Countries › Paraguay › Guide › 4. Entities and setup › Branch of a foreign company in Paraguay: Civil Code art. 1197, SUACE filing, registered powers, IRE, IDU on remittances and head office charges

Branch of a foreign company in Paraguay: Civil Code art. 1197, SUACE filing, registered powers, IRE, IDU on remittances and head office charges

Argentina. For full detail on Argentina, go to The Argentine Thread.

Last verified: 2026-10-28 · Status: Stable

A foreign company can operate in Paraguay through a branch (sucursal) without forming a local company: under Civil Code art. 1197 it must set up a representation domiciled in Paraguay, prove it was validly formed under its home law and document the decision to open the branch, the capital assigned, if any, and its legal representatives. The SUACE file is a notarial deed recording the legalised home country bylaws and branch resolution, with the representative's power registered in the Public Registry of Commerce, plus the same registry forms, court fees and Treasury opinion as local companies. For tax, the branch is an IRE taxpayer at 10 percent, profits it makes available to the head office bear 15 percent IDU, and interest, royalties and technical assistance paid to the head office are Paraguayan source income taxed at 15 percent INR and deductible only within a 30 percent of net income cap.

USD figures use PYG 5,847.90 per US dollar, the Banco Central del Paraguay reference quotation for 27 October 2026, the latest daily sheet published on the verification date. Amounts set in jornales or minimum wages use the daily minimum wage of PYG 117,077 and the monthly minimum wage of PYG 3,044,000 in force from 1 July 2026 (Resolución MTESS 670/2026). Conversions are for orientation only.

Key facts

Minimum assigned capital for a branch of a foreign company	None set by Código Civil art. 1197 PYGCódigo Civil art. 1197 as quoted by SUACE, as of 2026-10-28 · in force
Registry for branches of foreign companies	Registry of Legal Persons and Public Registry of Commerce (Dirección General de los Registros Públicos), via SUACE SUACE requirements for legal persons, point II, as of 2026-10-28 · in force
IRE rate on branch net income	10 %Ley 6380/2019 art. 2 num. 7 and 21, as of 2026-10-28 · in force
IDU on profits made available to a foreign head office	15 %Ley 6380/2019 art. 40 and 43 num. 2, as of 2026-10-28 · in force
INR on royalties and technical assistance paid to a related nonresident (100 percent deemed net income)	15 %Ley 6380/2019 art. 73, 75 num. 6 and 76, as of 2026-10-28 · in force
Cap on deductible related party interest, royalties and technical assistance	30 % of net incomeLey 6380/2019 art. 15 num. 23, as of 2026-10-28 · in force

The rule

1. Requirements for a foreign company. To comply with the formalities, every company formed abroad that wishes to carry on its activity in Paraguay must establish a representation domiciled in the country, prove that it was formed under the laws of its country, and prove in the same way the decision to create the branch or representation, the capital assigned to it, if any, and the appointment of its legal representatives.
Cost to do it: The article sets no minimum assigned capital ("in su caso", if any).
Example: A Chilean S.A. opening a Paraguayan branch files its bylaws, the board resolution opening the branch with any assigned capital, and the appointment of the branch representative.Ley Nº 1183/85 Código Civil, as quoted in the SUACE requirements, Art. 1197, 1985-12-23 official text · verified 2026-10-28

2. SUACE filing for a branch. Besides the general legal person file (SUACE form, IDs, deed with copies, Public Registries request cover form 01, registration minutes forms 14 and 17, Treasury opinion, court registration fee and special fee for the Registry of Legal Persons and the merchant registration), a branch files an original public deed recording (a) the bylaws from the home country, duly legalised, and (b) the decision to create the branch or establishment in Paraguay, duly legalised, containing the art. 1197 items. The power of attorney must be registered in the Powers section of the Public Registry of Commerce and the deed must cite its registration data and validity. Foreign holders, directors or attorneys must provide a Paraguayan identity card.
Cost to do it: Court registration fees and special fees (amounts not stated in the list), notary fees for the deed and the power registration, apostille and sworn translation in the home country and Paraguay.
Example: Order of work: legalise or apostille home documents, translate, register the power, record documents in a deed, then file through SUACE.SUACE general requirements for legal persons, General requirements and point II (sociedad constituida en el extranjero, sucursal), 2021-08-17 official text · verified 2026-10-28

3. Merchant registration and books. Companies whose main purpose is commercial acts are merchants and must register their merchant registration (matrícula) and required documents in the Public Registry of Commerce, keep chronological accounts in Spanish with at least a journal and an inventory book once capital exceeds 1,000 daily minimum wages, have books stamped by the registry before use, prepare an annual balance sheet within the first three months of each year and keep books and vouchers for five years.
Example: 1,000 daily minimum wages = PYG 117,077,000. / About US$20,020.Ley Nº 1034/83 Del Comerciante, Art. 3, 11, 12, 74, 75, 78, 79, 83 and 85, 1983-12-06 official text · verified 2026-10-28

4. Income tax on the branch. Branches, agencies or permanent establishments of persons domiciled or entities formed abroad that carry on taxable activities in Paraguay are IRE taxpayers. IRE is 10 percent of net income.
Example: Net income PYG 1,000,000,000: IRE PYG 100,000,000. / About US$171,002: IRE US$17,100.Ley Nº 6380/2019, Art. 2 num. 7 and art. 21, 2019-09-25 official text · verified 2026-10-28

5. Tax on profits sent to the head office. Profits, dividends or returns made available or paid by permanent establishments of entities formed abroad are subject to IDU, withheld by the payer, at 15 percent when the recipient is a nonresident, expressly including the foreign head office; for nonresidents it is a single and final payment. Amounts allocated to reserves or capitalisation are not taxed until capital is redeemed.
Example: Remitting the after tax PYG 900,000,000 bears IDU of PYG 135,000,000; the head office receives PYG 765,000,000. / About US$153,901 remitted, US$23,085 IDU, US$130,816 received.Ley Nº 6380/2019, Art. 40, 41, 42 and 43 num. 2, 2019-09-25 official text · verified 2026-10-28

6. Head office interest, royalties and technical assistance. Interest on loans or other investments by the head office or other foreign branches, and royalties and technical assistance paid by branches of foreign entities, are Paraguayan source income for INR. Amounts paid to the head office, shareholders or related entities not covered by a specific rule are taxed on 100 percent of the gross amount at 15 percent, withheld by the payer as a single and final payment. For IRE, interest, royalties and technical assistance paid to the head office or foreign branches are deductible only at market price or interest not above the average bank deposit rate published by the Central Bank, with the tax withheld, and only up to 30 percent of net income before that deduction.
Example: A PYG 100,000,000 royalty to the head office bears INR of PYG 15,000,000 withheld by the branch. / About US$17,100 royalty, US$2,565 INR.Ley Nº 6380/2019, Art. 15 num. 23, 73 num. 1, 75 num. 6, 76 and 77, 2019-09-25 official text · verified 2026-10-28

7. Beneficial ownership and changes. The registry law covers companies and other legal persons under the Civil Code and special laws. Where substantial capital of a Paraguayan entity belongs to entities resident abroad, it must also report and keep updated the ownership of the foreign shares or quotas and the powers granted in Paraguay, and report all shares if the foreign jurisdiction allows bearer shares; if the beneficial owner cannot be identified, the local legal representative is presumed to be the beneficial owner. New entities file within 45 business days of formation and changes within 15 business days.
Cost to do it: Fine 50 to 500 daily minimum wages (PYG 5,853,850 to PYG 58,538,500) or up to 30 percent of profits to be distributed.
Example: About US$1,001 to US$10,010.Ley Nº 6446/2019, Art. 2, 3, 5 and 7, 2019-11-29 official text · verified 2026-10-28

Point	Branch	EAS subsidiary
Separate legal person	No, part of the foreign company	Yes
Parent liability	Foreign company answers for the branch	Limited to committed contributions
Founding documents	Legalised home bylaws and branch resolution recorded in a Paraguayan deed	Model bylaws online
Registered power	Required in the Public Registry of Commerce	Legal representative named in the bylaws
Income tax	IRE 10 percent	IRE 10 percent
Profit repatriation	IDU 15 percent on profits made available to the head office	IDU 15 percent on dividends to a nonresident shareholder
Charges to the parent	INR 15 percent on interest, royalties, technical assistance; 30 percent deduction cap	Same

Branch or subsidiary for a foreign parent (Código Civil art. 1197 via SUACE; Ley 6480/2020; Ley 6380/2019; verified 28 October 2026)

Worked example

A foreign company's Paraguayan branch earns net taxable income of PYG 1,000,000,000 (about US$171,002).
IRE at 10 percent: PYG 100,000,000 (about US$17,100).
It makes the remaining PYG 900,000,000 available to the head office: IDU at 15 percent is PYG 135,000,000 (about US$23,085), so the head office receives PYG 765,000,000 (about US$130,816); the combined Paraguayan burden is 23.5 percent.
A separate royalty of PYG 100,000,000 (about US$17,100) to the head office bears INR of PYG 15,000,000 (about US$2,565) and is deductible for IRE only within the 30 percent of net income cap.
An Argentine head office gets no treaty relief in Paraguay because the DNIT treaty page lists no Paraguay Argentina income tax treaty; how Argentina taxes the branch profits is covered on The Argentine Thread guide.

Step by step

Board resolution of the foreign company opening the branch, stating assigned capital (if any) and appointing the Paraguayan legal representatives with powers.
Obtain a certificate of good standing or equivalent and certified bylaws; apostille or legalise them and the resolution; obtain sworn translations into Spanish.
Register the power of attorney in the Powers section of the Public Registry of Commerce.
Have a notary record the bylaws and the resolution in a public deed citing the registered power; file through SUACE with forms 01, 14 and 17, the Treasury opinion and court fees.
After registration obtain the RUC, employer registrations and stamped books, and file the branch's ownership chain and beneficial owners within 45 business days.
Set head office charge policies so interest and royalties stay within the market price and 30 percent rules and INR is withheld.

Common traps

The branch is not a separate legal person, so the foreign company is exposed to Paraguayan liabilities; most foreign investors use an EAS instead.
The power must be registered before the branch deed, and the deed must cite its registration data and validity (SUACE); a power from abroad that is not apostilled or translated stalls the file.
SUACE asks for a Paraguayan identity card for foreign holders, directors or attorneys, so plan for a resident representative or residence for the manager.
Head office charges are deductible only within the 30 percent of net income cap and at market rates, and INR must be withheld even on non deductible amounts (Ley 6380 art. 15 num. 23).
IDU at 15 percent applies to profits made available to the head office; the DNIT treaty page lists comprehensive income tax treaties with Chile, the Republic of China (Taiwan), the United Arab Emirates, Uruguay and Qatar and none with Argentina, so check the head office's country before assuming relief.
Ley 1034 requires a Spanish language journal and inventory book stamped by the registry before use; head office ledgers in another language do not satisfy it.

Sources

← Sociedad de responsabilidad limitada (S.R.L.) in Paraguay: 2 to 25 partners, quotas, 50 percent paid in, managers, registry and deemed distributionsEmpresa individual de responsabilidad limitada (EIRL) in Paraguay: sole trader with ring fenced capital, minimum capital and registry →

Get rule changes weekly

Free. One email a week from The LatAm Thread.

One more step after you press the button: we take you to Substack, where your email is already filled in. Confirm there to start. No spam, unsubscribe anytime, we never share your address. By subscribing you agree to the privacy policy.