IMI Official Partner
In today’s uncertain world, many people seek a “safe haven” or Plan B residence that offers a secure environment – supporting individual liberties and private property rights. South America has stood out in recent years as a peaceful continent, far removed from the world’s trouble zones.
Two countries that have become popular among foreign investors in recent years for their residence programs are Paraguay and Uruguay. In this article, we will compare and contrast the residence and citizenship programs of these two Latin American countries from the point of view of a foreign investor. This will help you decide which one is right for you.
Paraguay Residence Program
Let’s start by taking a look at Paraguay. Paraguay’s residence program stands out as being one of the easiest and most affordable in the world. This is no coincidence – it is reflective of the nature of the Paraguayan people, who are friendly, open, and welcoming to foreigners. To qualify for this residence, you must simply be able to show proof of financial solvency.
Once you meet this requirement, you can apply first for the visa at a Paraguayan consulate outside the country. Depending on your country of citizenship, you might also be able to apply directly on arrival in Paraguay or in one of the nearby border consular posts in Argentina or Brazil. The process is straightforward and can be completed within a few days.
With the visa in hand, you can travel to Paraguay and apply for a Residence Permit. The Paraguayan Residence Permit, together with the national ID card known as a cedula, allows you to live and work in Paraguay for its validity period, and even to apply for citizenship.
One of the most significant advantages of the Paraguay residence program is its affordability. The total cost of obtaining the visa is typically around $10,000 per person, including legal fees and other expenses. This is a fraction of what you would pay for similar programs in other countries, such as the United States or Canada.
Uruguay Residence Program
Uruguay’s residence program, also known as the “Uruguay Permanent Residency Program,” is slightly more complicated than Paraguay’s but still relatively easy to qualify for. To obtain this visa, you also need to prove solvency – the significant difference is that you should also rent or buy a home in Uruguay and spend the majority of the year there.
You can demonstrate solvency for the Uruguay residency visa by proving that you have a steady income of at least $1,500 per month. You must also have a clean criminal record.
Once you have met these requirements, you can travel to Uruguay and start the process online with the help of a local agent such as NTL Trust. If needed you should first apply for a tourist visa at the Uruguayan consulate in your home country. However, many nationalities can travel to Uruguay directly with no need to apply in advance for a visa.
The actual residency process in Uruguay (through to obtaining your residence permit and cedula) can take some months, but during this time, you can live and work in Uruguay without any problem. You can even apply for citizenship after 3-5 years, starting from day one of your first arrival in the country.
One advantage of the Uruguay residence program is that it offers more options for investors. You can choose to invest in a business, real estate, or even government bonds. Additionally, Uruguay is known for its stable economy, which makes it an attractive option for investors looking for a long-term investment opportunity.
Try Before You Buy In: Uruguay’s Digital Nomad Visa
A recent innovation is Uruguay’s Digital Nomad visa. Uruguay’s digital nomad visa is for people who either work remotely for companies outside of the country or are self-employed.
The process could hardly be simpler. First you enter Uruguay as a regular tourist. Then, you complete an online form with personal details and sign an affidavit that you have the means to support yourself financially.
After six months as a Digital Nomad, you can apply for a further six-month extension or—if you love Uruguay and want to settle and obtain citizenship—start the permanent residency application process from within the country.
Paraguay or Uruguay Residence: Which is Right for You?
Now that we have looked at the residence programs of Paraguay and Uruguay, let’s compare them to help you decide which one is right for you.
Affordability: One of the most significant advantages of the Paraguay residence program is its affordability. The total cost of obtaining the visa is typically in the low five figures.
The Uruguay residence program requires rental or purchase of a home in Uruguay, and the cost of living in Uruguay is higher, making it a slightly more expensive option. Then again, if you are used to living in expensive parts of the world like North America or Europe, you would almost certainly save money by relocating to Uruguay.
Physical Presence: In Paraguay, physical residence is not mandatory to maintain the residence permit and cedula. Once you have visited the immigration department, police, bank, notary, and a few other mandatory short stops, with the help of our local agent in Paraguay, you are done. If you don’t want to stay, simply leave a power of attorney with our local agent to pick up the documents when they are ready. Once you have visited the immigration department, you can leave the country and return as frequently as you wish without losing your residency status. However, if you plan to apply for citizenship, you must spend at least six months per year in the country during the three-year residency period.
In Uruguay, however, physical residence is required to maintain the residence permit, which is strictly enforced. You are generally expected to reside in the country for at least six months per year. There are only limited exceptions to this rule: for example, business travel outside the country for a Uruguayan company or government agency could potentially qualify as time spent in Uruguay.
Citizenship and Passport: Both countries allow you to apply for citizenship after a certain amount of time. In Paraguay, you can apply for citizenship after three years of residency. However it’s important to note that your citizenship application will have to pass through multiple government ministries – as well as being very slow, a lot of discretion and politics are involved.
Your Paraguay citizenship application is only likely to be successful if you demonstrate a strong commitment to integration into the country – for example you can expect to be tested on your language skills and knowledge of local history and politics. Still, even if you do everything as you should, there is no guarantee that your application for Paraguayan citizenship will be approved.
In Uruguay, the process is much more transparent. You can apply after three years of residence if you are married – even if the marriage is not to a local citizen. If you are unmarried, you must wait five years. Note that the clock starts ticking on your period of ‘residence’ from your first day of arrival in the country, even if your residence permit is issued some months or even years later. The process involves little discretion, so you can be almost sure that if you put in the time in the country and don’t make waves, your application to become a passport-carrying Uruguayan citizen will be approved within a few months.
In summary, therefore, we can say that although the process of obtaining residence in Paraguay is more straightforward than that of Uruguay, the opposite applies when it comes to upgrading residency status into citizenship. Whether you are interested in converting your residency into citizenship (obtaining the passport) is therefore a very important factor in the Uruguay vs. Paraguay decision-making process.
Investment Opportunities: Both countries offer excellent investment opportunities. You can choose to invest in a business, real estate, or government bonds. Many clients opt to set up a small consulting business or family office in their chosen country. Both Paraguay and Uruguay are known as major agricultural producers and exporters so investing in agricultural production makes great sense – beef, soybean and citrus fruits are current favourites and there are opportunities to invest passively via trusted management companies.
Security and Individual Liberties: Both Paraguay and Uruguay are known as stable democracies, making them ideal options for those seeking a safe haven. When it comes to freedom and individual liberties, it is fair to say that Paraguayans as a whole have more conservative views, on matters such as abortion and drug use, but are very liberal economically. Meanwhile Uruguay is considered more socially progressive – with a strong commitment to human rights, LGBT rights, and freedom of speech – but economically it leans towards a European welfare state model.
Economically speaking, both Paraguay and Uruguay are free market economies. Residents are free to go about their business and are rarely bothered by the over-regulation that has unfortunately become endemic in North America and Europe. The banking systems in both countries are stable, and there are no exchange controls. Both Paraguay and Uruguay have their own local currencies, but US dollars (and to a lesser extent the euro) are used almost interchangeably. High value purchases like vehicles or real estate are priced in dollars. The cost of living in Uruguay is substantially higher than Paraguay.
Criminal Record: Both countries require a clean criminal record to qualify for their residence programs. Minor offences such as traffic cases may be overlooked but must always be declared. Uruguay looks more liberally at minor drugs offences.
Taxation: Tax-wise, there is little to choose between Paraguay and Uruguay, as foreign residents should expect a very minimal tax burden. Paraguay’s tax system is territorial, meaning that you would only be taxed on income earned inside the country. There is no obligation to bring into the country more than you need for day-to-day spending, so it is traditional for Paraguayan residents and citizens to use offshore companies from havens like Panama, Nevis or Belize for their international business.
Uruguay has higher taxes, but also offers clear incentives to new foreign residents. You should plan on sitting down with a tax advisor to make some tweaks (something that would be unnecessary in Paraguay), but if you are just retiring rather than generating income in Uruguay, you will not need to pay any taxes on your worldwide income.
Simply put, there is no history nor culture of taxing foreign income in either country. The domestic tax systems are designed to tax the domestic economy. This can be surprising for some westerners, accustomed to aggressive tax collection on worldwide income in their countries of origin. However, after experiencing the freedom of not having to worry about tax returns or deductions, they rarely wish to return home!
Lifestyle: Without a doubt, Paraguay is the better choice for people who are looking to escape to a quiet, conservative idyll that has many values in common with North America or Europe of the 1950s. Rural Uruguay certainly offers a similar lifestyle, but those seeking a more cosmopolitan environment will prefer Uruguay’s second city Punta del Este, Uruguay’s international hotspot. This has a completely different, much more upmarket and trendy, vibe than the similarly-named Ciudad del Este, Paraguay’s second city.
Uruguay has the additional benefit of being a short ferry ride or plane hop across the River Plate from Argentina’s capital, Buenos Aires. While Argentina currently suffers from major economic and crime problems and is probably not a desirable destination for full-time living, Buenos Aires is undoubtedly a major world metropolis that has much to offer in terms of culture, nightlife and gastronomy, to name just a few of its attractions. Due to the constant peso devaluations in Argentina, these benefits are available at bargain basement prices to foreign tourists paying in dollars. Punta del Este is a 30 minute flight from Aeroparque, Buenos Aires’ downtown airport, so Punta’s residents often hop over to B.A. when they feel the need of big city life.
While South America offers a plethora of options for investors and digital nomads, Paraguay and Uruguay are both excellent choices with different situational benefits.
Both Paraguay and Uruguay offer attractive residence programs for those seeking a safe haven or Plan B in our unstable world. Paraguay’s program is more affordable and straightforward, making it a good option for those on a budget. Uruguay’s program is more diverse in terms of investment opportunities, making it a great option for those seeking a secure place to spend time, relax, and work online.
Ultimately, the decision of which country to choose will depend on your individual needs and preferences. The best way to decide on how to plan and structure your global mobility portfolio for maximum benefit is with the help of a firm of experts such as NTL Trust.
NTL Trust’s vast experience in the world of investment migration, coupled with its on-the-ground teams situated in critical regions of the globe, will help you understand your situation, choose the best suite of global mobility options, and pursue them efficiently. All you need to do is contact us today to talk to one of our experts.