Succession and Inheritance in Paraguay
Paraguay levies no inheritance tax — but one rule subjects property located there to Paraguayan law, whatever your will says at home.
“Paraguay does not tax inheritance” is the line that summarises much of the available coverage — and it is technically correct, but incomplete enough to produce an unpleasant surprise for anyone planning on that basis alone.
There is indeed no direct inheritance tax in the Paraguayan Civil Code. But there is indirect taxation, through personal income tax, on part of the assets received — and there is a conflict-of-laws rule that makes all the difference for anyone with heirs outside Paraguay.
The saisine principle and the mandatory court process
The Paraguayan Civil Code (Law No. 1,183/85) enshrines, in Article 2443, the saisine principle: from the moment of death, ownership of the deceased’s assets passes automatically to those entitled to receive them — even before that right is actually exercised.
That does not mean the transfer resolves itself. There is no direct notarial succession in Paraguay. Every transfer of assets on death requires a succession proceeding before a first-instance civil court, which produces the declaration of heirs and authorises the distribution. Until the proceeding concludes, the assets remain undivided, and no heir may dispose of their share individually.
Heirs living abroad can run the process by power of attorney, without travelling to Paraguay — but the court proceeding itself has no shortcut.
Who inherits, and how much: the forced share
The Civil Code reserves part of the estate to forced heirs (the legítima), which the testator cannot displace by will:
- Descendants: the forced share is four-fifths of the estate (Article 2598).
- Spouse, where there are neither descendants nor ascendants: the forced share is half the estate.
- Adopter and adoptee: a reciprocal forced share of half the estate, under the applicable adoption regime.
Testamentary provisions or lifetime gifts that reduce the forced share below the statutory level can be judicially reduced, at the request of the prejudiced heir, once the succession is opened. For the calculation, the value of lifetime gifts is added back to the deceased’s net estate — meaning advance gifts do not automatically escape the forced share computation.
The rule that changes everything for foreign heirs
Here is the point most generic coverage does not develop — and it is decisive for a family with assets in two countries.
Article 25 of the Civil Code provides that succession, the order of entitlement and the validity of testamentary provisions are governed, in principle, by the law of the deceased’s last domicile.
But Article 25 itself carries the exception that drastically narrows that reach: the transfer of assets situated or existing in Paraguayan territory is subject, in any event, to the laws of the Republic of Paraguay. Article 2447 reinforces the rule specifically for real property: land and buildings situated in Paraguay are governed exclusively by Paraguayan law, regardless of the deceased’s domicile or nationality.
In practice: someone domiciled abroad, owning property in Paraguay, may have their general succession governed by the law of their domicile — but the portion of the estate located in Paraguay (typically the property) will be distributed under Paraguayan forced-share and entitlement rules, even where the foreign will provides otherwise. That can produce a distribution outcome quite different from what the testator expected when drafting the document at home.
Note on scope: the interaction between the succession law of the deceased’s domicile and the situs rule in the Paraguayan Civil Code depends on the exact composition of the estate and on whether a valid will exists in each jurisdiction. A will drafted purely from a home-country perspective, without accounting for this rule, may not produce the intended effect over the Paraguayan asset — we confirm that interaction case by case before any estate planning involving assets in two countries.
The indirect taxation: what personal income tax reaches
There is no standalone inheritance tax, but Law 6380/2019 and its implementing Decree (3184/19) reach part of the gratuitous transfer through personal income tax (IRP):
- Cash received as inheritance: taxed at 8% IRP when received by the heir.
- Inherited assets (property, vehicles): when subsequently sold by the heir, the sale is taxed at an effective rate of roughly 2.4% IRP on the transaction value — more favourable treatment than the sale of an asset originally acquired by the holder themselves.
Wills: form and recognition
Paraguay recognises the usual testamentary forms of continental civil law — a public will executed before a notary, and the private forms admitted by the Civil Code. For anyone who already has a will drafted abroad, the central issue is not the document’s formal validity but its actual reach over assets situated in Paraguay, given the situs rule described above.
What this changes in practice
The absence of a direct inheritance tax is not the absence of any tax cost. Personal income tax applies to inherited cash and, more lightly, to the future sale of inherited assets.
A foreign will does not necessarily control the fate of a Paraguayan property. The Civil Code’s situs rule can override foreign testamentary provisions with the Paraguayan forced share.
There is no shortcut around the court process. Even with a will and agreement between heirs, succession over assets in Paraguay goes through the civil courts — planning reduces friction and time, but does not remove the judicial stage.
Frequently asked questions
Does Paraguay charge inheritance tax?
There is no direct inheritance tax as such. But personal income tax applies to cash received as inheritance (8%) and, at a reduced rate, to the future sale of inherited assets (around 2.4%).
Does my foreign will cover a property I own in Paraguay?
Not necessarily. Assets situated in Paraguay are governed by Paraguayan succession law, regardless of the deceased’s domicile or nationality, under Articles 25 and 2447 of the Civil Code.
Can the succession be handled without travelling to Paraguay?
Yes, through a power of attorney to a local lawyer, but the process remains necessarily judicial.
Is there out-of-court succession (through a notary) in Paraguay?
No. Every succession requires proceedings before a first-instance civil court.
How to verify for yourself
- Paraguayan Civil Code, Law No. 1,183/85, Book V (Succession on Death) — BACN.
- Law No. 6,380/2019 and Decree No. 3,184/19 (taxation of gratuitous transfers) — DNIT.
The starting point
The absence of an inheritance tax is a genuine Paraguayan advantage — but it does not replace planning. The Civil Code’s situs rule alone is reason enough to revisit any will drafted purely from a home-country perspective where Paraguayan assets are involved.
If you hold, or intend to hold, assets in Paraguay as part of a broader estate plan, the next step is mapping exactly which part of the estate would fall under each jurisdiction.
One conversation is enough to know whether it makes sense to proceed.
Informational content. It does not constitute legal, tax or estate planning advice. The rules cited were verified against the official sources indicated in July 2026 and may be amended or further regulated. Individual situations produce different outcomes and should be analysed case by case.