Paraguay vs El Salvador at a Glance
Paraguay
- ✓ 0% tax on foreign income (territorial)
- ✓ Safe environment (7.5/100K homicide rate)
- ✓ $2,290-4,495 residency cost
- ✓ 3 years to citizenship
- ✓ Crypto unregulated (legal gray area)
- ✓ Stable democracy, established system
El Salvador
- ✓ 0% tax on foreign income (territorial)
- ✓ Safest in Western Hemisphere (1.3/100K)
- ✓ $1M BTC for Freedom Visa
- ✓ 2-4 months to citizenship (Freedom Visa)
- ✓ Bitcoin legal tender (0% BTC capital gains)
- • $1M minimum investment required
The Bitcoin Question
El Salvador made history in 2021 by becoming the first country to adopt Bitcoin as legal tender. But is it the best choice for establishing tax residency?
Key Insight
If you're primarily seeking 0% tax on foreign income and a stable environment, Paraguay is the clearer choice. If Bitcoin integration and being part of the "crypto experiment" matters more, El Salvador offers that unique proposition—but with higher costs and more uncertainty.
Tax Systems Compared
| Tax Category | Paraguay | El Salvador |
|---|---|---|
| Foreign Income | 0% | 0% |
| Local Income Tax | 10% flat | 0-30% progressive |
| Bitcoin Capital Gains | 0% (unregulated) | 0% (explicit exemption) |
| Corporate Tax | 10% | 25-30% |
| VAT | 10% | 13% |
| Wealth Tax | None | None |
| Inheritance Tax | None | None |
Paraguay: Simple & Established
Paraguay's territorial system has been in place for decades. Foreign income simply isn't taxed. Cryptocurrency exists in a regulatory gray area: not explicitly taxed, not explicitly regulated. This "benign neglect" approach works well for most crypto holders.
El Salvador: Bitcoin-First
El Salvador explicitly exempts Bitcoin from capital gains tax and allows it for all transactions. This clarity is valuable for active BTC traders. However, local income tax rates are higher, and the regulatory environment is still evolving.
Safety: A Transformed Landscape
2025 Update: El Salvador's Remarkable Transformation
Paraguay Safety Profile
- • Homicide rate: ~7.5 per 100,000 (2023)
- • No gang violence or cartel presence
- • Main crime: petty theft, property crime
- • Asunción rated safer than most LatAm capitals
- • Rural areas very safe
- • Political stability (no recent coups/unrest)
Comparable to European countries in violent crime rates.
El Salvador Safety Profile
- • Homicide rate: 1.3 per 100,000 (2025)
- • 98% reduction from 2015 peak (103/100,000)
- • US State Dept: Level 1 - Exercise Normal Precautions
- • Now safest nation in Western Hemisphere
- • MS-13 and Barrio 18 effectively eliminated
- • Tourism booming with Bitcoin City development
Remarkable transformation under Bukele administration's security crackdown.
The Bukele Transformation
President Nayib Bukele's security policies achieved what many thought impossible: a 98% reduction in homicides. El Salvador went from the world's murder capital to the safest nation in the Western Hemisphere. The US State Department now rates it Level 1 (Exercise Normal Precautions)—the same as Western Europe. While critics note the state of emergency measures, the results are undeniable. Paraguay's safety is more traditionally established, while El Salvador's represents a recent transformation.
Cost of Living Comparison
| Expense | Paraguay | El Salvador |
|---|---|---|
| 2BR Apartment (nice area) | $400-700 | $600-1,200 |
| Restaurant meal (mid-range) | $8-15 | $10-20 |
| Groceries (monthly) | $200-350 | $250-400 |
| Private health insurance | $150-300 | $100-250 |
| Monthly Total (comfortable) | $1,500-2,500 | $1,800-3,000 |
Both countries are affordable. Paraguay is 15-25% cheaper overall. El Salvador's dollarized economy means no currency risk but also less opportunity for cost arbitrage.
Residency Requirements
Paraguay Residency
- Timeline: 60-90 days
- Investment: None required
- Total cost: $2,290-4,495
- Documents: Birth certificate, police clearance (apostilled)
- Presence: Visit once per year minimum
- Citizenship: 3 years permanent residency
Straightforward process with no investment or income proof required.
El Salvador Residency
- Freedom Visa: 4-6 weeks approval
- Investment: $1M in Bitcoin
- Citizenship: 2-4 months (Freedom Visa)
- Documents: Similar to Paraguay
- Standard path: $52,000+ or income proof
- Standard citizenship: 5 years residency
Freedom Visa: fastest citizenship-by-investment program in the world.
Who Should Choose Which?
Choose Paraguay If You:
- → Prioritize safety and stability
- → Want lower residency costs
- → Prefer an established legal system
- → Want faster path to citizenship (3 years)
- → Don't need Bitcoin as legal tender
- → Plan to stay long-term
- → Run a crypto mining operation
Choose El Salvador If You:
- → Want to be part of the Bitcoin experiment
- → Need explicit BTC capital gains exemption
- → Have $1M+ BTC for investment program
- → Want the fastest citizenship path (2-4 months)
- → Want Pacific beaches and surfing
- → Prefer closer proximity to US
- → Want to network with crypto community
The Bottom Line
Both countries now offer excellent safety and 0% foreign income tax. The choice comes down to: Paraguay for affordable residency ($2,290-4,495) with no investment required and citizenship in 3 years. El Salvador for Bitcoin integration, legal tender status, and the world's fastest citizenship (2-4 months)—but requires $1M BTC. If you have the capital, El Salvador's Freedom Visa is unmatched. For most, Paraguay offers the better value proposition.
FAQ
Does Paraguay or El Salvador have better tax benefits?
Both have territorial tax systems with 0% on foreign income. However, El Salvador offers additional Bitcoin-specific benefits including no capital gains tax on BTC. Paraguay's system is simpler and more established with less regulatory uncertainty.
Is Bitcoin legal tender in Paraguay?
No. Unlike El Salvador, Paraguay has not adopted Bitcoin as legal tender. Cryptocurrency is largely unregulated in Paraguay—not illegal, but not officially recognized. El Salvador made Bitcoin legal tender in 2021.
Which country is safer: Paraguay or El Salvador?
Both are now safe. El Salvador transformed from 103/100K homicides (2015) to just 1.3/100K (2025)—a 98% reduction. Paraguay sits at 7.5/100K. El Salvador now has a Level 1 US travel advisory and is considered the safest nation in the Western Hemisphere. Paraguay remains safe with no gang presence.
How do residency requirements compare?
Paraguay residency takes 60-90 days and costs $2,290-4,495 total with no investment required. El Salvador's Freedom Visa requires $1M Bitcoin investment but offers citizenship in 2-4 months. El Salvador also has standard residency options for smaller investments.
Can I get citizenship in both countries?
Paraguay offers citizenship after 3 years of permanent residency. El Salvador's Freedom Visa ($1M BTC) provides citizenship in just 2-4 months. Standard El Salvador residency takes 5 years to citizenship. Both allow dual citizenship.