Definitive Guide to Hiring in Paraguay

Hiring in Paraguay

Hiring employees compliantly in Paraguay means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Paraguay so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Paraguay; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Paraguay

Employment laws in Paraguay are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on Paraguay employment laws and Paraguay policies here.

Employee Probation Period

• Unskilled workers have a trial period of 30 days, while skilled workers have a trial of 60 days. 
• For highly skilled employees, the probation period is presumed to be six months, though the exact terms may be negotiated by employee and employer prior to finalizing their contract.

Annual Leave in Paraguay

• In Paraguay, vacation days are earned after working for one year for the employer. 
• Employees earn 12 days if they worked from one to five years, 18 days for five to 10 years and 30 days for 10 years of employment.

Holidays in Paraguay

Paraguay celebrates eleven national public holidays as well as additional public holidays that vary by state:

Maternity Leave Paraguay

• Maternity leave is 18 weeks (in normal circumstances) and 24 weeks (in case of medical complications).
• In the event of multiple births, the woman receives an additional 30 days per child.

Paternity Leave Paraguay

Sick Leave in Paraguay

Working Hours in Paraguay

• The standard work week in Paraguay is 8 hours a day and 48 hours
• For employees who work nights, the work week is 7 hours a night and 42 hours.
• Workers with mixed schedules, this limit is 7.5 hours a day/night and 45 hours a week.

Overtime in Paraguay

• The maximum overtime hours are 3 hours a day and 9 hours a week.
• Overtime is paid at different rates:
  • 150% of the regular pay rate for overtime during daytime hours
  • 200% of the regular pay for overtime during night hours and public holidays.

Termination of Employment in Paraguay

• In Paraguay, notice of termination must be delivered to the employee in writing.
• If the cause for termination is justified (misconduct or poor performance), the employee is not entitled to severance pay.
• An employee who is terminated without cause is entitled to 15 days of severance pay for every year of service.
• For an employee who has over 10 years of employment with a company- If an employer is not able to prove a just cause to a labor court, the employee might either be reinstated or would have the right to double the regular severance pay.

Notice Period in Paraguay

• The length of the prior notice varies according to different tenure durations
  • 30 days of notice period for less than 1 year of employment
  • 45 days of notice period for 1 to 5 years of employment
  • 60 days of notice period for 5 to 10 years of employment
  • 90 days of notice period for more than 10 years of employment.

Severance in Paraguay

• If the cause for termination is justified (misconduct or poor performance), the employee is not entitled to severance pay.
• An employee who is terminated without cause is entitled to 15 days of severance pay for every year of service.
• For an employee who has over 10 years of employment with a company- If an employer is not able to prove a just cause to a labor court, the employee might either be reinstated or would have the right to double the regular severance pay.

Paraguay Salary and Wages

13th/14th Month Salary in Paraguay

• Yes (Mandatory)
• There is a statutory requirement to pay the 13th month.
• This is a Christmas bonus usually paid in December called Aguinaldo.

• In Paraguay, there is a compulsory social security system through which it is required that the employers register their employees.
• The calculation basis constitutes every wage item, in cash or goods, except the annual mandatory bonus and family allowance.
• The employee’s contribution is withheld from salary by the employer, which is a designated withholding agent. The employer´s contributions are computed on total payroll and are paid together with the employee´s withholding to the Social Security Institute.
• For some positions that are independent (e.g. Administrators, Directors, Managers), the contribution to the social security system is optional.
• The monthly rates are as follows:

Immigration Paraguay

• All foreigners wishing to maintain residency in Paraguay must obtain residence permits. 
• The Paraguayan migratory legislation does not provide for work visas. 
• Individuals may enter as tourists for a maximum period of 90 days (renewable).
• During this period, they can start the process to obtain temporary or permanent residence permits. 
• Temporary residence permits allow their holders to reside in Paraguay. 
• They are valid for a period of one year and may be renewed for a period of up to six years. 
• The generally required documents to reside in Paraguay are the following:
  • Identity card or passport from the country of origin 
  • Birth certificate 
  • Marriage certificate or divorce decree (to demonstrate civil status) 
  • Police or criminal records (from the age of 14) from the country of origin or residence during the previous five years 
  • Police records certificate for foreigners issued by the Department of Informatics of the National Police (from the age of 14) 
  • Health certificate from the Ministry of Health, mentioning psycho-physical health and confirming absence of infectious diseases 
  • Certificate of life and residence, issued by the police department of the country of origin 
  • Certificate of entrance and permanence in Paraguay 
  • Consular visa for countries that require it (verified by the Paraguayan Ministry of Foreign Affairs) 
  • Two passport-size photos (2.5 cm x 2.5 cm) in color 
  • Work promise, mentioning the salary, with a signature certified before a notary public 
  • Commercial patent, Tax Identification Number and identity card of the employer 
  • Professional and/or technical title (legalized) or an official education certificate 
  • Proof of maintenance (for adults) 
• An individual with temporary residence must renew his or her permit each year.
• For obtaining permanent residence, the following additional documents are required: 
  • Proof of economic solvency, which is USD5,000 or the equivalent in a bank, credit union or financial entity, or a university title with a work promise mentioning the salary to be received (same as for temporary residence; see above). 
  • Signed affidavit with the promise to obey Paraguayan laws, signed before a notary public. 
• Permanent residence permits are valid for 10 years and may be renewed.
• Neither permanent nor temporary residents need to obtain a work permit in Paraguay. 
• The residence permit is sufficient for performing gainful activities in the country

Value Added Tax (VAT) in Paraguay

• The standard rate of VAT is 10 percent, a differential (reduced) VAT rate of 5 percent applies to:
  • lease and transfer of properties
  • transfer of agricultural products, fruits, horticultural products in their natural state and live animals; products obtained from hunting and fishing, live or not; vegetable oil, virgin or crude degummed; certain products from the ‘family basket’: rice, noodles, mate (yerba mate), edible oils, milk, eggs, raw meat, flour and iodized salt
  • transfer of pharmaceutical products.

Payments And Invoicing

• The tax year in Paraguay is the calendar year (1 January through 31 December). 
• Individuals must file a tax return by March of the following year. 
• The exact date depends on the taxpayer’s Tax Identification Number.
• Joint filing is not allowed. 
• Each person must file a tax return individual income exceeds the threshold

Payroll Accrual in Paraguay

Country Accruals Additional Information

Description

Payroll Accruals Additional Information

Accrued Benefits in Paraguay

Why use Global Expansion to hire in Paraguay

Establishing a branch office or subsidiary in Paraguay can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Paraguay labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Paraguay law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Paraguay. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Paraguay Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.