How to pay contractors in Paraguay

How to choose: five questions for paying a contractor in Paraguay

1. Is the contractor an individual or a company? Most freelancers are individuals with an RUC. Their income from services falls under the IRP, which is 8% on net income up to PYG 50 million, 9% up to PYG 150 million and 10% above, due only if gross service income passes PYG 80 million in the year (PwC, checked 2026-10-29). If the contractor is a person, collect a factura for each payment and keep the contract beside it. If they work through a company, ask which tax regime it is under and what it will invoice.

2. Does the fee include VAT? Paraguay’s general VAT rate is 10%, and it applies to individuals rendering personal services (PwC, checked 2026-10-29). In binding consultation No. 677 the tax authority held that a translation service done in Paraguay for a client abroad is subject to IVA (DNIT, checked 2026-10-29). It binds only the party who asked, so the contractor’s accountant decides. Write in the contract whether the rate is gross or net of IVA and IRP.

3. Guaraníes, or dollars? Wise pays guaraníes from its own bank account in Paraguay, typically within seconds, with 95% of transfers arriving in under a day; the page warns that availability depends on the sender’s country (wise.com, checked 2026-10-29). A SWIFT wire can carry dollars to an account that holds them. A platform such as Ontop pays in USD into its own Global Account instead (getontop.com, checked 2026-10-29). Guaraníes: Wise or a platform paying PYG. Dollars: a wire, or a USD platform account if the contractor accepts one.

4. How much do you pay each month? Fees come as a percentage per payout or a monthly seat. At 3%, a percentage fee equals a $25 seat at about $833 a month, a $29 seat at about $967, a $40 seat at about $1,333 and a $49 seat at about $1,633. Below that, a percentage fee costs less; above it a seat does. Wise’s own example fee on 1,000 USD was 53.46 USD by bank transfer (wise.com, checked 2026-10-29), more than a 3% platform fee on the same amount, so quote your route before assuming it is the cheap one.

5. How close is the engagement to employment? Article 17 of the Código del Trabajo defines employment as a service done for an employer under its direction or dependence for pay, and article 19 presumes the contract between whoever gives work and whoever does it (Ley 213/93, checked 2026-10-29); see also contractor misclassification. If that fits your contractor, use a Contractor of Record. 4dev acts as Contractor of Record — the contracting party for each contractor — which reduces reclassification risk; Deel, Multiplier and Rivermate also list one. Read the liability clause in the COR contract, not the product name. If the role is a job, hire through an EOR; compare providers in the EOR rating.

Rule of thumb. One contractor who wants guaraníes, under about $1,600 a month: a platform with a percentage fee, or Wise once you have a live quote. A team, or a document with every payment: a contractor platform. Single-client, full-time work: a Contractor of Record, or an EOR if it is a job. Compare the field in the contractor payouts rating.

Payout rails that work in Paraguay in 2026

The guaraní (PYG) is the local currency. We found no official Paraguayan source on exchange reporting for incoming service payments, so confirm with the contractor’s bank whether anything has to be declared before the first payment.

What the contractor needs

A freelance developer, designer or writer in Paraguay usually works as an individual with an RUC, the taxpayer number issued by the tax authority (DNIT), and issues a factura for each payment. Income from personal services falls under the IRP: 8% on net income up to PYG 50 million, 9% up to PYG 150 million, 10% above, due only if gross service income passes PYG 80 million in the year, with the annual return due in March, staggered by the last digit of the taxpayer ID (PwC, checked 2026-10-29). Deductible expenses include health and education, social security contributions and office equipment, and the return is Form 515 filed in Marangatu (yo-facturo.com, checked 2026-10-29).

Contractors also deal with IVA. The general rate is 10%, applied to individuals rendering personal services (PwC, checked 2026-10-29). The tax authority’s binding consultation No. 677 held that a translation service from Paraguay to a client abroad is subject to it (DNIT, checked 2026-10-29). We did not find a rule that treats every service for a foreign client as an exempt export, so the contractor’s accountant has to confirm how their invoice is handled. Classification, IP and the contract are in our hiring guide.

Documents and tax on the payer’s side

Paraguayan withholding. We found no Paraguayan rule that makes a foreign payer withhold on an invoice from a local individual. The contractor declares and pays the IRP themselves.

US payers. Paraguay is not on the IRS list of US income tax treaties (irs.gov, checked 2026-10-29). Pay for services performed in Paraguay is foreign-source income (irs.gov, checked 2026-10-29), so there is no US withholding and no Form 1099-NEC. An individual signs Form W-8BEN.

What to keep on file:

• the signed services contract, with currency, receiving account and who bears transfer charges;
• the contractor’s factura for each payment, with its number in the payment reference;
• payment confirmations;
• the W-8BEN, if you are a US payer.

On a platform or Contractor of Record model you keep the platform’s invoice; the platform holds the contractor’s documents.

Where it breaks

• VAT left unsaid. The contractor’s invoice may carry 10% IVA on top of the fee. A rate agreed without saying so leaves one side short.
• The contractor quotes net. Nothing is withheld, so the IRP comes out of the contractor’s pocket at 8% to 10% of net income once gross income passes PYG 80 million.
• Route closed for the sender. Wise’s own Paraguay pages are country-specific and the sender’s page decides whether guaraníes can be sent from your country (wise.com, checked 2026-10-29); check it before you promise this rail.
• Intermediary charges. On a SWIFT wire, less than the invoice can arrive; fix who pays in the contract.
• Dollars into a platform account. A contractor paid in USD to a Global Account still has to move it to a bank; agree who bears that step.
• Reclassification. The Código del Trabajo presumes the contract between whoever gives work and whoever does it (art. 19) and does not need it written (art. 18) (Ley 213/93, checked 2026-10-29). Direction by you and dependence on you point to employment.