Trusts, Fideicomisos and Holdings in Paraguay
The trust stopped being opaque to the home tax authority. Paraguay has its own vehicle, the fideicomiso — but it solves a different problem. What each one does.
“Put your wealth in a trust and it disappears from the tax authority’s radar.” That line, or some variation of it, still circulates in content about international wealth protection — and in a growing number of jurisdictions it is now simply false.
The Brazilian case illustrates the shift well: Law No. 14,754/2023 made the trust transparent for tax purposes. For a Brazilian tax resident, the trust stopped being a veil. This article explains what changed and where Paraguay fits — not as a way around the rule, but as part of a wealth design that works inside it.
What changed in the treatment of trusts
Before the law, the tax treatment of trusts sat in a grey zone: one reading held that the assets “left” the owner on entering the trust, returning to the tax radar only on actual distribution to the beneficiary. Law 14,754/2023 closed that reading.
Under the current rule, the trust’s assets and rights are treated, for Brazilian tax purposes, as belonging to the settlor during their lifetime. Fiscal ownership shifts only on the first of these three events:
- The trust becomes irrevocable during the settlor’s lifetime; or
- The settlor dies; or
- There is an actual distribution to a beneficiary.
Whichever comes first determines when fiscal ownership moves from the settlor to whoever is then treated as owner.
In the meantime, income and capital gains generated by the trust’s assets are taxed annually at 15%, whether or not there is any distribution — the same transparency regime applied to controlled foreign entities.
Note on scope: Ruling Cosit No. 75/2025, published by the Receita Federal on 30 April 2025, consolidated the position that merely naming a Brazilian-resident individual as a beneficiary of a trust — even an irrevocable, discretionary one — is enough to trigger the obligation to report and tax the assets as if held directly. The trustee’s discretion over distributions does not displace that obligation.
The point most people miss: the law looks at the resident, not the vehicle
These rules reach whoever is a tax resident in the jurisdiction that enacts them — settlor or beneficiary. They do not regulate the trust itself, a foreign figure with no direct counterpart in continental civil law; they regulate the tax position of the person participating in it.
Which means the same structure produces entirely different outcomes depending on where the owner’s tax residence sits. A trust or holding that makes sense for a Paraguayan tax resident — subject to Paraguay’s territorial regime — can generate a 15% annual liability if that same owner remains a Brazilian tax resident. The order between the tax exit and the creation of the wealth structure is not a detail: it determines whether the structure works as designed.
The local alternative: the Paraguayan fideicomiso
Paraguay has its own fiduciary vehicle, governed by Law No. 921/96 on Fiduciary Business — and it is not the same as an Anglo-Saxon trust, even though it addresses part of the same problem.
In the Paraguayan fideicomiso, the settlor transfers ownership of specified assets to a fiduciary, who must administer or dispose of them for the benefit of the settlor themselves or a third-party beneficiary. Three central features, under the law:
- Autonomous estate: the assets transferred to the fideicomiso form a separate estate, dedicated exclusively to the purpose defined in the constitutive act.
- Protection from the settlor’s creditors: assets forming that autonomous estate cannot be enforced against by the settlor’s creditors — subject to challenge where there is fraud against third parties.
- Regulated fiduciary: unlike an Anglo-Saxon trust, where the trustee can be almost any individual or specialist entity, in Paraguay the fiduciary role is reserved to authorised banks and trust companies, supervised by the Central Bank of Paraguay — giving the vehicle a degree of institutionalisation and regulatory oversight that many offshore trusts lack.
The encargo fiduciario — a form in which no ownership transfer occurs — is a distinct figure, with no autonomous estate, serving more limited administrative purposes.
Anglo-Saxon trust, Paraguayan fideicomiso or holding: when each fits
| Vehicle | What it does well | Relevant limitation |
|---|---|---|
| Anglo-Saxon trust (offshore) | Complex multigenerational succession, common law jurisdictions, beneficiaries across several countries | For a settlor or beneficiary resident in a jurisdiction with transparency rules, it is fiscally transparent — producing neither deferral nor opacity |
| Paraguayan fideicomiso (Law 921/96) | Local asset protection with regulated banking supervision, a documented specific purpose, assets situated in Paraguay | Requires an authorised fiduciary (bank or trust company); the tax regime on income generated follows Paraguay’s territorial rules |
| Paraguayan holding (EAS) | Concentrating shareholdings, succession planning through shares, real economic activity | Not a shield in itself; subject to the same transparency regime where the owner is resident in a jurisdiction applying it |
Choosing between them is not a question of which “hides best” — none of them does that under a transparency regime. The right choice depends on the real objective: succession, protection against litigation, concentrating wealth management, or simply organising assets located in Paraguay.
What this changes in practice
A trust is no longer a way off the tax radar for anyone remaining resident in a jurisdiction with transparency rules. Income is taxed annually, with clear triggers for the shift in fiscal ownership.
Timing matters more than the vehicle. The same wealth structure produces different tax outcomes depending on whether the owner is, or is not, a tax resident of a given jurisdiction at the relevant moment.
The Paraguayan fideicomiso is a legitimate, regulated tool — not a disguised substitute for a trust. It works better for specific purposes (asset protection, local fiduciary administration) than as a generic “wealth shield”.
Frequently asked questions
Does a trust still protect assets from creditors?
Civil asset protection (against creditors) and tax transparency are distinct questions. Transparency rules address the second — they do not necessarily eliminate the trust’s civil protective effects, but they do eliminate fiscal opacity.
Are a Paraguayan fideicomiso and a trust the same thing?
No. The Paraguayan fideicomiso is governed by its own statute (Law 921/96), requires an authorised fiduciary (a bank or trust company) and sits under Central Bank of Paraguay supervision — a more institutionalised structure than most offshore trusts.
If I cease to be a tax resident, do transparency rules still apply to me?
They reach tax residents of the jurisdiction enacting them. Someone who correctly formalises their tax exit ceases to be subject to them from the moment they become non-resident — but that requires a genuine, formalised exit, not merely the existence of a structure abroad.
Is there any advantage in keeping the structure while I am still resident?
It depends on the objective. For wealth governance and succession organisation, yes, even under annual taxation. For tax deferral, no — that effect has been removed.
How to verify for yourself
- Law No. 14,754/2023 and Normative Instruction RFB No. 2,166/2023 — Receita Federal do Brasil.
- Ruling Cosit No. 75/2025 — Receita Federal do Brasil.
- Law No. 921/96 on Fiduciary Business — BACN and the Central Bank of Paraguay.
The starting point
Trusts and fideicomisos remain legitimate tools of wealth organisation — what changed is that they no longer hide anything from the tax authority. The right structure is the one that solves the family’s actual objective (succession, protection, governance), designed with the owner’s tax residence already settled — not as a shortcut around it.
One conversation is enough to know whether it makes sense to proceed.
Informational content. It does not constitute legal, tax or investment advice. The rules cited were verified against the official sources indicated in July 2026 and may be amended or further regulated. Individual situations produce different outcomes and should be analysed case by case.