Paraguay vs Panama Residency
Where the money goes is the cleanest difference between the two, and the Investor Pass is the fairer comparison if you were going to place capital anyway.
Last verified 2026-08-20Next review 2026-11-204 official sources
Panama's Friendly Nations route is no longer the cheap option it was. Executive Decree 197 of 2021, with a further change by Executive Decree 226, restricted the economic solvency requirement to employment in a Panamanian company, a real estate investment of at least USD 200,000, or a fixed-term bank deposit of at least USD 200,000 held for a minimum period. It also made the permit a two-year provisional residence first, with permanent residence applied for afterwards.
Paraguay's general route has no published monetary threshold. Resolución DNM N.° 407/2026 requires verifiable income and evidence that you actually carry on the activity you declare, across twelve applicant categories, and the migration authority has not published a figure for any of them.
The two systems in outline
| Paraguay | Panama | |
|---|---|---|
| Main route for a non-regional applicant | Temporary residency, then permanent by change of category | Friendly Nations, if your nationality is on the list, otherwise other categories |
| Nationality restriction | None on the general route. The cheaper MERCOSUR route is limited to eight South American nationalities | Friendly Nations is limited to a published list of countries |
| Money required up front | No published threshold. Solvency is evidenced, not deposited | USD 200,000 in property or a fixed deposit, or a Panamanian job with the supporting corporate paperwork |
| Structure of the grant | Temporary up to 2 years, renewable, then permanent | Two-year provisional residence, then permanent residence applied for |
| Personal income tax | Territorial IRP at 8% / 9% / 10% on services, 8% on capital, Paraguayan-source only | Territorial. Residents taxed on Panamanian-source income, on a progressive scale with a 0% band, then 15% and 25% |
| Citizenship | Constitutional minimum of three years of permanent residency | Longer, with a Spanish and civics examination |
Where the money goes
This is the cleanest difference between the two and it is worth being blunt about.
In Panama, under the current Friendly Nations rules, the mainstream non-employment routes require you to place USD 200,000, either into Panamanian real estate or into a fixed-term deposit with a Panamanian bank for a defined minimum term. That is capital committed, not a fee. It may be a perfectly good investment; it is still capital you cannot use elsewhere while the residence depends on it.
In Paraguay, the equivalent requirement is evidentiary. Under Resolución DNM N.° 407/2026 you show verifiable income and proof that you genuinely carry on the declared activity, within one of twelve named categories including teleworkers and digital nomads, retirees and pensioners, property owners and the self-employed. The migration authority has not published a monetary threshold, and neither have the professional analyses of the resolution we have read. What that means in practice is set out honestly in the economic solvency page, including the fact that any specific figure quoted to you is unverified.
Paraguay does have an investment route with real numbers, the Investor Pass, at USD 200,000 for real estate or stock-market investment and USD 150,000 for tourism projects. It grants direct permanent residency without a prior temporary period. See the Investor Pass. If you are going to place USD 200,000 anyway, that is the comparison to run against Panama, not the general route.
Tax: both territorial, differently
Panama and Paraguay are both territorial systems, which is why they appear on the same lists. The mechanics differ.
Panama taxes residents on Panamanian-source income on a progressive scale that starts with a genuine 0% band up to a stated amount, then 15%, then 25%. Foreign-source income is outside the base. Panama's system has been the subject of considerable international scrutiny, and its position on transparency lists has moved over the years, which is a practical consideration when opening bank accounts elsewhere or explaining your residence to a European tax authority.
Paraguay taxes Paraguayan-source income under the IRP at 8%, 9% and 10% on personal services and 8% on capital, and the source boundary is set by Article 48 of Ley N° 6380/2019. Paraguay's reputational position is quieter, largely because it is smaller and has been marketed less. Both countries have the same structural weakness for the planner: a narrow treaty network.
The trap in both is identical. If you become a business taxpayer, the source rule that applies to you may be wider than the personal one. In Paraguay this is Article 6 and the IRE, explained in IRP vs IRE. Panama has its own version of the question. Do not assume a company inherits the individual's territorial treatment in either country.
Presence and practicality
Panama's advantages are real: better air connectivity, a dollarised economy, a banking system used to foreign clients, and an established professional services market. Its disadvantages are the capital requirement, higher costs in Panama City, and the fact that the residency market there is mature enough to be crowded with intermediaries of varying quality.
Paraguay's advantages are cost, a lighter financial requirement, and a shorter constitutional path to citizenship. Its disadvantages are worse connectivity, a smaller banking system that is harder for a new arrival to enter (see opening a bank account), and less English spoken.
Which to choose
- You have USD 200,000 to place and want the better-connected country: Panama.
- You do not want to lock up capital: Paraguay's general route, subject to evidencing solvency.
- You want the shortest constitutional path to a second passport: Paraguay, on the three-year minimum in Article 148. See the citizenship timeline.
- Your nationality is not on Panama's Friendly Nations list: Paraguay's general route has no nationality restriction.
- You are retiring on a pension: both have retiree-oriented treatment, and Panama's pensionado programme has a long-established discount scheme. See Paraguay residency for retirees.
Scope and currency. The Panamanian material here summarises the position after Executive Decrees 197 and 226 of 2021 and published professional analysis. Panama's migration requirements, its country list, deposit terms and the health-certificate and paperwork requirements change, and we do not track them. Confirm everything Panamanian with the Servicio Nacional de Migración or a Panamanian lawyer. We are a Paraguayan residency service and this comparison exists because readers ask for it, not because we practise there.
See also Paraguay vs Uruguay and what Paraguayan residency does not solve.
Common questions
- How much money do you need for Panama’s Friendly Nations visa?
- Since Executive Decree 197 of 2021, with a further option added by Executive Decree 226, the economic solvency requirement is employment in a Panamanian company, a real estate investment of at least USD 200,000, or a fixed-term bank deposit of at least USD 200,000 held for a minimum term. Confirm the current rules with the Servicio Nacional de Migración.
- Does Paraguay require a deposit or investment?
- Not on the general route. Resolución DNM N.° 407/2026 requires documentary evidence of verifiable income and of the actual exercise of the declared activity, and publishes no monetary threshold. Paraguay’s separate Investor Pass publishes USD 200,000 for real estate or stock-market investment and USD 150,000 for tourism projects.
- Which has the faster route to citizenship?
- Paraguay, on the constitutional minimum of three years of permanent radicación in Article 148, alongside the other conditions. Panama’s naturalisation period is longer and includes a Spanish and civics examination.
Not sure which pathway applies to you?
Paraguay publishes several residency routes with different requirements, fees and deadlines. A short call will tell you which one fits your situation — or whether Paraguay is the wrong answer for you.
Sources
Every legal, fee and procedural statement on this page is taken from the sources below and was checked on 2026-08-20. Where they change, this page changes.
- Servicio Nacional de Migración de Panamá — Permisos migratorios — Panamanian residence permit categories, including the Países Amigos subcategory
- PwC Worldwide Tax Summaries — Panama, taxes on personal income — Panama taxes Panamanian-source income on a 0% / 15% / 25% scale
- Dirección Nacional de Migraciones — Actualización del régimen de acreditación de solvencia económica — Resolución DNM N.° 407/2026 — categories, effective date and standard of proof
- Dirección Nacional de Migraciones — Paraguay Investor Pass — Investor Pass: investment thresholds and direct permanent residency
Related
This page is general information about Paraguayan rules as published by the authorities named above. It is not legal or tax advice for your circumstances, and immigration outcomes depend on your nationality, documents and individual case. See our legal and tax information disclaimer.