Employer of Record Paraguay
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Agility EOR delivers services for business’s looking for an Employer of Record in Paraguay. We help clients hire new employees or transfer existing employees into a fully-managed EOR service.
Employer of Record in Paraguay
A Brief Guide to Paraguay
Paraguay, the land of rivers, is an intriguing country in the heart of South America, tucked between Argentina, Bolivia, and Brazil. It’s a country blessed with abundant natural resources and a vibrant culture that resonates with its people’s indomitable spirit and pride.
Central South America
Asunción, Ciudad del Este, San Lorenzo
~$40 billion (USD)
Agriculture, Manufacturing, Construction, Mining
Business Culture in Paraguay
In Paraguay, business culture is primarily built on personal relationships and trust. Respect for hierarchy and seniority is ingrained into Paraguayan society, and this carries over into their business practices. It’s not uncommon to find decisions being made at the top, with an expectation for the directives to be executed without question. Face-to-face meetings are preferred and are usually preceded by small talk to strengthen relationships.
When it comes to attire, businesspeople in Paraguay dress conservatively, leaning towards dark-colored suits for men and suit sets or dresses for women. Punctuality is appreciated, but don’t be surprised if things run a bit late; it’s more about the relational than the transactional.
Payroll and Taxes
Payroll and Taxes in Paraguay
In Paraguay, 13th month payments are mandatory. The amount is equivalent to a months wages, and usually paid in December as a Christmas bonus.
In Paraguay, income tax is only paid by those who earn an annual salary equivalent to 36 months of minimum wage.
Gross Annual Salary (PYG Thou)
Approx USD Equivalent
Tax Rate (%)
Up to 91,800
Up to $13,000
Employers in Paraguay are also responsible for payments towards the social security fund, at a rate of 16.5%
Pension and Healthcare
The pension system in Paraguay is managed by the Social Insurance Institute (IPS), which is funded by contributions from employees and employers, as well as the government. The IPS manages both the public pension scheme and health insurance, with contributions based on an individual’s earnings. Although there are private pension schemes available, they play a smaller role in the overall pensions landscape. The pension system in Paraguay has been the subject of recent reforms aimed at improving its sustainability and coverage.
Healthcare in Paraguay
The healthcare system in Paraguay is a mix of public and private providers. The public system is administered by the Ministry of Public Health and Social Welfare, and the Social Insurance Institute (IPS), funded through taxes and contributions from workers and employers. It offers a range of services from preventative care to complex treatments, but is often stretched thin, particularly in rural areas.
In contrast, the private sector boasts higher quality care with well-equipped facilities and shorter waiting times. It’s largely used by those who can afford private health insurance or out-of-pocket expenses, often in the more urban areas like Asunción. While the private sector offers a higher standard of care, the public sector serves as a safety net for those who cannot afford private care. Despite the challenges, strides have been made to improve the health system, with initiatives focused on bolstering infrastructure, expanding coverage, and enhancing service quality.
Employment Law in Paraguay
Relevant Legislation: The main law governing labor and employment in Paraguay is the Labor Code of 1993 (Código Laboral). Additional guidelines can be found in various decrees, resolutions, and conventions.
Employment Contracts: In Paraguay, employment contracts can be verbal or written, but certain types, such as fixed-term contracts, must be in writing. Both types of contracts are legally binding and governed by the Labor Code.
Working Hours: The standard working week in Paraguay is 48 hours, spread over six days. Employees are entitled to a rest period of 24 consecutive hours every week, generally on Sunday.
Leave: Employees in Paraguay are entitled to paid annual leave of 12 working days after one year of service, and 18 working days after five years. Maternity leave is also provided for 18 weeks (9 weeks before and 9 weeks after childbirth).
Overtime: Overtime is considered any work beyond the regular 48-hour workweek. It must be paid at a rate of 50% above the normal rate for the first two hours and 100% thereafter. The law restricts overtime to a maximum of 3 hours a day or 30 hours a month.
Termination: An employee can be terminated for reasons such as misconduct, incompetence, or economic reasons. Termination must follow due process, often including warnings and an opportunity to improve performance.
Notice: In case of termination due to economic reasons or employee misconduct, the employer must provide 30 days’ notice, or pay in lieu of notice. For resignations, employees are generally required to provide 15 days’ notice.
Severance Pay: Upon termination, employers are required to provide severance pay to employees based on their length of service. The amount is equal to the average wages of the last month for each year of service.
Work Permits in Paraguay
Immigration in Paraguay is overseen by the General Directorate of Migration, a department within the Ministry of the Interior. The country has a relatively open immigration policy, welcoming both short-term and long-term immigrants.
Foreign nationals intending to work in Paraguay usually require a Temporary Residence Visa. This visa allows an individual to live and work in Paraguay for up to two years, and it is renewable. To apply for this visa, individuals usually need to have a job offer from a Paraguayan employer who will sponsor their application. In addition to the job offer, the application process typically involves providing a range of supporting documents, including a valid passport, proof of sufficient funds, a medical certificate, and a police clearance certificate.
For business investors and entrepreneurs, there’s the Permanent Residence Visa which is particularly attractive as it provides a path to permanent residency with a relatively low minimum investment requirement. This visa is often used by foreign business people who wish to establish a business in Paraguay, as well as by retirees and others who wish to live in Paraguay long-term.
It’s worth noting that all foreign documents submitted in the visa application process must be legalized and translated into Spanish. Furthermore, once in Paraguay, foreign nationals need to register with the local authorities and obtain a Paraguayan ID card.
Paraguay Public Holidays
New Year’s Day
Founding of Asunción
Boquerón Battle Victory Day
Virgin of Caacupé Day
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Paraguay Employer of Record Benefits
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