Panama vs Paraguay residency
Panama and Paraguay both tax individuals only on locally sourced income, which is why founders with foreign income compare them. Paraguay's general temporary residence needs no investment; Panama's main routes ask for USD 200,000 under Friendly Nations, for citizens of listed countries, or from USD 300,000 under the Qualified Investor programme.
Updated
Panama also has a pensioner route for people with a lifetime pension of USD 1,000 a month. The table compares the routes, legal bases, taxation and timelines.
| Criterion |  Panama |  Paraguay |
|---|---|---|
| Main routes | Friendly Nations (closed list of countries), Qualified Investor and pensioner | General temporary residence for up to 2 years, extendable once for the same period |
| Investment needed | Friendly Nations: B/. 200,000 (USD 200,000) in property or a 3-year fixed deposit; Qualified Investor: from B/. 300,000 (USD 300,000) in new property | None on the general route |
| Legal basis | Executive Decree 416 of 2012, amended by Decrees 197 and 226 of 2021 (Friendly Nations); Executive Decree 17 of 8 September 2026 (Qualified Investor) | Law 6984/2022 (Migration Law) |
| Path to permanent residence | Friendly Nations: 2-year provisional phase before permanent residence | Temporary residence precedes an application for permanent residence |
| Personal tax basis | Territorial: Panamanian-source income only | Territorial: Paraguayan-source income only |
| Tax on local income | 0% up to USD 11,000, 15% up to USD 50,000, 25% above | 8% / 9% / 10% progressive on personal services, once gross income exceeds PYG 80,000,000 a year |
| Timeline | Qualified Investor: up to 15 working days for the investment certificate and 30 working days for the SNM decision | About 105 days from visit to completed file (our experience) |
| Banking partners in our network | 1 | 4 |
- Main routes: Servicio Nacional de Migración, Executive Decrees 226 of 2021, 16 and 17 of 2026 (Panama); Dirección Nacional de Migraciones, via the state news agency IP (Paraguay). As of 2026-10-25.
- Investment needed: Servicio Nacional de Migración, Executive Decree 226 of 2021 and Executive Decree 17 of 2026 (Panama); Dirección Nacional de Migraciones (Paraguay). As of 2026-10-25.
- Legal basis: Servicio Nacional de Migración and Gaceta Oficial (Panama); Dirección Nacional de Migraciones (Paraguay). As of 2026-10-25.
- Path to permanent residence: Servicio Nacional de Migración, Executive Decree 226 of 2021 (Panama); Law 6984/2022 via the state news agency IP (Paraguay). As of 2026-10-25.
- Personal tax basis: PwC Worldwide Tax Summaries, Panama and Paraguay. As of 2026-10-25.
- Tax on local income: PwC Worldwide Tax Summaries, Panama (Panama); PwC Worldwide Tax Summaries and DNIT (Paraguay). As of 2026-10-25.
- Timeline: Executive Decree 17 of 2026 (Panama); our Paraguay case files, as of 2026-05-13 (Paraguay).
General information, not legal or tax advice. Approval always rests with the institution or authority.
Our take
Paraguay suits founders who want a residence permit without tying up capital and who accept a document-heavy process with a visit in person.
Panama suits citizens of Friendly Nations countries and investors who can commit USD 200,000 or more, retirees with a qualifying pension, and people who want permanent residence after a two-year provisional phase. In both countries a residence permit is not the same as tax residency, and your current country's exit rules still apply.
Questions
Do Panama and Paraguay tax foreign income?
Both use territorial taxation for individuals: Panama taxes Panamanian-source income and Paraguay taxes Paraguayan-source income. Foreign-source income generally stays outside their tax, but your former country may still tax you until you have left it properly.
Which countries qualify for Panama's Friendly Nations route?
Only nationals of the countries on a closed list set by executive decree; Ecuador was added on 31 August 2026. The route requires a USD 200,000 property or a three-year fixed deposit, and permanent residence follows a two-year provisional phase.
Do I need to invest to get Paraguay residency?
No. The general temporary residence under Law 6984/2022 has no investment threshold. It is granted for up to two years, can be extended once and precedes permanent residence.
The jurisdictions in this comparison
- Panama residency for founders and investorsPanamanian permanent residence lets foreigners live in Panama indefinitely, reached through routes such as Friendly Nations, Qualified Investor or the pensioner visa. Since September 2026 the Qualified Investor route follows Executive Decree 17, which kept B/. 300,000 for new property. It suits founders, investors and retirees with income from abroad.Learn more
- Paraguay residency for founders and investorsParaguayan temporary residency is a two-year permit, renewable once, for foreigners who want a legal base in South America and a territorial tax system that does not tax foreign-source income. As of October 2026 it is the required first step towards permanent residency. It suits remote founders, investors and location-independent professionals.Learn more
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