Starting a business in Paraguay may not be as common as in other destinations in Latin America for investment. However, there are major benefits including low taxes and a simple immigration system that makes getting residency easy. As a result, company registration in Paraguay is an easy way for businesspeople to grow their company in a new market.
If you are looking to enter Paraguay on a long or short-term basis, you may choose to hire using an employer of record (EOR) in Paraguay. This may be a simpler step forward than full company formation.
Known as “the Heart of South America”, Paraguay has experienced exponential economic growth over recent decades. The gross domestic product (GDP) reaching an impressive $39.5 billion by 2021 (all figures in USD). This is reflected by its gross national income (GNI), which reached $ 5,891 per capita. This makes Paraguay an upper-middle-income nation by international standards.
Paraguay’s rapid growth has been met with a concomitant increase in interest among international investors, with foreign direct investment (FDI) inflows growing to (USD) $207 million. Paraguay, despite being landlocked, has significant trade with Brazil and Argentina. These two countries have the region’s largest and third-largest GDPs. This makes them strong and strategic reasons for registering a business in Paraguay.
Along with those two countries and Uruguay, the country is also a founding member of the Southern Common Market (Mercosur), an economic integration and free trade initiative that recently celebrated its 30th anniversary. Paraguay has several free trade agreements (FTAs), including a major bilateral one with Chile.
If you want to incorporate a company in Paraguay and need help navigating the legal requirements needed to start one, your best bet is to align yourself with a local partner. Contact us now to discuss your business options.
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Starting a business in Paraguay: some considerations
Some considerations to take into account when starting a business in Paraguay include:
Choose your legal representative: If you are not going to be in the country permanently, you will need to appoint a legal representative in Paraguay. This can be anyone of legal age who isn’t otherwise barred from such a role, however, you will ideally want to appoint someone with a good understanding of the local corporate legal framework.
Entity type: The type of entity you choose depends on the desired enterprise structure, your liability acceptance, and capital investment. Foreign investors commonly select limited liability companies (Sociedad de Responsabilidad Limitada — SRL) and stock companies (Sociedad Anónima — S.A). Others also consider forming a branch or registering a subsidiary.
Economic activity: To comply with local regulations, it’s essential to correctly identify your economic activity and all sources of revenue. It’s highly recommended to work with a reliable corporate lawyer who can guide you on properly defining your operations in all official documentation.
4 steps to start a business in Paraguay
- Step 1: Draft the company’s bylaws
- Step 2: Obtain a VAT ID and certificate from the Chamber of Commerce
- Step 3: Open a corporate bank account to start your business in Paraguay
- Step 4: Make an initial investment
How to form a company in Paraguay: 4 key Steps
Starting a business in Paraguay involves four key steps, as explained below:
Step 1: Draft the company’s bylaws
Prepare your company’s bylaws which define the subscribed capital, fiscal address, and legal representative. Please note that this process may take up to 12 weeks.
Step 2: Obtain a VAT ID and certificate from the Chamber of Commerce
Depending on the type of entity you choose, you may need to declare the final beneficiaries, while if you are hiring local employees, you will need to register at the Labour Ministry.
Step 3: Open a corporate bank account to start your business in Paraguay
A Paraguay-based legal representative can suggest the ideal corporate bank account provider for your business based on type and location.
Step 4: Make an initial investment
With your company registered and the bank account open, you can now make your initial investment to complete the process of starting a business in Paraguay.
Common FAQs when forming a company in Paraguay
In our experience, these are the common questions and doubtful points of our Clients.
Yes, a business can be 100% foreign owned by either legal persons (“legal entities”) or natural persons (“individuals”).
Registering a company in Paraguay takes 8 weeks
The S.A. in a company name in Paraguay refers to a “Sociedad Anónima,” which translates to a “Joint Stock Company.” This legal framework establishes the company as a separate entity from its shareholders, with each shareholder possessing shares that represent their ownership stake. Importantly, the financial responsibility of shareholders is confined solely to the value of their shares, crafting a safeguarded boundary. The S.A. structure holds substantial prominence in Paraguay due to its exceptional adaptability and flexibility, rendering it the favored option for a diverse range of business ventures.
In Paraguay, S.A.S means “Sociedad por acciones Simplificada”, which translates to “Joint Stock Company.” This is a type of commercial company with legal personality and assets independent from those of its owners. Shareholders are liable only up to the amount of their respective contributions corresponding to the integration of the shares they subscribe to or acquire. Shareholders are not liable for labor, tax, or any other type of obligations incurred by the company beyond its contribution, except in the event that the legal personality of the company is declared unenforceable.
In Paraguay, both “S.A.S” (Sociedad por Acciones Simplificada) and “S.A” (Sociedad Anónima) are limited liability entity types.
A. Number of shareholders: A S.A.S can have from one to an unlimited number of shareholders, while an S.A must have at least two shareholders.
B. Responsibility of the shareholders: In both legal vehicles, Shareholders are not liable for labor, tax, or any other type of obligations incurred by the company beyond its contribution
C. Incorporation process: The S.A.S can be incorporated in 15 days while the S.A requires the approval of the Internal Audit (Sindico).In any case, the S.A can act as “in formation” until it completes the formalities.
D. Object of the company: In the S.A, one or more specific objects or lines of business must be established in the bylaws, while in the S.A.S, any lawful commercial activity can be established in a general way as an object.
Biz Latin Hub can help with company formation in Paraguay
At Biz Latin Hub, our multilingual team of company formation experts has years of experience supporting foreign investors starting a business in Paraguay. With our complete portfolio of back-office services, including legal, accounting, tax advisory, and recruitment, we can be your single point of contact for all of your business needs in Paraguay, or any of the other 15 countries across Latin America and the Caribbean where we operate.
Reach out to us now for personalized assistance or a free quote.
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The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.