Countries › Paraguay › Guide › 15. Exiting › Closing the branch of a foreign company
Closing the branch of a foreign company
Last verified: 2026-10-28 · Status: Stable
A Paraguayan branch is not a separate company, so closing it means winding down the establishment the foreign company registered under Civil Code art. 1197, not liquidating a local entity. Profits sent to the head office are taxed like dividends at 15 percent IDU, and interest, royalties and other amounts paid to the head office bear nonresident tax on a 100 percent base. The branch must still close its tax registration, settle its workers and keep a representative able to receive claims until it does.
USD figures use PYG 5,868.31 per US dollar, the Banco Central del Paraguay reference quotation for 28 October 2026 (bcp.gov.py cotización referencial). Minimum wage figures use Resolución MTESS 670/2026: monthly PYG 3,044,000, daily for monthly paid workers PYG 101,467 and daily minimum wage (jornal) PYG 117,077, from 1 July 2026. Conversions are for orientation only.
Key facts
| IDU on branch profits made available to the foreign head office | 15 %Ley 6380/2019 art. 40 and 43 num. 2, as of 2026-10-28 · in force |
|---|---|
| INR base on amounts paid to head office or related parties not otherwise covered | 100 %Ley 6380/2019 art. 75 num. 6, as of 2026-10-28 · in force |
| Deadline to request RUC cancellation after cessation | 30 business daysRG 79/2021 art. 18 (RG 133/2023), as of 2026-10-28 · in force |
The rule
1. What a branch is. Companies constituted abroad are governed by the law of their home country as to existence and capacity, but their establishments, agencies or branches in Paraguay are domiciled in Paraguay for the acts carried out there and must comply with the obligations of the most similar local company type. To operate, the foreign company must set up a representation with a domicile in Paraguay, prove it was validly constituted and register the decision to create the branch, its assigned capital (if any) and its representatives.
Cost to do it: Registry and notary costs on closure filings are market priced.
Example: A foreign head office resolves to close its Paraguayan branch and keeps its Paraguayan representative in office while the branch winds down. / Not a cash cost.Ley Nº 1183/1985 Código Civil, Art. 1196 and 1197, 1985-12-18 official text · verified 2026-10-28
Cost to do it: Registry and notary costs on closure filings are market priced.
Example: A foreign head office resolves to close its Paraguayan branch and keeps its Paraguayan representative in office while the branch winds down. / Not a cash cost.Ley Nº 1183/1985 Código Civil, Art. 1196 and 1197, 1985-12-18 official text · verified 2026-10-28
2. Representative stays liable until the end. The representative of a foreign company may perform all acts the company may perform and represent it in court; any contrary provision is void. Representatives carry the same liability as administrators under the Civil Code (for types not regulated in it, that of S.A. administrators). Service of process on a foreign company can be made in Paraguay on its general representative or on the attorney who acted in the contract giving rise to the dispute.
Cost to do it: Keep a representative until claims are closed.
Example: A supplier sues after the branch stops trading: service on the registered representative is valid. / Not a cash cost.Ley Nº 1183/1985 Código Civil, Art. 1200 and 1201, 1985-12-18 official text · verified 2026-10-28
Cost to do it: Keep a representative until claims are closed.
Example: A supplier sues after the branch stops trading: service on the registered representative is valid. / Not a cash cost.Ley Nº 1183/1985 Código Civil, Art. 1200 and 1201, 1985-12-18 official text · verified 2026-10-28
3. Branch profits to the head office: 15 percent IDU. Profits made available or paid by permanent establishments of entities constituted abroad to their head office are subject to IDU at 15 percent, withheld by the branch as payer and final for the nonresident.
Cost to do it: IDU 15 percent of profits remitted.
Example: Final branch profit of PYG 500,000,000 remitted to the head office: IDU PYG 75,000,000, net PYG 425,000,000. / About US$85,203 gross, US$12,781 IDU, US$72,423 net.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 40, 41 and 43 num. 2, 2019-09-25 official text · verified 2026-10-28
Cost to do it: IDU 15 percent of profits remitted.
Example: Final branch profit of PYG 500,000,000 remitted to the head office: IDU PYG 75,000,000, net PYG 425,000,000. / About US$85,203 gross, US$12,781 IDU, US$72,423 net.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 40, 41 and 43 num. 2, 2019-09-25 official text · verified 2026-10-28
4. Other payments to the head office. Interest on loans or investments by the head office or other foreign branches, royalties and technical assistance paid by branches of foreign entities are Paraguayan source. Amounts made available, remitted or paid to shareholders, head office or related entities that are not covered by a specific item bear INR on 100 percent of the gross amount at 15 percent.
Cost to do it: INR 15 percent of the gross amount.
Example: Settling a head office service charge of PYG 100,000,000 before closing: INR PYG 15,000,000. / About US$17,041 charge, US$2,556 INR.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 73 num. 1 and 13, 75 num. 6 and 7 and 76, 2019-09-25 official text · verified 2026-10-28
Cost to do it: INR 15 percent of the gross amount.
Example: Settling a head office service charge of PYG 100,000,000 before closing: INR PYG 15,000,000. / About US$17,041 charge, US$2,556 INR.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 73 num. 1 and 13, 75 num. 6 and 7 and 76, 2019-09-25 official text · verified 2026-10-28
5. Tax closing. The branch must communicate the cessation within 30 days with a final balance, file closing returns for each tax and request RUC cancellation within 30 business days of the cessation through Form 623; since 1 May 2026 the request is only admitted with tax and customs obligations current and no pending audits, refund claims or disputes.
Cost to do it: No fee in these rules.
Example: Branch stops trading on 30 June: cessation notice by 30 July; RUC cancellation request within 30 business days. / Not a cash cost.Ley Nº 125/1991 Que establece el nuevo régimen tributario; Resolución General Nº 79/2021 art. 18 and 20 (RG 133/2023, RG DNIT 34/2025), Ley 125 art. 192 num. 7; RG 79/2021 art. 18 and 20, 1991-12-18 official text · verified 2026-10-28
Cost to do it: No fee in these rules.
Example: Branch stops trading on 30 June: cessation notice by 30 July; RUC cancellation request within 30 business days. / Not a cash cost.Ley Nº 125/1991 Que establece el nuevo régimen tributario; Resolución General Nº 79/2021 art. 18 and 20 (RG 133/2023, RG DNIT 34/2025), Ley 125 art. 192 num. 7; RG 79/2021 art. 18 and 20, 1991-12-18 official text · verified 2026-10-28
6. Employees of the branch. A closure of the branch is a closure for labor purposes: written notice to the labor authority before ending contracts, or art. 91 severance for every worker whatever their seniority; double severance for workers with ten or more years on a verified closure.
Cost to do it: Severance per worker.
Example: A stable worker on PYG 3,044,000 a month with eleven years: 2 x 15 x 11 daily wages of PYG 101,467 = PYG 33,484,110. / About US$5,706.Ley Nº 213/1993 Código del Trabajo, Art. 78 h), 80, 94 and 99, 1993-06-29 official text · verified 2026-10-28
Cost to do it: Severance per worker.
Example: A stable worker on PYG 3,044,000 a month with eleven years: 2 x 15 x 11 daily wages of PYG 101,467 = PYG 33,484,110. / About US$5,706.Ley Nº 213/1993 Código del Trabajo, Art. 78 h), 80, 94 and 99, 1993-06-29 official text · verified 2026-10-28
Worked example
- Closing a branch with PYG 500,000,000 of final profit (about US$85,203): IDU PYG 75,000,000 withheld before remittance; any assigned capital returned is not profit, but document it carefully because the law text does not separately address return of a branch's assigned capital.
Step by step
- Head office resolution to close; keep the Paraguayan representative in office until the end.
- Notify the labor authority and settle employees.
- Collect receivables, settle suppliers and head office charges (INR where due).
- Remit final profits net of 15 percent IDU.
- File closing returns, the cessation notice and the RUC cancellation request; revoke the representative's powers only once claims are closed.
Common traps
- Head office charges booked at the end (management fees, interest, royalties) are Paraguayan source and bear INR at 15 percent.
- Removing the representative too early leaves no one able to receive service, but service on the attorney who acted in the contract is still valid.
- Pending customs guarantees or IVA refund claims block RUC cancellation.
Sources
- Código Civil Ley 1183/1985, official signed text (BACN, scanned PDF)
- Ley 6380/2019 tax law text (DNIT)
- Ley 125/1991 tax law incl. Book V procedure (BACN)
- Resolución General 133/2023 amending RG 79/2021 art. 18 (DNIT)
- Resolución General DNIT 34/2025 amending RG 79/2021 art. 20 (DNIT)
- Código del Trabajo Ley 213/1993 (DNIT)
- Resolución MTESS 670/2026 minimum wage
- BCP daily reference exchange rates
Related pages
- entities/branch-of-a-foreign-company
- exiting/closing-with-the-dnit-and-deregistration
- exiting/closing-down-and-employees
- taxes/non-resident-withholding-inr
- exiting/exiting-paraguay
- /calendar/
- /country/paraguay/
- Live dashboard
Related: Paraguay country profile · live dashboard · central bank and release calendar · our posts on X
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