Paraguay, officially the Republic of Paraguay, is a landlocked country in South America. It is bordered to the south and southwest by Argentina, Brazil to the east and northeast, and Bolivia to the northwest. Despite being one of South America’s only landlocked countries, Paraguay has ports on the Paraguay and Paraná rivers that provide access to the Atlantic Ocean via the Paraná-Paraguay Waterway. Paraguay is a founding member of Mercosur, the United Nations, the Organization of American States, the Non-Aligned Movement, and the Lima Group.
*Please note that the official currency is the currency of remuneration when employed through WorkMotion in Paraguay.
Fast-track your talent onboarding while ensuring 100% compliance with local regulations. using an Employer of Record in Paraguay
Calculate net salary post deductions and compare it with the salary in other countries instantly.
Receive process support by an experienced team of experts & pay your talent on time and in their local currency, ideal for companies looking to hire employees or contractors in Paraguay
Easily onboard your remote talent in Paraguay through our Employer of Record (EOR) solution. Our subsidiaries and network partners make this process fast and 100% compliant.
Paraguay, officially the Republic of Paraguay, is a landlocked country in South America. It is bordered to the south and southwest by Argentina, Brazil to the east and northeast, and Bolivia to the northwest. Despite being one of South America’s only landlocked countries, Paraguay has ports on the Paraguay and Paraná rivers that provide access to the Atlantic Ocean via the Paraná-Paraguay Waterway. Paraguay is a founding member of Mercosur, the United Nations, the Organization of American States, the Non-Aligned Movement, and the Lima Group.
*Please note that the official currency is the currency of remuneration when employed through WorkMotion in Paraguay.
The national holidays mentioned below are valid for the year 2026 and are critical for hiring in Paraguay planning:
The holidays mentioned below are valid for the year 2026.
| January 1 | New Year’s Day | |
| March 1 | National Heroes Day | |
| April 2 | Maundy Thursday | Movable |
| April 3 | Good Friday | Movable |
| May 1 | Labour Day | |
| May 14 | Independence Day | |
| May 15 | Mother's Day | |
| June 12 | Chaco Armistice | Movable |
| August 15 | Founding of Asunción | |
| September 29 | Boqueron Battle Victory Day | |
| December 8 | Virgin of Caacupé Day | |
| December 25 | Christmas Day |
The approximate time for sharing the contract with an employee in Paraguay is 14 business days assuming no special requests or changes to our standard employment contract. Any such requests or changes would need to undergo internal and external review, directly leading to a time delay.
NOTE: This number is subject to change and is only an estimation of the Contract Sharing Time. The estimated Contract Sharing Time begins from the moment that WorkMotion has received all required information from both the client and the employee.
Social Insurance Institute (IPS) finances the following benefits:
Employers contribute 16.5% to social insurance, while employees contribute 9%.
| Contribution | Employer’s Contribution | Employee’s Contribution |
| Social Insurance | 16.5% | 9% |
The normal working hours are eight hours a day and 48 hours per week during the daytime. For night workers, this limit is seven hours a night and 42 hours a week while for workers with mixed schedules, this limit is seven and a half hours a day or night and 45 hours a week.
The total working hours inclusive of overtime may not exceed 11 hours a day. The maximum overtime hours are three hours a day and nine hours a week.
| Overtime Pay Rate | Time of Overtime |
| 150% of a normal wage rate | During the day |
| 200% of a normal wage rate | During the night |
The probation period in the initial stage of the employment contract aims for the employer to appreciate the skills of workers, and the employee may verify the suitability of the conditions of the contracted work. The duration of the probationary period is:
For terminating an indefinite-term contract, the required notice period depends on the worker’s length of service as follows:
| Length of Service | Length of Notice |
| Up to 1 year of service (after completion of probation period) | 30 days |
| More than 1 and up to 5 years of service | 45 days |
| More than 5 years and up to 10 years of service | 60 days |
| 10 years of service and beyond | 90 days |
The normal working hours are eight hours a day and 48 hours per week during the daytime. For night workers, this limit is seven hours a night and 42 hours a week while for workers with mixed schedules, this limit is seven and a half hours a day or night and 45 hours a week.
The total working hours inclusive of overtime may not exceed 11 hours a day. The maximum overtime hours are three hours a day and nine hours a week.
| Overtime Pay Rate | Time of Overtime |
| 150% of a normal wage rate | During the day |
| 200% of a normal wage rate | During the night |
The probation period in the initial stage of the employment contract aims for the employer to appreciate the skills of workers, and the employee may verify the suitability of the conditions of the contracted work. The duration of the probationary period is:
For terminating an indefinite-term contract, the required notice period depends on the worker’s length of service as follows:
| Length of Service | Length of Notice |
| Up to 1 year of service (after completion of probation period) | 30 days |
| More than 1 and up to 5 years of service | 45 days |
| More than 5 years and up to 10 years of service | 60 days |
| 10 years of service and beyond | 90 days |
There are no regulations regarding unpaid leave.
Social Insurance Institute (IPS) finances the following benefits:
Employers contribute 16.5% to social insurance, while employees contribute 9%.
| Contribution | Employer’s Contribution | Employee’s Contribution |
| Social Insurance | 16.5% | 9% |
Using an employer of record in Paraguay means WorkMotion becomes the legal employer on record with Paraguayan authorities.
Your company directs the work.
WorkMotion handles everything that sits between you and a compliant employment relationship:
Here is how that process works in practice.
WorkMotion generates an employment contract aligned with Paraguay’s Labor Code (Código del Trabajo).
The contract is prepared in Spanish – the required language for employment documentation in Paraguay – and covers the terms that Paraguayan law mandates:
Because WorkMotion operates through its partner network in Paraguay, the contract reflects current local legal requirements, including any updates from the Ministry of Labor, Employment and Social Security (MTESS).
Contracts are shared with the employee for e-signing, keeping the process fast and fully documented.
Before payroll can run, every employee in Paraguay must be registered with the Instituto de Previsión Social (IPS) – the national social security authority covering healthcare, pension, and occupational risk insurance.
WorkMotion handles this registration on behalf of the employee, along with any required declarations to the Subsecretaría de Estado de Tributación (SET) for income tax purposes.
Failure to register with IPS promptly can result in fines, back-payment of contributions, and suspension of employee benefit coverage – so this step is handled before the employee’s first working day.
WorkMotion sets up payroll in Paraguayan guaraní, as required by law.
Employer IPS contributions are calculated at 16.5% of covered gross salary, with employee contributions at 9% – totalling 25.5% submitted monthly to IPS by the statutory deadline.
WorkMotion also sets up accruals for the aguinaldo (the mandatory 13th-month salary, equivalent to one-twelfth of total annual remuneration), which must be paid by 31 December each year.
The aguinaldo is exempt from IPS contributions and income tax, but it is a real recurring cost that must be planned for from day one. WorkMotion builds this accrual into the monthly payroll structure so there are no year-end surprises.
Beyond IPS coverage, WorkMotion administers the statutory benefits required under Paraguayan law:
Where relevant, WorkMotion can also support optional benefits – such as private health coverage or meal allowances – that help clients attract and retain skilled talent in Paraguay’s increasingly competitive market for specialised roles.
Each month, WorkMotion runs payroll, calculates all deductions and contributions, issues Spanish-language payslips to employees, and remits IPS contributions and any applicable IRP (income tax) withholdings to the relevant authorities within statutory deadlines.
Late or incorrect payments can trigger interest, fines, and SET audits – WorkMotion’s payroll process is built to prevent these outcomes through automated calculation and real-time compliance checks.
Paraguay’s minimum wage is reviewed annually by the Consejo Nacional de Salarios Mínimos (CONASAM) and updated by government decree – most recently rising to PYG 3,044,000 per month from 1 July 2026.
Because severance, the aguinaldo, and family allowances are all calculated off the wage base, any change in the minimum wage flows through to multiple payroll obligations simultaneously.
WorkMotion monitors these regulatory updates and applies them from the effective date.
When employment ends, WorkMotion manages the full termination process:
WorkMotion then ensures the final settlement is documented and paid correctly.
For most companies hiring one to a handful of employees in Paraguay, entity setup is not the right starting point. Here is how the two approaches compare.
| WorkMotion EOR | Setting Up a Paraguay Entity | |
|---|---|---|
| Setup cost | Per-employee monthly fee; no incorporation cost | Legal, notarial, and registration fees typically apply; capital requirements vary by entity type |
| Time to first hire | Days from signed contract | Typically weeks to months, depending on entity type and registration pathway |
| Ongoing legal exposure | WorkMotion carries employer-of-record liability; compliance managed by local experts | Your entity carries full employer liability; requires ongoing legal and HR support in-country |
| Ongoing admin burden | Payroll, IPS filings, SET declarations, and compliance monitoring handled by WorkMotion | Monthly IPS and SET filings, payroll management, and regulatory tracking managed internally |
| Exit flexibility | Scale up or down without restructuring a legal entity | Dissolving a Paraguayan entity requires formal legal procedures and can take significant time |
EOR through WorkMotion’s partner network fits companies that need to hire in Paraguay quickly, compliantly, and without committing to the overhead of a permanent legal structure.
If your company is building a long-term, large-scale operation in Paraguay with significant local headcount and commercial presence, entity setup may be worth evaluating alongside EOR – and WorkMotion’s Direct Hiring solution can support that transition in markets where it is available.
Use the WorkMotion Employment Cost Calculator to estimate the full cost of hiring in Paraguay, including IPS contributions, aguinaldo accrual, and statutory benefits, before you commit.
Paraguay’s Labor Code is detailed, and several of its requirements catch foreign employers off guard. These are the compliance gaps that create the most exposure.
The aguinaldo is not a discretionary bonus – it is a mandatory 13th-month salary equivalent to one-twelfth of all remuneration earned during the calendar year, due by 31 December.
Foreign employers often budget based on 12 monthly salary payments and discover the aguinaldo obligation only when December arrives.
WorkMotion accrues the aguinaldo monthly from day one, so the cost is visible and planned for throughout the year.
The aguinaldo calculation includes not just base salary but all remuneration earned during the year – including bonuses and allowances that are part of the employment relationship.
Excluding these components from the calculation is a common error that leads to underpayment and potential labour authority penalties.
WorkMotion’s payroll engine applies the correct base automatically.
Paraguay requires employers to pay a 30% vacation bonus on top of the salary paid during annual leave. This is separate from the aguinaldo and separate from the leave entitlement itself.
Many foreign employers are unaware this obligation exists, or confuse it with the 13th-month payment. WorkMotion calculates and pays the vacation bonus as part of the standard leave administration process.
IPS registration must happen before an employee’s first working day, not after the first payroll run.
Late registration can result in fines, back-payment of contributions, and – critically – gaps in the employee’s healthcare and pension coverage from the start of employment.
WorkMotion initiates IPS registration as part of the onboarding process, before payroll begins.
Employees with more than ten years of service in Paraguay cannot be dismissed without proven just cause.
If an employer cannot justify the dismissal, the employee may be entitled to reinstatement or double severance compensation.
Foreign employers accustomed to more flexible termination rules in their home markets often do not plan for this exposure.
WorkMotion manages termination documentation, severance calculations, and final settlement payments to reduce legal risk at exit.
Paraguayan law requires that salaries be paid in guaraní (PYG) via local bank transfer, with Spanish-language payslips.
While foreign-currency arrangements may be documented separately, the guaraní calculation must remain the basis for IPS contributions and tax reporting.
Companies that pay employees in USD or EUR without maintaining the correct guaraní payroll records create compliance gaps that can surface during labour inspections.
SMEs based in Germany, the Netherlands, and the UK – particularly in B2B SaaS, fintech, and AI – use WorkMotion’s EOR in Paraguay to hire software engineers and technical specialists they cannot find or afford in their home markets.
Paraguay’s young workforce, with a median age of 27 and growing technical education infrastructure, makes it an increasingly viable source of mid-level to senior engineering talent.
WorkMotion handles the full employment relationship so the engineering team can onboard quickly without the European HQ needing to understand Paraguayan labour law.
E-commerce companies and digital agencies with European or US headquarters use Paraguay as a base for customer operations, logistics coordination, and regional marketing roles.
Paraguay’s Mercosur membership and its position between Argentina, Brazil, and Bolivia make it a practical hub for companies building Latin American operations.
WorkMotion’s EOR service through its partner network means these companies can hire local operations staff compliantly without setting up a Paraguayan entity for what may initially be a small team.
US companies – particularly in tech and SaaS – that are expanding beyond North America often hire their first Latin American employee in Paraguay or use it as part of a broader regional hiring strategy spanning other markets such as Guatemala and Honduras.
The combination of a stable labour framework, relatively straightforward payroll structure, and a 10% corporate tax environment makes Paraguay attractive for companies evaluating South American markets.
WorkMotion provides the compliance infrastructure so the US company’s HR or People team does not need to build local expertise from scratch.
NGOs and green tech organisations with European headquarters increasingly hire programme staff, field coordinators, and regional leads in South America.
Paraguay’s cost of living and talent availability make it a practical location for these roles.
WorkMotion’s EOR model means the organisation can employ staff compliantly in Paraguay without the administrative overhead of running a local entity – freeing the internal team to focus on programme delivery rather than payroll compliance.
You have found the right person in Paraguay.
The compliance infrastructure to employ them – IPS registration, a locally compliant contract in Spanish, monthly payroll in guaraní, aguinaldo accruals, and statutory benefits – is not something your team needs to build from scratch.
Through WorkMotion’s partner network in Paraguay, we act as the legal employer, handle every statutory obligation under the Paraguayan Labor Code, and get your new hire onboarded in days rather than months.
Whether you are hiring your first employee in Paraguay or adding to an existing Latin American team, WorkMotion removes the compliance friction so you can focus on the work.
Once the employment contract is signed, WorkMotion can typically complete onboarding within a few business days. The critical path item is IPS (Instituto de Previsión Social) registration, which must be completed before the employee’s first working day – WorkMotion initiates this as part of the standard onboarding sequence, so there is no gap in healthcare or pension coverage from the start of employment.
Paraguay’s Labor Code permits a probation period of up to 60 days for most employment relationships. During this period, either party can terminate the contract without the standard notice or severance obligations that apply to confirmed employees. WorkMotion includes the correct probation terms in the locally compliant Spanish-language contract generated at onboarding.
Paraguayan law permits fixed-term contracts, but only where the nature of the work genuinely justifies a defined end date – for example, a specific project or seasonal activity. Using a fixed-term contract to avoid the protections that apply to indefinite employees is a recognised compliance risk: if the work is ongoing in nature, labour authorities may reclassify the arrangement as indefinite employment, triggering severance and other entitlements. WorkMotion advises on the appropriate contract structure based on the actual role and duration before the contract is generated.
Paraguay operates a personal income tax (Impuesto a la Renta Personal, or IRP) that applies to employees earning above a statutory threshold – currently set at ten times the monthly minimum wage. For employees earning below this threshold, no income tax withholding applies. Where IRP is applicable, WorkMotion calculates and remits withholdings to the Subsecretaría de Estado de Tributación (SET) as part of the monthly payroll process, ensuring the employee’s tax position is correctly managed from the first payroll run.
Severance in Paraguay depends on the reason for termination and the employee’s length of service. For dismissal without just cause, employees are entitled to an indemnity calculated at 15 days of salary per year of service for the first ten years, rising to 20 days per year thereafter – in addition to accrued vacation pay, the proportional aguinaldo, and any applicable notice period compensation. Employees with more than ten years of continuous service cannot be dismissed without proven just cause; attempting to do so without adequate documentation exposes the employer to reinstatement orders or double severance liability. WorkMotion manages the full termination process, including severance calculations and final settlement documentation, to reduce legal exposure at exit.
WorkMotion provides employer of record services in Paraguay through its partner network rather than a directly owned local entity. This means WorkMotion works with established, vetted in-country partners who hold the necessary local registrations and maintain compliance with Paraguay’s Labor Code, IPS requirements, and SET obligations – while WorkMotion retains oversight of the employment relationship, contract standards, and payroll accuracy on your behalf.
Discover how WorkMotion helps you hire anywhere, stay compliant, and manage global teams with ease.
Trusted by
![idWjC-9cC6_logos 1 [Vectorized]](https://workmotion.com/wp-content/uploads/2026/02/idWjC-9cC6_logos-1-Vectorized.svg)
