Paraguay vs Iceland
Tax Residency Comparison
Paraguay taxes foreign income at 0% through its territorial system, while Iceland taxes residents at up to 46%. Icelanders switching to Paraguay residency save $40,000 - $160,000+ per year on average, with a fast 90-day process and only a $5,000 bank deposit required.
Side-by-Side Tax Comparison
| Category | 🇵🇾 Paraguay | 🇮🇸 Iceland |
|---|---|---|
| Foreign Income Tax | 0% | up to 46% |
| Capital Gains Tax | 8% | 22% |
| Corporate Tax | 10% | 20% |
| Residency Timeline | 90 days | N/A |
| Investment Required | $5,000 bank deposit | N/A |
| Physical Presence | Once every 3 years | 183+ days/year |
| Path to Citizenship | 3 years to citizenship | Varies |
Why Icelanders Choose Paraguay
Save $40,000 - $160,000+/Year
The average icelanders moving to Paraguay saves $40,000 - $160,000+ annually by eliminating up to 46% taxes on foreign-sourced income.
Territorial Tax System
Unlike Iceland's worldwide taxation, Paraguay only taxes income generated within its borders. Foreign income is generally exempt.
Location Freedom
While Iceland requires 183+ days presence, Paraguay only requires a visit once every 3 years to maintain residency.
Fast Process
Get permanent residency in just 90 days. No years of waiting, no complex point systems, no quotas.
The Iceland Tax Problem
High income tax rates
Small market limits opportunities
High cost of living
Currency volatility risk
Important: Leaving Iceland
Iceland has relatively straightforward non-residency rules. Paraguay offers an affordable alternative.
Our team includes specialists familiar with Iceland tax law who can help you navigate the transition properly and legally.
Who Should Consider Paraguay Over Iceland?
Remote Workers
Keep 100% of your foreign-earned income instead of losing up to 46% to taxes.
Entrepreneurs
Build your business without the Iceland tax burden holding you back.
Investors
Optimize capital gains with Paraguay's favorable 8% rate vs 22%.
Retirees
Stretch your pension and investments further with minimal tax obligations.
Frequently Asked Questions
Is Paraguay better than Iceland for taxes?
For foreign income, Paraguay is significantly better with 0% tax versus Iceland's 46% top rate. Paraguay also offers a dramatically lower cost of living, which compounds the tax savings for Icelanders.
What's the tax difference between Paraguay and Iceland?
Iceland taxes income at up to 46%, capital gains at 22%, and has high social contributions. Paraguay taxes only local income at 10%, with no tax on foreign income, no capital gains tax on foreign investments, and minimal social charges.
Can Icelanders get Paraguay residency easily?
Yes. Icelandic citizens enter Paraguay visa-free and can apply for permanent residency directly. The process takes 4-6 weeks with minimal documentation requirements.
Explore More Resources
Everything you need to make an informed decision about Paraguay residency
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Last reviewed: February 2026