What are Paraguay's personal income tax rates?
Paraguay's Personal Income Tax (IRP) has two rate structures: a flat 8% on capital gains, and progressive rates of 8%, 9%, or 10% on personal services income depending on net income level. The brackets are set by Article 69 of Law 6380/2019: 8% up to G. 50 million (~$7,600), 9% from G. 50-150 million (~$7,600-$22,800), and 10% above G. 150 million (~$22,800). IRP applies only to Paraguayan-source income; foreign income is exempt under territorial taxation. (Business income is taxed separately under IRE at a flat 10%.)
Tax Residency vs Immigration Residency
What is IRP?
IRP (Impuesto a la Renta Personal) is Paraguay's Personal Income Tax. It applies to individuals (persons físicas) who earn income from Paraguayan sources. The tax replaced the previous IRPC (Impuesto a la Renta del Servicio de Carácter Personal) under the 2019 tax reform.
The IRP covers two distinct income types:
Rentas de Servicios Personales (RSP)
Income from personal services, including employment, professional work, and independent services
Rentas y Ganancias del Capital (RGC)
Income from capital gains, property sales, investments, and rentals
Only Paraguayan-source income is subject to IRP. Foreign-source income (such as foreign employment income, overseas investments, or foreign rental income) is exempt under Paraguay's territorial tax system.
Source Citation
DNIT IRP Portal, retrieved March 2026
IRP Rate Structure
Personal Services Income (RSP)
Income from personal services is taxed at progressive rates of 8%, 9%, or 10%, depending on income level. The rate increases as your Paraguay income for 2026 rises across tax brackets.
| Income Type | Tax Rate | Form Number |
|---|---|---|
| Personal Services (RSP) | 8%, 9%, or 10% | Formulario 515 |
| Capital Gains (RGC) | 8% flat | Formulario 516 |
| Net Income Bracket (PYG) | Rate | Approx. USD |
|---|---|---|
| Up to G. 50,000,000 | 8% | ~$7,600 |
| G. 50,000,001 to G. 150,000,000 | 9% | ~$7,600 to ~$22,800 |
| Over G. 150,000,001 | 10% | > $22,800 |
Source Citation
Bracket thresholds are established by Article 69 of Law 6380/2019 and confirmed by PwC Paraguay (last reviewed February 2026) and the DNIT IRP Cartilla. The minimum non-taxable threshold for personal services is G. 80,000,000 (~$12,150 USD) in gross income.
Worked Example: G. 200,000,000 Net Income (Marginal Rates)
| Bracket | Taxable Base | Rate | Tax Owed |
|---|---|---|---|
| 1st bracket | G. 50,000,000 | 8% | G. 4,000,000 |
| 2nd bracket | G. 100,000,000 | 9% | G. 9,000,000 |
| 3rd bracket | G. 50,000,000 | 10% | G. 5,000,000 |
| Total | G. 200,000,000 | G. 18,000,000 (~$2,730) |
Note: Exchange rates fluctuate. The legal thresholds are the guaraní amounts, not the USD equivalents. Approximate USD values use ~6,586 PYG/USD.
Capital Gains Income (RGC)
Income from capital gains is taxed at a flat 8% rate. This includes gains from property sales, investments, and other capital transactions.
Source Citation
DNIT IRP Portal, retrieved March 2026
Who Pays IRP?
IRP applies to persons físicas (individuals) who earn Paraguayan-source income above certain thresholds. The DNIT estimates that approximately 300,000 taxpayers file IRP returns each year.
Filing Threshold for Personal Services
Individuals must file IRP if they earn more than Gs. 80,000,000 (approximately $12,150 USD at ~6,586 PYG/USD, as of early 2026) in Paraguayan-source personal services income during the fiscal year.
Note: Exchange rates fluctuate; the legal threshold is the guaraní amount, not the USD equivalent.
Who Must File
- • Employees earning Paraguayan wages
- • Independent contractors and freelancers performing services in Paraguay
- • Professionals (doctors, lawyers, accountants, etc.)
- • Public sector employees
- • Individuals earning rental income from Paraguayan property
- • Individuals earning capital gains from Paraguayan asset sales
Who Is Exempt
- • Individuals earning below the Gs. 80 million threshold
- • Individuals with only foreign-source income
- • Non-residents (they pay INR, a separate tax)
Source Citation
DNIT News - "Casi 300 mil contribuyentes liquidarán el IRP en marzo", retrieved March 2026
Paraguayan vs. Foreign Source Income
A critical concept in Paraguay's tax system is the distinction between Paraguayan-source and foreign-source income.
IRP applies ONLY to Paraguayan-source income. Foreign-source income is exempt.
Paraguayan-Source Income
(subject to IRP)
- • Wages for work performed in Paraguay
- • Income from services provided within Paraguay
- • Rental income from Paraguayan property
- • Capital gains from sales of Paraguayan assets
Foreign-Source Income
(exempt from IRP)
- • Foreign employment income
- • Foreign investment income
- • Foreign rental income
- • Foreign pensions
The Complexity Lies in Source Determination
For remote workers, freelancers with international clients, and cross-border situations, determining whether income is Paraguayan-source or foreign-source requires careful legal analysis.
The location of the client alone does not determine source; the place where economic activity occurs matters.
Read more: Paraguay's Territorial Tax System Explained
Filing Obligations
IRP is filed annually. The filing deadline is March of each year for the previous fiscal year (for example, March 2026 is the deadline for fiscal year 2025 income).
Two Separate Forms
Formulario 515
For declaring personal services income (Rentas de Servicios Personales)
Formulario 516
For declaring capital gains (Rentas y Ganancias del Capital)
Requirements to File
- • Must have a RUC (Registro Único de Contribuyente); learn about RUC registration
- • Must be registered in the Marangatu tax system
- • Must have electronic invoicing capability set up
- • Must maintain proper records of income and expenses
Consequences of Non-Filing
- • Late filing penalties (accumulate monthly)
- • Interest on overdue payments (accrues daily)
- • Potential RUC suspension (affects all tax activities)
- • Loss of tax residency status (requires re-establishment)
DNIT actively monitors compliance and enforces penalties.
Source Citation
DNIT IRP Filing Information, retrieved March 2026
IRP vs. Other Paraguay Taxes
Understanding how IRP fits within Paraguay's broader tax system helps clarify your obligations.
| Tax | Full Name | Rate | Applies To |
|---|---|---|---|
| IRP | Impuesto a la Renta Personal | 8%, 9%, 10% (services) 8% (capital) | Individuals' personal income |
| IRE | Impuesto a la Renta Empresarial | 10% | Companies and business income |
| INR | Impuesto a la Renta de No Residentes | 10% | Non-residents' Paraguay income |
| IVA | Impuesto al Valor Agregado | 10% | Consumption/VAT |
Note: IVA (VAT) is a consumption tax separate from income tax; it applies to most goods and services purchased in Paraguay.
Key distinction: IRP is for individuals. IRE is for companies. If you operate through a Paraguayan company, your business income is taxed at 10% under IRE, not IRP.
Source Citation
Law 6380/2019, DNIT IRP Portal, and PwC Paraguay Tax Summary (last reviewed February 2026)
Why Professional Help Matters
The IRP brackets are now published in law (Article 69, Law 6380/2019), but several factors still create real complexity:
1. Income Classification
Distinguishing between personal services income (Form 515) and capital gains (Form 516) requires legal interpretation. Certain income types could fall into either category depending on circumstances.
2. Source Determination
For remote workers, international freelancers, and cross-border situations, determining whether income is Paraguayan-source or foreign-source is fact-specific and complex. Getting this wrong has significant tax consequences. See our foreign-source income rules guide.
3. Compliance Requirements
IRP compliance requires RUC registration, Marangatu system setup, electronic invoicing, and annual filing. Errors trigger penalties and can affect your tax residency status.
Key Takeaways
- IRP applies to Paraguayan-source income earned by individuals
- Capital gains are taxed at a flat 8%
- Personal services income is taxed at 8%, 9%, or 10% (progressive, brackets in Law 6380/19 Art. 69)
- Filing deadline is March annually for the previous fiscal year
- Foreign-source income is exempt under territorial taxation
- Source determination and income classification require professional analysis
The IRP system demonstrates a common theme in Paraguay taxation: the published rates are simple, but applying them correctly to your situation requires understanding residency status, income classification, and source rules.
Have more questions about Paraguay taxes? See our tax FAQ for answers to common questions about tax residency, territorial taxation, and filing requirements.
Frequently Asked Questions
What is the current IRP rate in Paraguay?
IRP has two rate structures. Capital gains are taxed at a flat 8% rate. Personal services income is taxed at progressive rates of 8%, 9%, or 10%, depending on income level. The brackets are set by Article 69 of Law 6380/2019: 8% up to G. 50 million, 9% from G. 50 million to G. 150 million, and 10% above G. 150 million.
How is IRP different from IRE?
IRP (Impuesto a la Renta Personal) applies to individuals' personal income. IRE (Impuesto a la Renta Empresarial) applies to companies and business income. IRE has a flat 10% rate, while IRP has progressive rates of 8-10% for personal services and 8% for capital gains.
Do I pay IRP on foreign income?
No. IRP applies only to Paraguayan-source income. Foreign-source income, including foreign employment, foreign investments, and foreign rental income, is exempt under Paraguay's territorial tax system. However, determining whether income is foreign-source requires careful analysis of where the economic activity occurs. See our foreign-source income rules guide.
What is the minimum income threshold to file IRP?
For personal services income, you must file IRP if you earn more than Gs. 80,000,000 (approximately $12,150 USD at ~6,586 PYG/USD, as of early 2026) in Paraguayan-source income during the fiscal year. There is no minimum threshold for capital gains: if you have Paraguayan-source capital gains, you must file.
When is the IRP filing deadline?
The IRP filing deadline is March annually. You must file your IRP return for the previous fiscal year by March.
What forms do I need to file IRP?
Two forms are used for IRP: Formulario 515 for personal services income (Rentas de Servicios Personales) and Formulario 516 for capital gains (Rentas y Ganancias del Capital). You must determine which form applies based on your income type.
Who must pay IRP in Paraguay?
IRP applies to individuals (personas físicas) who earn Paraguayan-source income above the filing threshold. This includes employees, independent contractors, professionals, public sector workers, and individuals earning rental or capital gains income from Paraguayan sources.
How do I know which IRP rate applies to me?
The rate depends on your income type and level. Capital gains are taxed at 8%. Personal services income is taxed at 8%, 9%, or 10% based on brackets set in Article 69 of Law 6380/2019: 8% up to G. 50 million net income, 9% from G. 50 million to G. 150 million, and 10% above G. 150 million.
Can I file IRP if I'm not a Paraguay resident yet?
Yes. Once you obtain tax residency by registering for a RUC, you must file IRP returns on Paraguayan-source income regardless of your immigration residency status. Immigration residency (permanent or temporary) and tax residency are separate concepts in Paraguay.