Paraguay vs Luxembourg
Tax Residency Comparison
Paraguay taxes foreign income at 0% through its territorial system, while Luxembourg taxes residents at up to 42%. Luxembourgers switching to Paraguay residency save $35,000 - $140,000+ 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 | 🇱🇺 Luxembourg |
|---|---|---|
| Foreign Income Tax | 0% | up to 42% |
| Capital Gains Tax | 8% | 0-42% |
| Corporate Tax | 10% | 24.94% |
| 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 Luxembourgers Choose Paraguay
Save $35,000 - $140,000+/Year
The average luxembourgers moving to Paraguay saves $35,000 - $140,000+ annually by eliminating up to 42% taxes on foreign-sourced income.
Territorial Tax System
Unlike Luxembourg's worldwide taxation, Paraguay only taxes income generated within its borders. Foreign income is generally exempt.
Location Freedom
While Luxembourg 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 Luxembourg Tax Problem
High income tax despite reputation
Net wealth tax for companies
Limited deductions for individuals
High property prices
Important: Leaving Luxembourg
Luxembourg residents can establish non-residency with proper planning. Paraguay offers a genuine alternative residence.
Our team includes specialists familiar with Luxembourg tax law who can help you navigate the transition properly and legally.
Who Should Consider Paraguay Over Luxembourg?
Remote Workers
Keep 100% of your foreign-earned income instead of losing up to 42% to taxes.
Entrepreneurs
Build your business without the Luxembourg tax burden holding you back.
Investors
Optimize capital gains with Paraguay's favorable 8% rate vs 0-42%.
Retirees
Stretch your pension and investments further with minimal tax obligations.
Frequently Asked Questions
Is Paraguay better than Luxembourg for taxes?
For personal income, Paraguay is significantly better with 0% on foreign income versus Luxembourg's 42% top rate. While Luxembourg has strong corporate structures, Paraguay's 10% flat tax on local income is simpler and lower.
What's the tax difference between Paraguay and Luxembourg?
Luxembourg taxes personal income at up to 42% with a 24.94% corporate rate. Paraguay taxes only local income at 10% with a 10% corporate rate and zero tax on foreign-sourced income, though it lacks Luxembourg's financial infrastructure.
Can Luxembourgers get Paraguay residency easily?
Yes. Luxembourg citizens enter Paraguay visa-free and can apply for permanent residency directly. The process takes 4-6 weeks with straightforward documentation requirements.
Explore More Resources
Everything you need to make an informed decision about Paraguay residency
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Last reviewed: February 2026