraguayan Guaraní (PYG).
• Minimum wage (2025): Around PYG 2,839,626 (€347 / $403).
• Payslips are mandatory and must list: gross and net salary, deductions (tax, social security), bonus and overtime payments

Benefits

Mandatory:

• Paid vacation and holidays
• Social security coverage
• Year-end bonus (“13th salary”) equivalent to one month’s pay

Optional:

• Private health insurance
• Meal or transport allowances
• Flexible work arrangements and remote work

Monthly living cost (Asunción Edition)

• Rent (1-bedroom apartment): €280–€400 / $300–$430
• Utilities & internet: €80 / $85
• Groceries: €200–€250 / $215–$270
• Public transport: €20 / $22
• Coffee out: €1.50 / $1.60
• Dinner for two: €25–€35 / $27–$38

How to get a local ID number

All employees and residents must obtain a Cédula de Identidad (national ID).

• Apply through the Dirección General del Registro Civil or Policía Nacional.
• You’ll need your passport, proof of residence, and a work permit or residency card.
• Processing time: 1–2 weeks.

Remote workers staying temporarily can register for a taxpayer number (RUC) if required for local compliance.

Social security registration

Employers must register all employees with the Instituto de Previsión Social (IPS) within a few days of hire.

• Covers health insurance, pensions, and family allowances.
• Employees automatically receive an IPS card for medical care.

Banking

Popular banks include:

• Banco Itaú Paraguay
• Banco Continental
• Banco BBVA Paraguay
• Banco Regional

To open an account, bring your Cédula ID, proof of address, and employment contract.

Housing and rental process

• Most rentals are handled through agencies or directly with landlords.
• Standard leases last 12 months.
• Security deposit: usually one month’s rent.
• Tenant rights: You can’t be evicted without legal notice, and landlords must handle major repairs.

Healthcare system

Paraguay has a public healthcare system (IPS) funded by social security, plus a growing private sector offering affordable services.

• Private health plans are common among professionals.
• Pharmacies are widespread, and medical staff generally speak Spanish and some English.

Driving and public transport

• Foreigners can drive using an international driver’s license for up to 90 days.
• Public transport is inexpensive but basic, and buses are the main option.
• Ride-sharing apps like Bolt and Uber operate in Asunción.

Emergency and important contacts

• Police: 911
• Ambulance: 141
• Fire: 132

Work permit and visa requirements

Foreign nationals can enter Paraguay visa-free for 90 days. But, to work legally, you’ll need:

• A temporary residence permit (valid for 1 year)
• A work permit sponsored by your employer

After 3 years of residence, you can apply for permanent residency.

Business culture and work norms

• Personal relationships matter, and trust is built over time.
• Meetings often start with small talk.
• Punctuality is flexible.
• Hierarchies are respected, but the work environment is friendly and relaxed.