Company Formation in Paraguay
Updated on Wednesday 21st June 2023
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As its economy has grown significantly in the recent years, mainly due to the increased agricultural export, Paraguay is a country where many foreign investors choose to form companies. There are many options when it comes to company formation in Paraguay.
In case you decide to set up a company in Paraguay, you can contact our team of experts in company formation as they can assist you and make sure that your business is operating in the shortest amount of time.
Types of legal entities in Paraguay
One of the first steps in setting up a company in Paraguay is to choose which type of legal structure best suits your interests and then establish it. Here are some of the most common legal entities: the limited liability company (LLC) and the public liability company.
Foreign investors can also decide on expanding their existing companies by creating a branch or a representative office in Paraguay. However, the limited liability company is the most popular amongst investors.
There are a few requirements to be met when establishing a LLC in Paraguay:
- at least one director that needs to be a Paraguayan resident;
- minimum two shareholders;
- no requests concerning the capital share (which is an advantage).
What are the highlights of opening an LLC in Paraguay?
Opening an LLC in Paraguay is similar with the registration process that is available at a global level, in the sense that similar documents must be prepared and, in general, the company must comply with the same basic requirements, such as registering for taxation, for employment, etc.
Of course, there are certain procedures and legal matters that are characteristic only to this country, in matters of the duration of the incorporation process, the capital requirements, types of taxes, tax rates, etc.
In the list below, our consultants in company formation in Paraguay will present some of the highlights related to an LLC:
- the registration of an LLC takes around 10 weeks (shorter than in the case of a public limited company, which can be incorporated in approximately 12 weeks);
- the shareholders must open a corporate bank account, and this procedure takes around 4 weeks (the same requirement is available in offshore jurisdictions, where investors must open an offshore bank account);
- the company does not have a capital requirement, but the bylaws must state a minimum amount of $1;
- as said above, the company can be formed by at least 2 shareholders and 1 director;
- the LLC is liable to the payment of the corporate tax, which is charged at a standard rate of 10%;
- starting with 1 January 2020, small and medium-sized companies (including the LLC), can benefit from a simplified tax regime.
What are the rights of an LLC in Paraguay?
An LLC in Paraguay defines a company that has legal personality, separate from the one of the founders of the company. As such, the entity benefits from various rights, just as it is the case of individuals.
An LLC is entitled to rent an office space in its own name – and more importantly, this is a mandatory part of the process of company formation in Paraguay, but it can also purchase a property.
If you want to set up a business here and you want to purchase a property for the said business, our consultants can provide the necessary legal support during the purchase procedure and can complete the due diligence formalities on your behalf.
Corporate due diligence refers to the process through which company formation experts of local lawyers verify if a property is sold in good faith by its current owner. This refers to background checks regarding the following:
- the financial situation of the property;
- its current ownership and any other party that can have any ownership rights to the property;
- the physical condition of the property (hidden damage, etc.).
A company that is registered in Paraguay is also allowed to have ownership rights in other companies registered here or overseas.
Guidelines for the registration of a company in Paraguay
The first step is checking the uniqueness of your company's name you have chosen and then drafting the company's certificates, which have to bear the signature of a lawyer.
Next step of the company registration process in Paraguay is to notarize the company's deeds at a notary's office. In order to certify these documents you will have to pay a fee.
Then you need to submit the registration papers with the Single Access Window Agency (SUAE). There you must submit all documents for revision or approval, then they can be scanned and you receive an identification number.
At the Treasury Attorney Office you will have to file documents such as the bylaws or and the company formation certificates.
Then you should also obtain a taxpayer's registry number after applying for tax registration at the Ministry of Finance. This is also part of the procedures that our specialists in company registration in Paraguay can complete for you.
The publication of an extract of the company's regulations in the Official Gazette and in a local newspaper is necessary.
What are the employment obligations in Paraguay?
If you will register a business here, you will most likely need to hire employees, in order to develop your business operations. The registration for employment is part of the compulsory process of company formation in Paraguay.
You must know that the employer has the right to first hire employees on a trial basis, to observe their capacity to integrate in the company and see their level of skills for the respective job. Also, the employees have the possibility to see if they want to be a part of the respective company.
The employment trial period varies based on the level of skills. In the case of unskilled employment, the trial period is established at 30 days, while for skilled employment, it can increase to 60 days.
For highly skilled employment, the trial period can increase up to 6 six months, but in this particular case, the law states that the employer and the employee can freely negotiate this period of time.
Our experts in company formation in Paraguay can be of help in any kind of business establishments’ registration procedures and they have extensive experience in finding solutions for whatever problem you may encounter in the process of opening a company in Paraguay or in other countries.