Paraguay Offers 0% Capital Gains Tax on Crypto for Individuals

Paraguay has established itself as a leading crypto-friendly destination by 2025, implementing a 0% capital gains tax and income tax on personal crypto transactions. This favorable tax regime is particularly attractive to miners due to the country's cheap hydroelectric power. Businesses, including exchanges and mining farms, are subject to a 10% corporate tax rate, while individuals can engage in trading, staking, and mining activities tax-free, unless these activities are conducted commercially. Compliance with these tax regulations is overseen by the SET (Subsecretaría de Tributación), and there is no Value Added Tax (VAT) on crypto transactions. However, the formal legislation surrounding cryptocurrencies remains in a state of limbo, requiring firms to stay updated with changes in tax terms to remain compliant.

Taxation in Paraguay is managed by the SET, and while there is no specific tax legislation on cryptocurrencies, general tax principles are applicable. Bitcoins are not considered legal tender but are treated as digital assets for tax purposes. Recent reports indicate that Paraguay is considering a crypto regulatory framework, but no such law has been officially passed as of mid-2025. Key points of the current tax regime include no capital gains tax for individuals on crypto investments, no income tax on crypto earnings unless they are part of a business activity, and no VAT or GST on crypto transactions. For businesses, the corporate tax rate is 10% if crypto is part of the company’s revenue.

Individuals in Paraguay enjoy a 0% capital gains tax on crypto profits and a 0% income tax on casual crypto earnings such as airdrops and staking rewards. Businesses, on the other hand, are subject to a 10% corporate tax if crypto is part of their business income. Personal crypto investments and crypto-to-crypto swaps are tax-exempt. Buying and selling crypto is not taxable for individuals, and mining and staking are tax-free unless conducted as a business activity. Crypto salaries or payments are taxed as ordinary income if received as payment. Crypto-to-crypto trades are not considered taxable events, and there are no clear regulations for DeFi or yield farming, which are likely not taxable unless deemed business income. NFTs are treated like other crypto assets with no specific tax rules.

While individuals are free to make cryptocurrency investments without any reporting requirements due to the 0% capital gains tax, business entities engaged in cryptocurrencies must declare their crypto-related earnings in their annual tax filings. Individuals are recommended to keep exhaustive transaction and wallet address records in case of audits. The tax deadlines generally coincide with Paraguay’s fiscal calendar and fall between March and July. Regulatory compliance mandates an organized approach, trusting the pending changes in this crypto-friendly domain.

Paraguay’s crypto tax framework offers straightforward benefits for investors. Since personal crypto gains are tax-exempt, no deductions are needed for individual traders. However, crypto businesses can deduct operational expenses like mining equipment or exchange fees against their taxable income. One notable limitation is that crypto losses cannot offset other income, a reasonable trade-off for the country’s generous 0% capital gains policy. This is in contrast to requiring registration, which keeps compliance simple for individuals but allows commercial crypto activities to have fair taxation.

The country’s tax authority has implemented clear monitoring mechanisms while preserving its crypto-friendly environment. The SET monitors crypto exchanges via KYC compliance, and tax evasion for businesses can lead to fines or audits. There is no strict enforcement for individual investors, primarily intending to ensure transparency in the commercial operations of crypto while allowing individual traders access to tax exemption policies. This dual approach favors growing the digital economy in Paraguay while providing necessary financial oversight.

Paraguay maintains its crypto-friendly stance with no major tax changes expected before 2026. The 0% capital gains tax for individuals and 10% corporate rate remain, while clearer regulations may emerge. With average crypto revenue per user at US$30.60 in 2025, Paraguay’s market shows growth potential. The government may introduce blockchain incentives, reinforcing its appeal for miners using affordable hydro power. While modest compared to the US, Paraguay’s crypto sector continues evolving. Investors should watch for updates while enjoying one of Latin America’s most favorable tax regimes.

In 2025, the means for taxing cryptocurrencies in Paraguay is hailed as one of the most advantageous frameworks in Latin America, with a 0% capital gains tax for individuals but a reasonable 10% corporate rate on businesses. The crypto-friendly legislation of the country, partnered with the abundance of renewable energy, continues to woo miners and investors. It is generally “loose” in terms of implementation of enforcement for transactions for personal purposes. But companies are subject to such regulations to avoid having audits or penalties. Changes in regulations make it very imperative to keep advising stakeholders about proper documentation and the latest developments. Specifically, it is advised to consult a tax professional in the field of digital asset law in Paraguay regarding ensuring compliance and better planning.