Payroll and Benefits Guide Paraguay
Last updated: Mar 03, 2026
Contribution
| Employer Payroll Contributions | |
|
16.50%
|
Social Security
|
| 16.50% |
Total Employment Cost |
| Employee Payroll Contributions | |
|
9.00%
|
Social Security
|
| 9.00% |
Total Employee Cost |
Income Tax
Exempt: Monthly income up to approximately G 2,500,000 (around USD 350), meaning no income tax is paid on earnings below this threshold.
First bracket: Income exceeding the exemption up to about G 8,000,000 per month is taxed at 8%.
Second bracket: Income above G 8,000,000 per month is taxed at 10%.
10 % Applicable to all resident employees in Paraguay with an annual income equal to or higher than 36 monthly minimum salaries (approximately 13,000 USD annually). The salary used is that which is in force on 1 January of every year.
Tax Filing:
In Paraguay, only certain workers are required to submit an individual annual tax filing under the Personal Income Tax (IRP) system:
- Employees whose annual income exceeds G 80,000,000 per year
- Workers with additional income (e.g. from freelance work, investments, or business activities) that makes them liable under IRP.
Employer taxes
Employee taxes
Minimum Wage
General
The monthly minimum wage in Paraguay is 2,680,373 PYG.
MINIMUM WAGE (PER MONTH)
Payroll
Payroll Cycle
In Paraguay, the payroll frequency can be weekly, bi-weekly, or monthly. The employer must pay salaries at least once a month.
13th Salary
13th-month payments are mandatory in Paraguay and an additional month’s salary must be paid by the end of the year. This payment is generally referred to as a Christmas bonus equal to one-twelfth of all remuneration accrued during the year. It is calculated as the average monthly salary earned during the calendar year (January to December), and it is exempt from income tax and social security contributions.
Working Hours
General
In Paraguay, the work week generally consists of 48 hours a week, 8 hours per day. For employees who work between 8:00 pm and 6:00 am, the work week cannot exceed 42 hours and must be compensated at 130% of the employee’s regular pay rate.
Overtime
| Aspect | Regulation Details | Notes |
| Maximum Ordinary Hours | 48 hours per week (8 hours per day). | This is the standard maximum workweek. Overtime is work performed beyond this limit. |
| Night Work Limit | For work performed between 8:00 PM and 6:00 AM, the work week cannot exceed 42 hours. | These hours must be compensated at a 130% premium over the regular pay rate, even if they are not overtime. |
| Voluntary OT | Overtime is voluntary and must be agreed upon by both the employer and employee. | |
| Exemptions | Managerial and executive positions are often exempt from receiving statutory overtime pay. |
2. Overtime Limits and Caps
| Aspect | Regulation Details | Notes |
| Daily Overtime Cap | Overtime is strictly limited to 3 hours per day. | Total work, including overtime, is thus capped at 11 hours per day. |
| Weekly Overtime Cap | Overtime must not exceed 9 hours per week. | Some sources cite an absolute maximum weekly working time of 57 hours (48 ordinary + 9 overtime). |
Overtime compensation is mandatory and is calculated as a tiered minimum premium percentage of the employee’s regular hourly pay rate.2 The rate increases significantly for night work and public holidays.
| Day/Condition | Time Period | Minimum Premium Rate (Supplement) | Total Pay Rate |
| Daytime Overtime (Tier 1) | 6:00 AM to 8:00 PM (Daytime Hours) | +50% of the regular hourly rate. | 150% |
| Nighttime Overtime (Tier 2) | 8:00 PM to 6:00 AM (Nighttime Hours) | +100% of the regular hourly rate (Double Pay). | 200% |
| Weekly Rest Day (Sunday) | All hours worked on rest day. | +100% of the regular hourly rate (Double Pay). | 200% |
| Public Holiday Work | All hours worked on public holiday. | +100% of the regular hourly rate (Double Pay). | 200% |
Note on Night Work: The 200% rate for nighttime overtime includes the normal wage plus the 100% premium for the overtime itself.
Leave
Annual Leave (vacation)
The paid leave entitlement in Paraguay depends on the employee’s seniority:
- 12 working days of leave for the first 5 years of service
- 18 working days of paid leave for 5 to 10 years of service
- After ten years of service, an employee is entitled to 30 working days of paid leave
PTO carryover
In Paraguay, statutory annual leave is meant to be taken when due. Limited carryover/accumulation may be allowed by agreement, but not indefinitely. Accrued statutory leave cannot be forfeited by policy, and unused leave must be paid out on termination.
Public Holidays
The government decides each year if any public holidays falling on weekends lost are moved to a weekday in lieu.
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 1 March 2026 | Sunday | National Heroes’ Day | Standard holiday |
| 2 April 2026 | Thursday | Maundy Thursday | Standard holiday |
| 3 April 2026 | Friday | Good Friday | Standard holiday |
| 1 May 2026 | Friday | Labor Day / May Day | Standard holiday |
| 14 May 2026 | Thursday | National Holiday (Pre-Independence) | |
| 15 May 2026 | Friday | Independence Day | Standard holiday |
| 12 June 2026 | Friday | Chaco Armistice Day | |
| 15 August 2026 | Saturday | Founding of Asunción Day | |
| 29 September 2026 | Tuesday | Boquerón Battle Victory Day | |
| 8 December 2026 | Tuesday | Virgin of Caacupé Day | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
Sick Days
Employees are entitled to paid sick leave provided they have made a minimum of four weeks of Social Security payments. The leave is paid based on the employee’s salary for the four months preceding the sickness up to 26 weeks and can be extended by 24 weeks in exceptional circumstances. It is compensated by the employer and Social Security (IPS), each paying 50% of the employee’s regular income.
Maternity Leave
Employees are entitled to 18 weeks of fully paid maternity leave, compensated by Social Security (IPS) following the submission of a medical certificate.
The employer can grant an additional six weeks of leave to an employee who has suffered an illness during pregnancy or the delivery of the child. In the event of multiple births, a mother receives an additional 30 days of leave per child.
Adoptive mothers are granted 18 weeks of maternity leave if the adoptive child is below six months. If the child is older than six months, the entitlement is 12 weeks of sick leave.
Paternity Leave
The father/partner is entitled to 2 weeks of paid paternity leave after the child’s birth. Paternity leave is compensated by the IPS at the rate of 100% of the employee’s regular salary.
Parental Leave
There are no provisions in the law regarding parental leave.
Other Leave
In Paraguay, in the event of the death of an immediate member, an employee is entitled to bereavement leave. For the death of a father, mother, spouse, or child, an employee is entitled to three days of leave.
In addition, an employee is entitled to 3 days of leave in the event of their wedding.
PAID MATERNITY LEAVE (DAYS)
Termination
Termination Process
The termination process varies according to how the employment agreement and collective agreement are in place and is based on the type of contract and reason for termination. All notices of termination must be delivered by the employee in writing.
An employer cannot unlawfully dismiss employees employed for more than ten years and only for a just cause.
| Salary payment interval / date | Final payment on termination | Bank account payment requirement |
|---|---|---|
| Wages must be paid at regular intervals: weekly, fortnightly (quincena) or monthly (as agreed). | Proportional aguinaldo must be paid when the employment relationship ends if termination occurs before year-end; other earned wages/entitlements must be settled per the Code. | Salary must be paid to the worker (or a person authorised in writing), on a business day at the workplace and within two hours after the end of the shift, unless otherwise agreed in writing or force majeure. The Code does not mandate payment only via bank account. |
Notice Period
The Notice period in Paraguay is as follows:
- No notice is required during the probationary period.
- For employees with up to 1 year of service, a 30-day notice is required.
- A 45-day notice is required for those with more than 1 year but less than 5 years of service.
- Employees with 5 to 10 years of service require a 60-day notice.
- For those with over 10 years of service, a 90-day notice is mandatory.
Severance Pay
In Paraguay, the severance pay (if applicable) is dependent on the employee’s length of service.
Severance pay for employees is calculated as 15 days of regular salary for every year of service up to a maximum payment of 50% of the employee’s annual salary.
An employee with over 10 years of employment with a company, (if an employer is not able to prove a just cause to a labor court) may need to be reinstated or have the right to a payment twice the amount of the regular severance pay.
Probation Period
The probationary period is 30 days for unqualified employees or domestic workers and 60 days for qualified workers or apprentices.
Immigration
People traveling to Paraguay for work must obtain a business visa to enter the country unless their country of origin is exempt from visas to Paraguay.
Provisional Residence Permit – valid for six months and can be renewed for additional six months, intended for employees working for foreign companies for short periods.
Temporary Residence Permit – valid for a year and can be renewed repeatedly for up to 6 years depending on employment area and reason for extending the stay. The application must include an employment contract with a business incorporated in Paraguay.
Permanent Residence Permit – allows the applicant to live and work in Paraguay indefinitely.
The application process can take up to 90 days.
The business visa is valid for six months and can be renewed for an additional six months. During that time, the candidate must apply for a resident permit, which allows for employment. The application must include employment confirmation.
VAT
General
The standard rate of VAT in Paraguay is 10%.
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Payroll and Benefits Guide
in Paraguay
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 1 March 2026 | Sunday | National Heroes’ Day | Standard holiday |
| 2 April 2026 | Thursday | Maundy Thursday | Standard holiday |
| 3 April 2026 | Friday | Good Friday | Standard holiday |
| 1 May 2026 | Friday | Labor Day / May Day | Standard holiday |
| 14 May 2026 | Thursday | National Holiday (Pre-Independence) | |
| 15 May 2026 | Friday | Independence Day | Standard holiday |
| 12 June 2026 | Friday | Chaco Armistice Day | |
| 15 August 2026 | Saturday | Founding of Asunción Day | |
| 29 September 2026 | Tuesday | Boquerón Battle Victory Day | |
| 8 December 2026 | Tuesday | Virgin of Caacupé Day | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
Questions & Answers