Italy and Paraguay are advancing negotiations on their first bilateral income tax treaty, aimed at strengthening investment ties and providing greater tax certainty for cross-border businesses.
Italy and Paraguay are in negotiations for a bilateral income tax treaty, according to a release from the Italian Paraguayan Chamber of Commerce on 22 June 2026.
The discussions come as Paraguay strengthens its position as a strategic investment hub for Italian and European businesses in South America. The country’s competitive advantages include a business-friendly environment, low tax burden, favourable energy costs, and its strategic location within the Mercosur region.
A future tax treaty is expected to provide greater legal certainty for investors by establishing rules to prevent double taxation and support cross-border economic activity between Italy and Paraguay.
If an agreement is reached, it will need to be finalised, signed, and ratified before entering into force.
