Can you keep EU clients while being tax resident in Paraguay?

1. Tax residency vs. client location

A common misconception is that your tax residency must match your clients’ location. In reality, these are separate concepts.

Being tax resident in Paraguay determines:
- Where you pay personal income tax.
- Which country has primary taxing rights over your worldwide income.

Your clients, however, can be located anywhere, including the EU, without changing your residency or automatically creating tax issues.

2. Personal work vs. company structure

Whether you can “keep EU clients” depends largely on how you are paid.

Two typical scenarios:
- You invoice clients personally as a freelancer.
- Clients contract with a company you own.

Invoicing personally from Paraguay is usually straightforward from a tax perspective, but may raise concerns around VAT or withholding taxes in certain EU countries. Using a company can add clarity, but also introduces questions about corporate tax residency and management.

3. Permanent establishment risks in the EU

EU clients do not automatically create a permanent establishment for you or your company.

Permanent establishment risk usually arises when:
- You have offices or employees in the EU.
- You regularly conclude contracts in a specific EU country.
- Core business activities are carried out there.

If all work is performed remotely from Paraguay and you have no physical presence in the EU, the risk is typically low.

4. VAT and invoicing considerations

For most services provided from outside the EU to EU businesses, VAT is handled under the reverse charge mechanism.

Key points to check:
- Correct VAT wording on invoices.
- Valid EU VAT numbers for B2B clients.
- Proper classification of services.

If you work with EU consumers instead of businesses, VAT rules can be more complex and may require registration under OSS or alternative structures.

5. Withholding taxes and treaties

Some EU countries apply withholding tax on cross-border service payments, depending on the type of service.

Paraguay has a limited treaty network compared to the EU, so:
- Some payments may be subject to withholding.
- Contract wording becomes more important.
- Gross-up clauses may be worth considering.

This is often a contractual issue rather than a residency problem.

6. Banking and payments

EU clients often care more about smooth payments than about where you live.

Common solutions include:
- International fintech accounts.
- Multi-currency IBANs.
- Clear payment instructions in contracts and invoices.

Being tax resident in Paraguay does not prevent you from receiving EUR payments, as long as your banking setup is compliant.

7. Compliance from the EU client’s perspective

From the EU client’s side, what matters is:
- A valid invoice.
- Clear supplier identification.
- No unexpected VAT or compliance burden.

If you remove uncertainty for the client, your residency is rarely an obstacle.

Final thoughts

Yes, you can keep EU clients while being tax resident in Paraguay. The key is not your address, but how your services are structured, invoiced, and documented. When contracts, tax residency, and operational reality align, working with EU clients from Paraguay is both legal and practical.