Sunday, September 1, 2024
Paraguay vs Georgia: Which Tax Residency Fits Remote Founders Better?
Paraguay vs Georgia: Tax Residency Comparison for Remote Entrepreneurs in 2026
Introduction
In the era of global remote work, choosing the right tax jurisdiction can have a major financial impact. Two frequently compared destinations are Paraguay and Georgia. Both offer favorable rules for online activities, but their tax systems, legal requirements, and living costs differ significantly.
Below is detailed, up-to-date information, free from oversimplifications and marketing exaggeration.
Paraguay – tax system and residency
Tax system
Paraguay uses a territorial system, meaning only income earned within Paraguay is taxed. Income generated abroad is not taxed for tax residents.
Key points:
- Personal income tax: 10% on locally earned income.
- VAT: 10% on local goods and services.
- Tax on foreign income: 0% for residents.
- No wealth or inheritance tax.
Obtaining tax residency
The process includes:
- Temporary residence permit, convertible to permanent after 2 years.
- Registration of taxpayer number (RUC).
- Obtaining a tax residency certificate from local authorities.
Occasional presence in the country may be required depending on strategy.
Cost of living
According to Numbeo, monthly living costs (excluding rent) for one person in Asunción: approximately 508 USD.
Georgia – tax system and residency
Tax system
Georgia offers favorable tax options, but the system is more complex than Paraguay's.
- Standard personal income tax: 20%.
- VAT: 18%.
- Capital gains and dividends may be taxed, but special regimes exist with benefits.
Preferential tax regimes
Small Business Status
- Revenue tax: 1% for individual entrepreneurs with annual turnover up to ~500,000 GEL (~180,000 USD).
- Applies to various service activities, including IT, marketing, and consulting.
- Exceeding the limit increases the rate to 3% or 20%.
- Accounting and tax filings are required.
Virtual Zone Status (for IT companies)
- Companies registered in Virtual Zone: 0% VAT and 0% corporate tax on exported IT services.
- Dividend payouts may be taxed at a low rate (~5%).
- Formal registration and operational activity are required.
Cost of living
In Tbilisi, monthly living costs (excluding rent) for one person: approximately 636 USD, higher than Paraguay but still relatively low compared to Western Europe.
Key comparison
| Element | Paraguay | Georgia |
|---|---|---|
| Tax on foreign income | 0% | Taxed, but special regimes reduce it (Small Business 1%, Virtual Zone 0%) |
| Standard personal income tax | 10% | 20% |
| VAT | 10% | 18% |
| Possibility of 0% tax | Yes (foreign income only) | Yes (special regimes) |
| Cost of living | Lower (~508 USD/month) | Higher (~636 USD/month) |
| Bureaucracy / formalities | Simple system | More accounting and legal formalities |
Conclusion
Paraguay: simple and transparent system, no tax on foreign income, lower living costs.
Georgia: ideal for small businesses and IT with special tax regimes, but higher bureaucracy and living costs.
The choice depends on the entrepreneur's profile and income structure.
For personalized guidance on establishing tax residency, visit Zentra for expert advice tailored to your unique circumstances.