The simplest 0% setup: Paraguay residency plus a US LLC

Most low-tax structures collapse under their own weight. Two companies, a holding entity, a trust, a nominee director, an accountant in each jurisdiction and an annual bill that quietly eats the saving. They work on a slide and then nobody maintains them.

Paraguay plus a US LLC is the opposite. It is two moving parts, both cheap, both boring, both maintainable by one person with a calendar:

1. 1Paraguay gives you a permanent residency in a territorial tax country, obtained with modest presence and held for life.
2. 2A US LLC gives you an entity every processor and client accepts, which — owned by one non-US person — adds no second layer of tax.

That is the entire structure. What follows is what it actually takes, what it costs, and the four things that turn the 0% into something else entirely.

Why the 0% is real — and where it comes from

There are two separate taxes in play, and people conflate them constantly.

The company's tax. A US LLC with a single non-US member is normally disregarded for US federal income tax. There is no corporate layer. If the LLC has no income effectively connected with a US trade or business, there is generally no US federal income tax to pay on its profits — although an annual information return is still mandatory.

Your tax. The profit is therefore yours, personally, taxed wherever you are tax resident. Paraguay operates a territorial system: broadly, Paraguayan-source income is taxed and foreign-source income is not. If you are resident in Paraguay and your income is earned from clients outside Paraguay through a foreign company, the personal layer can be very low or nil.

Stack those two and you get the headline. Neither half achieves anything alone. A US LLC owned by a Spanish tax resident is taxed in Spain. A Paraguayan residency held by someone who still lives in Germany is a card in a drawer.

Part one: leaving where you are now

This is the hard part, it is the expensive part, and it is the part that has nothing to do with Paraguay. Your current country decides when you stop being its tax resident, and it rarely decides on the basis of a foreign residency card.

What it typically looks at instead:

• Days. The 183-day rule is the floor, not the test. Clearing it is necessary and almost never sufficient.
• Centre of vital interests. Where your spouse and children live, where your home is available to you, where your doctor and your gym membership and your car are.
• Permanent home available. An empty flat you kept "just in case" is a live argument against you in most treaty tie-breakers.
• Formal deregistration. Many countries require an actual notification, and some keep you resident until you file it.
• Exit taxes. Several countries levy a deemed disposal on unrealised gains when you leave. Find out before you move, not after.
• Trailing rules. Some jurisdictions keep taxing you for years after departure if you move somewhere they consider low-tax.

You are not choosing a new tax residency. You are ending an old one — and then having somewhere credible to point at.

Do this half first. A residency you obtain before you have understood your exit is a residency you paid for early.

Part two: Paraguay permanent residency

Paraguay is on this page rather than Panama, Georgia or the UAE for four reasons: the residency is permanent rather than renewable, the presence required to obtain it is short, the cost is a fraction of the alternatives, and the tax system is territorial without an elaborate qualifying regime bolted on.

What the process involves

1. 1Assemble the documents — apostilled birth certificate, apostilled police clearance from your country of residence, notarised passport copy, proof of economic solvency.
2. 2Have everything translated by a sworn Paraguayan translator.
3. 3Travel to Paraguay for filing, biometrics and a local medical certificate.
4. 4Licensed local counsel files and represents you through the process.
5. 5Receive permanent residency, then apply for the cédula, the national identity document.

Realistically three to six months from complete document submission, and one trip of roughly one to two weeks for the in-country steps. Founders 8 lists Paraguay permanent residency from $1,999 with a licensed local partner; government fees, apostilles and translations are charged separately at cost.

Residency is not tax residency

This is the most common misunderstanding about the whole setup, and it is the difference between a structure that survives a question from a foreign tax office and one that does not.

Part three: the US LLC

Once the personal side is settled, the company is almost an administrative detail. A single-member LLC in Wyoming or New Mexico, filed in one to three business days, with an EIN application that takes four to eight weeks for a foreign owner without an SSN.

Why a US LLC rather than a Paraguayan company: your clients, processors and vendors already know what one is. Stripe, the app stores, ad platforms and enterprise procurement all have a US-entity path. A Paraguayan SRL invoicing a European client is a conversation; a US LLC is not.

What you owe the US

• Form 5472 with a pro forma Form 1120, every year, even at zero revenue. The penalty for missing it is $25,000. This is an information return, not a tax return — but the IRS enforces it.
• The state annual report — around $60 in Wyoming, due on the anniversary. Cheap, and a dissolved company is a closed bank account.
• A registered agent, $50–150 a year.

That is the whole recurring US obligation for a straightforward services business with no US presence. It is genuinely small, and it is genuinely mandatory.

What it costs, end to end

Call it $3,000–5,000 to stand it all up, and roughly $800–1,000 a year to keep it alive if you file simply. Compare that with a UAE free zone at $4,000–8,000 a year in renewals alone, before an audit.

The four ways this goes wrong

1. You never actually left

You get the cédula, you form the LLC, and you keep the apartment, the family and the eight months a year in your old country. Your old country continues to tax you on worldwide income, and now you also have filing obligations in two more places. This is the failure mode, by a wide margin.

2. Controlled foreign company rules

If any country still considers you resident, CFC rules can attribute the LLC's profits to you personally regardless of distributions. Place-of-effective-management rules can go further and treat the company itself as resident wherever you sit while running it.

3. You create a taxable presence where you actually work

Spending five months a year working from Lisbon or Bali can create tax residency or a permanent establishment there, whatever your cédula says. Perpetual travel is a strategy that requires more record-keeping than staying put, not less — which is precisely why day counts per country are a first-class feature of the Founders 8 workspace rather than a spreadsheet.

4. You're American

US citizens and green card holders are taxed on worldwide income wherever they live. Paraguayan residency does not change that. The Foreign Earned Income Exclusion and the foreign tax credit help; a Paraguayan cédula does not. If this is you, talk to a US-qualified adviser before reading any further about structures.

Who this actually fits

Paraguay has a thin double tax treaty network. If your income arrives with withholding tax attached — royalties, certain licence fees, some service payments from treaty-heavy countries — this setup can cost you more than it saves. Check that before you fall in love with it.

The order to do it in

1. 1Review your current tax residency and what leaving it would cost. Everything else is contingent on this answer.
2. 2Plan the exit properly — deregistration, exit tax, home, family, the lot.
3. 3File the Paraguay residency application and make the trip.
4. 4Form the US LLC and start the EIN application early; it is the slowest step.
5. 5Open banking with the business described accurately.
6. 6Register the RUC and build genuine presence in Paraguay if you will need a tax residency certificate.
7. 7Put the 5472 deadline, the state annual report and your passport expiry somewhere that will chase you.

Steps one and two are the whole game. Steps three through seven are logistics, and logistics are what Founders 8 is for — the residency application tracked step by step, the company record, the compliance calendar and the document vault in one workspace, so the simple setup stays simple in year three.