IVA in Paraguay: Rates, Exemptions and What It Means for Freelancers

What IVA taxes

Article 80 of Ley N° 6380/2019 charges IVA on three things: the sale of goods, the supply of services (other than services performed as an employee), and the import of goods. Article 84 sets the territorial rule. It taxes goods situated in Paraguay and services performed in the national territory, regardless of where the contract was signed, where the parties live, who receives the service or where the payment comes from.

Under the general rule, the place where the work is done decides the question, not the client's location.

The rates

Article 90 sets the rates:

The executive may set rates between 5% and 10% within some of the reduced categories, so the table is the statute, not necessarily the rate on every product. Article 93 requires prices to be advertised with IVA included.

What is exempt

Article 100 lists the exemptions. The ones most likely to matter to a private individual are:

• Financial sales: sales of foreign currency and of public and private securities, including shares and quota interests in companies, and the assignment of receivables. This is the provision the DNIT relied on to exempt the disposal of cryptocurrency. See crypto taxes in Paraguay.
• Interest on public and private securities, and deposits with regulated banks, finance companies, cooperatives and mutuals.
• Books and newspapers, in print or electronic form, and qualifying educational, cultural or scientific magazines.
• Recognised education at every level; petroleum fuels; games of chance; short-route public passenger transport.
• The export of goods, provided the exporter keeps the export documentation. Without it, the law conclusively presumes the goods were sold in the domestic market.

An exemption has a cost. Under Article 91, if you make exempt or non-taxed supplies, the IVA you pay on related purchases cannot be credited. It becomes a cost for your income tax, and you are treated as a final consumer. Under Article 96, taxpayers with only exempt supplies must still file returns.

Exported services: no zero rate

People used to EU or UK VAT, where a service to a business customer abroad usually falls outside the local net, tend to misread this.

• Article 100 exempts the export of goods. It contains no general exemption for the export of services.
• Article 101 gives exporters a refund of their input IVA, and that is also framed around the export of goods.
• Article 84 taxes services performed in Paraguay whoever receives them.

The DNIT applied exactly this reasoning in binding consultation N° 476, published in 2024. The taxpayer was an individual working from home in Paraguay, doing online prospecting and arranging meetings for two German companies over Zoom, Microsoft Teams and similar platforms. The taxpayer argued the work was a digital service used entirely abroad and should be invoiced as exempt. The DNIT disagreed: the work was not a digital service, because it depended on human involvement rather than being essentially automatic, and it was performed in Paraguay, so the invoice must show it in the gravada (taxable) column. The ruling adds that Paraguay has applied this source principle to services since the previous tax law, Ley N° 125/1991.

The same ruling also held that the income was within the personal income tax on services (IRP-RSP) once the non-taxable threshold of ₲80,000,000 was exceeded. That is consistent with Article 48, which treats activities carried out in Paraguay as Paraguayan-source. It is the other half of the same answer. Working in Paraguay for a foreign client is not foreign income. See what "0% on foreign income" actually covers.

Digital services: the exception, and the inconsistency

Article 81 defines digital services as services supplied through online access over the internet or another network, which are essentially automatic and impossible to provide without information technology. Article 84, numeral 5, gives them their own territorial rule. They are taxed in Paraguay only when they are used there. The article then lists what counts as use in Paraguay:

• the IP address of the customer's device, or the country code of their SIM card;
• the customer's billing address, or the billing address the bank holds for them;
• the bank account used to pay;
• the entity that issued the card used to pay.

If none of those points to Paraguay, the service is not taxed. Article 6 of the annex to Decreto N° 3107/2019 says the same thing and expressly lists call centres, contact centres and BPO as digital services, provided they are supplied exclusively over a network.

IVA on foreign digital services you buy

The same statute taxes digital services supplied into Paraguay from abroad, such as streaming and software subscriptions. Article 97 makes the banks, payment processors and similar intermediaries that handle the payment responsible for collecting the tax.

Resolución General N° 76, dated 28 December 2020, sets out the mechanics. It records that Decreto N° 3667/2020 postponed the collection duty to 1 January 2021. The intermediary collects the IVA when the account holder pays a foreign digital provider by card or transfer, and shows the amount on the statement. If you are registered for IVA and the service relates to your taxable activity, the amount collected counts as IVA credit. Your card or bank statement is the supporting document, and you enter the credit on Formulario N° 120.

Who has to register

Article 82 lists the IVA taxpayers. For individuals there are two categories:

• people who provide personal or professional services other than as an employee, and people who rent out real estate;
• people who run a sole-proprietor business (empresa unipersonal).

Companies, branches of foreign entities, importers and others are also listed. The DNIT's IVA page lists the obligation as 211 – IVA General, and your RUC record should show it.

The personal income tax has a non-taxable threshold, and IVA works differently. The individual in consultation N° 476 had been registered for IVA since June 2023 but not yet for the IRP, which becomes due only above ₲80,000,000. Registering for a RUC as a freelancer usually means registering for IVA first.

How the return works

Article 86 requires IVA to be calculated monthly as IVA débito minus IVA crédito.

• Débito (output tax) is the IVA on your taxable sales for the month, less returns, discounts and qualifying bad debts (Art. 87).
• Crédito (input tax) is the IVA on stamped local purchase invoices, IVA paid on imports, and IVA you withheld from foreign suppliers (Art. 88). An invoice supports a credit only if it shows your name and RUC and describes the purchase precisely, and only if the purchase relates to taxable activity (Art. 89).
• If your credit exceeds your debit, you carry the excess forward. You cannot get it refunded, except under the exporter regime (Art. 88).
• Individual taxpayers supplying personal services may credit no more than 30% of the IVA on buying a vehicle (Art. 88).

You must issue a sales document stamped (timbrado) by the tax authority for every sale, and ask for one on every purchase (Art. 92). The monthly return is Formulario N° 120. The DNIT publishes it as Versión 4 and gives the due date as monthly. Under Article 83, the tax point is the earliest of delivery, receipt of any payment, or the date payment falls due.

What IVA means for a foreign-resident freelancer

On the DNIT's published reasoning, if you do the work in Paraguay, you charge 10% unless the service is a genuine digital service, wherever your client is. A foreign client cannot reclaim Paraguayan IVA, so in practice you either add it to your fee or absorb it. Your credits will be modest: equipment and software bought locally on proper invoices, and IVA collected on foreign subscriptions used for the business. The return is due every month once you are registered, including months with no invoices. A company does not change this, because its services are taxed under the same Article 84 and it brings the wider business income tax source rule with it. See IRP vs IRE.

What we would actually do

1. Describe your work accurately before you register. The question is whether it is a human service performed here or a genuinely automated digital service. Rulings N° 476 and N° 493 show that the answer decides the rate, and that the line is contested.
2. Set up your RUC obligations and invoicing correctly from the start, with a Paraguayan accountant who files Formulario N° 120 every month.
3. Price in the 10% in new client contracts, or confirm you can absorb it.
4. If the amount is material and your facts are closer to N° 493 than to N° 476, file your own consulta vinculante rather than relying on someone else's ruling. It binds the authority only for the person who asks.
5. Do not let IVA drive your residency decision on its own. Set it alongside the income tax position in Paraguay's income tax rates and the home-country questions on the tax residency overview.