by Peter Macfarlane

Here at Q Wealth we have been writing about Paraguay for nearly a decade. In that time we have seen many of our readers happily immigrate to Paraguay and some have obtained citizenship through naturalization, and with it the Paraguay passport that Paraguayan citizens are of course entitled to. I first visited Paraguay in 2004 and saw a country with huge unexploited investment and development potential, populated by friendly and well-educated people. The past years have been difficult for Paraguay, with a lot of ups and downs, but now things are finally going well there. Mark my words: Paraguay is really set to boom now.

That’s one of the reasons why in January this year we held our first ‘Paraguay Briefing’ in Asuncion, at which we introduced a number of our  readers in person to our recommended residence and citizenship expert, to a top bilingual lawyer in Asuncion who is an expert in real estate, and to various experts on agriculture and land investments. In the evening we enjoyed dinner together at one of Asuncion’s trendy Irish pubs.

Those who attended that briefing had the chance to make a killing, just by opening a local currency Paraguayan bank account – a great opportunity to diversify into a non-US dollar bank account. In January 2011, $5,500 (the minimum required for the residency application) in a Paraguay bank account would have bought around 25 million guarani (local currency). Today, about three months later, that 25 million would buy $6,250. That is just currency appreciation, not accounting for interest etc. We fully expect the dollar to keep falling and the guarani to keep rising.

Anyway, one of the reasons we always liked Paraguay was that it was off the radar. Paraguay has been popular with German expats for some time, mainly for retirement. The German ‘international retirement’ type newsletters have been discreetly pushing Paraguay for years. Most of the serious foreign investment, however, was coming from wealthy Brazilians and Argentinians, who were doing well in their own countries but very wisely sought to diversify. Spanish investors were another group of early adopters. There was very little information in English on Paraguay. That seems to be changing.

Change is certainly not a bad thing, and we’re happy that this wave of interest in Paraguay reflects the fact that our feelings and recommendations over the years have been spot on. But it is having an effect on residence and citizenship matters, which readers should be aware of.

First of all, things are getting harder, and the immigration office is getting stricter. For Americans, a local sheriff’s report used to work fine. Now you need an FBI ‘rap sheet’ report. The same applies to Mexican citizens, who need reports from their federal police, and some others.  We have also seen the immigration office getting much stricter on medical tests than they were before. Our sources in Asuncion indicate that this trend is set to continue, ie as more and more people seek to obtain Paraguayan residency rights, it will not be as easy as it was. The bottom line: if you’re considering it, do it sooner rather than later.

Second Passport Scams: Beware

Secondly, there are some scams popping up with regard to Paraguayan residency. For some time now we have known of facilitators in Asuncion who offer to help with residency and citizenship, then simply don’t deliver. I even lost $10,000 myself once to such a person. She was supposed to deposit the money in the bank, and she spent it instead. I had to put this loss down to experience, because if this kind of thing happens there is not much you can do.

That is why recommendation is so important. We have changed our contacts in Paraguay over the years but are now very happy with the one we are working with, who is by far the most efficient and responsive yet, even if hes more expensive than some. I know I can e-mail him and get a reply within an hour or two, or I can reach him on Skype or call his cellphone. He speaks multiple languages so I don’t have issues sending readers directly to him. That peace of mind is worth paying extra for in my opinion.

But there is more. The problem is no longer just Paraguayan wannabee fixers whose friends at immigration lose their jobs. Now there are gringos involved in this. The other day we saw a well-written e-book in English doing the rounds on the internet, with a lot of inaccurate and misleading info in it.  Let’s hope the author was just naive and mistaken, rather than intending deliberately to mislead people.

He claimed it was possible to get permanent residence ‘stamped in your passport’ in one week: completely false. That’s just not how it works. He claims that naturalization in Paraguay is easy: it used to be, but it’s getting more difficult. Nobody can guarantee what will happen three years from now. Honest facilitators will tell you this.

Then, he talked about using a cedula for travel within Latin America and avoiding visa fees at borders. He doesn’t point out that this applies only to Paraguayan citizens – the cedula issued to residents doesn’t count. And Paraguayan citizens wouldn’t be subject to the visa fees he mentions anyway. Then he mentions Germans having to relinquish citizenship if they apply for Paraguayan passports: most Germans I know in Paraguay who have done this are scared stiff that the German government will find out.It is not a good solution.

But that all pales in comparison with his claim that you can become a Spanish citizen in two more years (ie, five years after getting residence in Paraguay). This is just preposterous. Spain does allow for a shortened naturalization period for Latin Americans, yes, but it only applies to people born in those countries, and even then it will take a lot more than two years in practice. This concession in Spain absolutely categorically does not apply to naturalized Paraguayans. Call your local Spanish embassy and ask them if you don’t believe me.

Then there is the suggestion that you can live in Asuncion and hire someone to manage your ranch for less than the cost of your current monthly cell phone bill. Yeah, right, I agree Paraguay is a land of opportunity but it certainly isn’t that easy. Or maybe he just hasn’t figured out yet that he really needs to buy a local pre-paid chip instead of using international roaming!

Don’t get me wrong, there is some good info in this book that I agree with. There are good summaries of Paraguay’s green energy resources and investment opportunities, and information on how the Paraguayan government is supporting the mining business that I see as something full of potential (Paraguay is already a gold-producing nation with some of the biggest fresh water and natural energy reserves in the world)

I admire it when people set up new publishing businesses, and usually try to support them, but some of this guy’s research is seriously wonky, and publishing things like this damages the reputation of Paraguay’s hard-working, honest immigration consultants who have been quietly helping our readers over the years. It is sure to lead to further tightening of immigration rules. Residency and citizenship is simply not something you can commercialize and  package into a ‘product.’ People who try to approach things in this way will have problems. Immigration is something that has to be handled by lawyers on a case-by-case basis.

I happen to know for a fact that this stuff is already on the Paraguayan government’s radar. Yes, they can read English and they do have internet access.  No government likes the suggestion that its basic laws and procedures are being misused or abused. They are painfully aware that this kind of publicity can literally cause international incidents. Some years ago Paraguay was accused by the US government of giving citizenship too easily to Arabs, leading to it being stigmatized as a hot-bed of islamic terrorism. This was complete rubbish of course but still it led to a serious tightening up of naturalization procedures, and even today, Arabs are subject to blatant discrimination in the Paraguayan immigration offices.

So, in conclusion, Paraguay is now on the radar. I have investments there myself, I love the country, and I still recommend it for those who are seeking residence and citizenship opportunities. It is true that in order to be classified as a resident, you need only visit the country once every three years. It is true that with three years of residence, you can apply for citizenship. It is true that the costs are some of the lowest in the world, especially when compared to economic citizenship programs. I think changes are afoot so I would urge you to act now rather than later if you are interested in moving on the opportunities.

I would also suggest you plan on spending some time in this country of opportunity to get to know it for yourself. The government there are looking for real new residents, honest people who can bring benefits to the country. Behave appropriately, respectfully and politely when dealing with the Paraguayan government and you will be welcomed. Entrepreneurs and investors are very welcome. The same cannot be said for those whose only interest is seeking to acquire a cheap passport by the back door. They are not welcome. Paraguay does not sell citizenship.

Please take care who you deal with for your immigration processing and who you rely on for information. If you are a Q Wealth member, we are happy to assist you as always with referrals from our rolodex.

Further reading:

Q Wealth Second Passports Page by Joe B. Gonzalez

Second Passports by Residence and Naturalization

Economic Citizenship: Legal Second Passports for Sale

Last week I started the case study of the young American, looking to have his exit strategy or ‘Plan B’ in place, who was looking for a second passport. He was focusing in on options in South America, preferring that to the economic citizenship programs of St Kitts and Nevis and Dominica in the Caribbean. And we looked at  Uruguay as a residence and citizenship option. If you haven’t yet read, part one, I suggest you do so here.

I finished up last week by touching on the wild-card option, Paraguay. I said that for young-at-heart individuals with a sense of adventure and a slightly higher tolerance for risk (or perhaps an appetite for profit?) there is Paraguay. And I pointed out that somebody might choose Paraguay over Uruguay because:

• you can apply after three years for citizenship, with no need to worry about family units
• no need to buy real estate: $5000 deposit in a local Paraguay bank is enough
• costs in Paraguay are much lower
• it’s a country full of business opportunities
• it’s more anarchic than Uruguay, meaning less control and more freedom… for example, nobody is really going to count how many days you are there. Having residence on paper is enough.

You might feel freer in Paraguay because government is less developed and less intrusive. Paraguay has always been somewhat cut off from the world, a landlocked frontier state in the middle of South America, that was very hard to reach until maybe 20 years ago. It is known, unfortunately, as a place where Nazis went after the second world war… but it’s less well known that many Jews went there too.

Basically Paraguay’s immigration policy, enshrined in its constitution, is that everybody is welcome provided they come to live in peace and obey society’s norms there. There is plenty of room for everybody, with a low population density, and smart individuals with money and business experience are particularly welcomed. Other people who think outside the box, particularly the hard-working Mennonites, have also found safe haven in Paraguay over the years. Paraguay is very much a secular state… the current President is a former Catholic archbishop who was ex-communicated!

This liberal immigration policy continues into the granting of Paraguayan citizenship, as little as two years after taking up residence. Paraguay’s constitution specifically allows dual or multiple citizenship, though the government sometimes insists that those applying for naturaliation renounce their previous citizenship. This is not enforced however and there are legal ways around it.

Paraguay’s passport, issued to citizens, is an excellent travel document. Since Paraguay has a small population and most of its higher class citizens (the ones who have money to travel) are of European extraction, it has visa-free travel agreements with the European Union and many other countries around the world.

Even before you qualify for the Paraguayan passport, you will receive a cedula – the national ID card that is recognized as a travel document in other members of Mercosur such as Argentina, Chile and Brazil. This card is issued automatically to residents.

Obtaining residence is a relatively simple matter. We have access to good, experienced immigration lawyers in Asuncion, the Paraguayan capital, who can help you and have a track record of helping Q Wealth members before you. Referrals are free of charge to Q Wealth members – just contact the office.

Obtaining citizenship, that is necessary to obtain a Paraguayan passport, is a little more complicated. You will need to learn some basic Spanish in order to carry out the necessary civics test – a multiple choice paper with questions about history, geography and the like. You will need to know things like the major rivers, the names of important historical personages, and the system of government. You will also need to demonstrate some connection with the country, but the lawyers can assist you with that.

All in all, Paraguay is not for those who want a comfortable life in an apartment overlooking a beach. For those people, Uruguay is the better option. However if you are looking for a country where land is cheap, and most businesses are virgin and unregulated, look at Paraguay.

One final note: Paraguayan residence is a very attractive base for world travellers, particularly Brits and Europeans, Canadians and Aussies, seeking to travel the world in search of income while leaving behind their home country taxes. The passport is really only important for Americans who are taxed on their worldwide income unless they renounce citizenship, or for those from countries like China or Russia who have problems travelling anywhere on their existing passports.

More information, as always, can be found in Q Wealth Report. The back issues available online in our Members Area include information on Paraguayan residence.