Multigenerational tax planning: passing on your wealth from Paraguay without losing it to inheritance tax in 2026

You've optimized your personal taxation: residency in Paraguay, a US LLC, 0% on foreign income. You're building wealth at a pace your friends who stayed in France can only envy. But one morning, a question hits you: what happens when I die? Who inherits? What taxes apply? Will France come back to claim 45% inheritance tax on wealth built in Paraguay? Will your children—who may live in France—lose half of what you've built?

Multigenerational tax planning is the forgotten chapter of expatriation. Most expatriates in Paraguay think about short-term taxation (this year's taxes) but not long-term (wealth transfer to the next generation). However, without planning, a €2 million estate built over 20 years in Paraguay at 0% could be subject to €800,000-€900,000 in French inheritance taxes upon death—nullifying decades of tax optimization in a single event.

This guide covers estate and inheritance planning for French-speaking expatriates in Paraguay: French, Belgian, and Swiss inheritance rules applicable to non-residents, inheritance taxes in Paraguay (spoiler: there aren't any), wealth protection structures, lifetime gift strategies, and an action plan to ensure your wealth passes through generations—not into the taxman's coffers.

Paraguay: 0% Inheritance Tax

The Paraguayan Framework

Paraguay does not have inheritance tax or gift tax. No tax is levied on wealth transfer between generations—whether upon death (inheritance) or during your lifetime (gifts). No progressive scale, no allowances, no inheritance declaration. Zero.

• Inheritance: Upon the death of a Paraguayan resident, their assets are transferred to their heirs according to Paraguayan civil law (Código Civil). No tax on the transfer. A $5 million estate passes entirely to the heirs.
• Gifts: Inter vivos gifts (during your lifetime) are not taxed in Paraguay. You can give an apartment, shares, or cash to your children without paying a single cent of Paraguayan tax.
• No equivalent of the IFI: Paraguay does not have a wealth tax or a real estate wealth tax. Your wealth is not taxed annually—nor is it taxed upon transfer.

This is a significant advantage compared to France (inheritance tax up to 45% in direct line, 60% between non-relatives), Belgium (regional taxes of 3-80%), or Switzerland (cantonal taxes of 0-50% depending on the canton and kinship).11. The Problem: France Follows Your Heirs

Article 750 ter of the CGI: The Long Arm of France

This is THE provision every expatriate in Paraguay must know. Article 750 ter of the CGI defines when France can tax an inheritance or gift, even if the deceased (or donor) did NOT live in France:

Case 1: The deceased was a French tax resident

• If you are a French tax resident at the time of your death, France taxes your entire worldwide estate (French assets + foreign assets + Paraguayan assets). French inheritance tax: progressive scale up to 45% in direct line (parents → children) after a €100,000 allowance per child.
• Relevance for you: If you are a Paraguayan resident (not French), this case does NOT apply. You are not a French tax resident → France cannot tax your worldwide estate under this case.

Case 2: The heir is a French tax resident

• Even if the deceased was NOT a French resident, France taxes the assets received by an heir who is a French tax resident—provided that heir has been a French tax resident for at least 6 years during the last 10 years preceding the transfer.
• Scope: This case targets worldwide assets received by the French resident heir. If your son has lived in France for 8 years and you die in Paraguay leaving him a $2 million Interactive Brokers portfolio: France taxes the entirety (because the heir is a French resident 6+/10 years).
• This is the main trap for expatriates in Paraguay whose children are in France.

Case 3: Assets are located in France

• Even if both the deceased AND the heir are non-French residents, France taxes assets located in France: French real estate, shares in French SCIs, securities of French companies (under certain conditions), claims on French debtors.
• Relevance: If you have an apartment in Paris via an SCI, this apartment is an asset "located in France" → taxable under French inheritance law, even if you are Paraguayan and your heir is Paraguayan.

French Inheritance Tax Scale (Direct Line)

Bracket (after €100,000 allowance)	Rate
Up to €8,072	5 %
€8,072 — €12,109	10 %
€12,109 — €15,932	15 %
€15,932 — €552,324	20 %
€552,324 — €902,838	30 %
€902,838 — €1,805,677	40 %
Above €1,805,677	45 %

For a net estate of €2 million transferred to a child: €100,000 allowance → taxable base €1,900,000 → inheritance tax ≈ ~€710,000 (effective rate ~37%). For an estate of €5 million: tax ≈ ~€2,060,000 (effective rate ~42%).

These amounts are per heir. If you have 3 children and an estate of €5 million, each child receives ~€1.67 million → tax ~€550,000 per child → total tax ~€1,650,000. This is less than for a single child (the €100,000 allowance applies to each child)—but it's still a third of the estate going to taxes.

The Nightmare Scenario: Heirs in France

Here's the scenario you need to anticipate:

1. You've lived in Paraguay for 15 years. You've built an estate of €3 million (Interactive Brokers portfolio, PY real estate, US LLC, Mercury Bank cash).
2. Your 30-year-old daughter has lived in Paris since her studies (she's been there for 12 years = 6+/10 years of French residency fulfilled).
3. You die in Paraguay.
4. Paraguay does not tax the inheritance (0% tax).
5. BUT France taxes your daughter on everything she receives (Article 750 ter, case 2: heir French resident 6+/10 years): ~€3 million - €100,000 allowance = €2,900,000 taxable → inheritance tax ~€1,100,000.
6. Your daughter must pay €1.1 million in French inheritance tax—on a Paraguayan estate you built with 0% tax for 15 years. The optimization during your lifetime is nullified in a single event.

This scenario is real, documented, and common. The French tax administration knows it and applies it systematically. If your children live in France, you MUST plan for the transfer—otherwise, you risk losing 30-45% of your estate upon death.

Multigenerational Planning Tools

Tool 1: Lifetime Gifts

Gifts are the first and most powerful estate planning tool. In France, each parent can give each child €100,000 every 15 years free of gift tax (renewable allowance):

• Couple with 2 children: 2 parents × 2 children × €100,000 = €400,000 every 15 years tax-free.
• Family gift of money: In addition to the general €100,000 allowance, a specific allowance of €31,865 applies to gifts of money (if the donor is under 80 and the beneficiary is an adult). Also renewable every 15 years.
• Gift between grandparents and grandchildren: €31,865 allowance per grandparent/grandchild, every 15 years.

Application for an expatriate in Paraguay:

• If your children are French residents (case 2 of Article 750 ter): lifetime gifts use the allowances and reduce the taxable estate upon death. Giving €100,000 per child now = €100,000 less in the taxable inheritance.
• If neither you nor your children are French residents: gifts of non-French assets are NOT taxable in France. You can freely give to your Paraguayan resident children without any French tax.
• The trap: If you make a gift while your children are French residents (6+/10 years), gifts of worldwide assets are taxable in France (Article 750 ter applies to gifts as well as inheritances). But the allowances apply, and the progressive rates are the same → it is always more advantageous to give progressively than to transfer everything upon death (because allowances renew every 15 years, and you can smooth the transfer over several cycles).

Tool 2: Life Insurance (French or Luxembourg)

Life insurance is the most common wealth transfer vehicle in France for reducing inheritance taxes:

• Article 990 I of the CGI: Capital transferred via life insurance (premiums paid before the subscriber's 70th birthday) benefits from an allowance of €152,500 per beneficiary (not per contract—per beneficiary). Beyond that, a flat tax of 20% (up to €700,000) then 31.25% applies.
• Article 757 B of the CGI: Premiums paid after age 70 benefit from a global allowance of €30,500 (all life insurance policies combined, all beneficiaries combined). Beyond that, premiums paid are subject to normal inheritance taxes (but not gains—only premiums are taxed).
• The advantage for an expatriate in Paraguay: If your children are in France (taxable heirs), life insurance allows you to transfer €152,500 per child with 0% tax, then subsequent amounts at 20-31.25% (instead of 30-45% in direct inheritance). This is significantly cheaper than normal inheritance.

Luxembourg life insurance:

• Luxembourg life insurance offers the same French tax advantages (Articles 990 I and 757 B apply to Luxembourg contracts as to French contracts) PLUS additional advantages: the Luxembourg "security triangle" (your assets are separated from the insurer's and protected by the CSSF), access to more diversified investment vehicles (dedicated internal funds, direct shares, private equity), and international portability (if you change country of residence, the contract adapts).
• For an expatriate in Paraguay with children in France: Luxembourg life insurance is probably the most effective transfer tool. Subscribe to the contract, designate your children as beneficiaries, fund it gradually. Upon death: €152,500 per child at 0%, then 20-31.25% beyond that. This is 10-15 percentage points less than normal inheritance taxes.

Tool 3: Property Disinvestment

Disinvestment (usufruct / bare ownership) is a classic estate planning tool:

• Principle: You give the bare ownership of an asset to your children while retaining the usufruct (the right to use and enjoy—live in the property or collect rent). Upon the death of the usufructuary (you), the usufruct expires, and the bare owner (your children) becomes full owner—without paying inheritance tax on the value of the reconstituted usufruct.
• The tax advantage: The value of bare ownership (on which gift tax is calculated) depends on the donor's age at the time of the gift. The earlier you give, the less the bare ownership is worth (and the lower the gift taxes):

Age of donor (usufructuary)	Value of usufruct	Value of bare ownership (tax base)
Under 21 years	90 %	10 %
31-40 years	70 %	30 %
41-50 years	60 %	40 %
51-60 years	50 %	50 %
61-70 years	40 %	60 %
71-80 years	30 %	70 %
81-90 years	20 %	80 %

Example: You are 55 years old and have an apartment in Paris worth €500,000. You give the bare ownership to your son (FR resident). Value of bare ownership: 50% × €500,000 = €250,000. Allowance: €100,000. Taxable base: €150,000. Gift tax: ~€28,000. Upon death (in 25-30 years): your son recovers full ownership (value perhaps €800,000) without paying additional taxes. Savings compared to direct inheritance: ~€250,000 in avoided taxes.

Disinvestment works for real estate (French or Paraguayan), company shares (SCI, LLC), and investment portfolios (via disinvestment of securities accounts). For an expatriate in Paraguay with assets in France: this is an essential tool.

Tool 4: The Family SCI

The family "Société Civile Immobilière" (SCI) is a wealth transfer vehicle widely used in France:

• Principle: Instead of holding real estate directly, you hold it via an SCI in which you and your children are partners. You gradually give SCI shares to your children (using the €100,000 allowances per child every 15 years).
• Advantages: SCI shares can be valued with a discount (10-30%) compared to the underlying real estate value (because SCI shares are less liquid than real estate—illiquidity discount). The gift of dismembered shares (bare ownership of shares) combines the advantages of disinvestment and the SCI.
• For an expatriate in Paraguay with real estate in France: The family SCI allows for gradual transfer of French real estate to your resident children in France, benefiting from renewable allowances and the share discount. This is the standard tool for optimizing Franco-Paraguayan real estate transfer.

Tool 5: The Paraguayan Will

In Paraguay, inheritance is governed by the Paraguayan Civil Code (Law 1183/1985). The rules are different from French law:

• Forced heirship: Paraguay recognizes forced heirship (legítima): reserved heirs (descendants, spouse) are entitled to a minimum share of the inheritance. In the direct line (children), the reserve is 4/5 of the inheritance (80%). The disposable portion (the part you can freely bequeath by will) is 1/5 (20%).
• No inheritance tax: Regardless of the distribution, no tax is levied in Paraguay on the transfer.
• The will: Draft a will (testamento) in Paraguay to organize the transfer of your Paraguayan assets. A Paraguayan notary (escribano) formalizes the document. The Paraguayan will covers assets located in Paraguay (PY real estate, PY bank account, PY SRL). For assets located in other countries (Mercury Bank in the USA, Interactive Brokers in Ireland, real estate in France), the applicable law may be that of the country where the assets are located—consult an international private law attorney.

Tool 6: The Trust (for significant estates)

The trust is an Anglo-Saxon estate planning tool that can be used for multigenerational transfer—but with important precautions for French citizens:

• Principle: You (the settlor) transfer assets to a trustee who manages them for the benefit of your children (the beneficiaries). The assets are no longer "yours" (they belong to the trust) — which can exempt them from inheritance tax.
• The French pitfall: France does not recognize the trust as a wealth transfer structure. The French tax authorities "look through" the trust and tax distributions (or assets) as if the trust did not exist (article 792-0 bis of the CGI). Trusts with French settlors, beneficiaries, or assets are heavily taxed (gift and inheritance tax + an annual tax of 1.5% on assets).
• The exception: If NONE of the participants (settlor, trustee, beneficiaries) are French tax residents and no assets are located in France, the trust escapes French taxation. For an expatriate in Paraguay whose children ALSO live outside France: the trust can be a viable planning tool. For an expatriate in Paraguay whose children are in France: the trust is a tax trap (France taxes it as a direct gift, or even more heavily).

Strategies by family situation

Situation 1: You and your children live in Paraguay

This is the simplest and most advantageous situation:

• Succession: Upon death, your Paraguayan assets pass to your heirs without inheritance tax (Paraguayan law). Your foreign assets (Mercury Bank, Interactive Brokers) also pass without tax in Paraguay (foreign source, no PY tax). France has no claim (neither the deceased nor the heirs are French residents, and the assets are not in France — unless you own real estate in France).
• Actions: Draft a Paraguayan will (escribano). Designate the beneficiaries of your Luxembourg life insurance (if you have one). Verify that you do not have any assets "located in France" (SCI, direct real estate, PEA) that would be taxable in France even without French residency.
• Total transfer tax: €0 (if no French assets).

Situation 2: You live in Paraguay, your children live in France

This is the most common — and most fiscally dangerous — situation. Article 750 ter (case 2) applies if your children have been French residents for 6+/10 years:

• The risk: Your French resident children are taxed on everything they receive (worldwide assets) at French inheritance tax rates (progressive scale up to 45%).
• The strategy: Combination of progressive gifts (€100,000 per child every 15 years) + Luxembourg life insurance (€152,500 per beneficiary at 0%) + bare ownership/usufruct split (for real estate) + family SCI (for French real estate).

The quantified action plan (assets of €3 million, 2 French resident children):

Tool	Amount transferred	Tax paid
Cash gift (2 parents × 2 children × €100,000)	€400,000	€0 (within the allowance)
Family gift of money (2 parents × 2 children × €31,865)	€127,460	€0 (specific allowance)
Luxembourg life insurance (2 beneficiary children × €152,500)	€305,000	€0 (allowance 990 I)
Life insurance beyond allowance (€800,000 remaining on LI)	€800,000	~€160,000 (20%)
Direct inheritance (remainder ~€1,367,540 for 2 children)	€1,367,540 (€683,770 each)	~€232,000 (~€116,000 per child, after residual allowance if first gift cycle)
Total transferred	€3,000,000	~€392,000 in tax

Without planning (everything in direct inheritance): tax ~€920,000. With planning (gifts + life insurance + structuring): tax ~€392,000. Savings: ~€528,000 — or 57% reduction in tax. And if you renew gifts in 15 years (second allowance cycle), the savings increase further.

Situation 3: You live in Paraguay, your children live in a third country (neither France nor Paraguay)

If your children live in a third country (Switzerland, Canada, Germany, UK):

• France: Article 750 ter (case 2) does NOT apply if your children are not French residents (6+/10 years). France can only tax assets "located in France" (case 3). If you have no French assets, France is out of the picture.
• Paraguay: 0% inheritance tax.
• The third country: Check the inheritance tax laws of your children's country of residence. The United Kingdom taxes inheritances (Inheritance Tax, 40% above £325,000). Germany taxes inheritances (7-30% for direct descendants). Switzerland taxes in some cantons (0-50% depending on the canton and relationship). Canada does not tax inheritances but taxes capital gains upon death (deemed disposition).
• Strategy: Planning must consider the rules of each heir's country of residence. Consult an international private law attorney to structure the transfer to minimize taxes in each jurisdiction.

Situation 4: You and your spouse live in Paraguay, your children are young (no expatriation to manage yet)

If your children are minors and live with you in Paraguay:

• Now: Take advantage of the window. Paraguay has no gift tax → gift what you can now (shares in PY SRL, cash, PY real estate). Gifts made in Paraguay to PY resident children are taxed neither in PY nor in France (if children are not French residents 6+/10 years).
• Future: If your children go to study or work in France (a common scenario), they could become French residents for 6+/10 years → Article 750 ter will apply. Plan gifts BEFORE your children settle in France. A gift made when the child is a PY resident is not taxable in France. The same gift made when the child is a French resident is.
• Timing: The criterion is "6 years within the last 10 years." If your child goes to France at 18 for university, they reach the 6/10 year threshold at 24. Any transfer after their 24th birthday is taxable in France. Plan gifts before their 24th birthday — ideally before they leave for France.

Multigenerational planning: beyond your children

Transferring to grandchildren (generation skipping)

Direct gifting to grandchildren (skipping a generation) is a fiscally efficient strategy:

• Allowance: €31,865 per grandparent/grandchild, every 15 years (in addition to the €100,000 per parent/child allowance).
• The advantage of generation skipping: If you give directly to your grandchildren, the assets do not pass through your children (who would have been taxed once upon inheritance) and then through your grandchildren (taxed a second time upon your children's inheritance). Generation skipping eliminates a layer of inheritance tax.
• In Paraguay: No gift or inheritance tax → give directly to your grandchildren (PY residents) without any tax. If your grandchildren are French residents 6+/10 years: the €31,865 allowance applies.

Creating a sustainable family wealth structure

For significant assets (> €2 million), a family wealth structure can protect and grow assets over several generations:

• Family SCI: Holding real estate (French and/or Paraguayan) in an SCI whose shares are progressively transferred to descendants. The SCI survives generations — it is not dissolved upon death.
• Life insurance with bare ownership/usufruct clause: Upon death, the spouse receives the usufruct of the contract (they receive the income) and the children the bare ownership (they receive the capital upon the surviving spouse's death). Double protection: the spouse is protected AND the transfer to the children is optimized.
• Dutreil Pact (for entrepreneurs): If your US LLC or PY SRL is an eligible "business," the Dutreil Pact allows a 75% exemption on the value of shares for inheritance tax — under strict conditions (commitment to retain, management). This device is French — it applies to transfers of company shares subject to French inheritance tax (heir resident in France or French company).

Belgium and Switzerland: specificities

Belgium

Belgian inheritance tax is regional (Flanders, Wallonia, Brussels) and varies significantly:

• Direct line (Flanders): 3% to 27% (progressive scale on net assets). Much lower than France (5-45%).
• Direct line (Wallonia/Brussels): 3% to 30% (similar to Flanders but with different thresholds).
• The taxation criterion: Belgium taxes inheritances if the deceased was a Belgian resident (not the heir — unlike France). If you are a Paraguayan resident (not Belgian) and your children live in Belgium: Belgium does NOT tax (because the deceased was not a Belgian resident). However, Belgium taxes real estate located in Belgium, regardless of the deceased's domicile.
• The advantage: Unlike France (which follows the heir), Belgium follows the deceased. If you are a PY resident and your children live in Belgium, Belgium does not tax the inheritance (except Belgian real estate). This is less problematic than France.

Switzerland

Swiss inheritance tax is cantonal and varies massively:

• Some cantons = 0% in direct line: Schwyz, Obwalden, Nidwalden, Lucerne, Zug, and other cantons totally exempt direct line inheritances (parents → children). The canton of Vaud also exempts.
• Other cantons tax: Geneva (0-6% in direct line), Neuchâtel, Appenzell (up to 18%).
• The criterion: Switzerland taxes if the deceased was domiciled in a canton at the time of death. If you are a Paraguayan resident: Switzerland does NOT tax (except real estate located in Switzerland).

The planning timeline: don't wait

Age	Actions
35-45 years old (settling in PY)	Draft a Paraguayan will. Take out Luxembourg life insurance (beneficiaries: spouse + children). If minor PY resident children: start gifts (cash, PY SRL shares) as long as they are not French residents.
45-55 years old	First cycle of gifts to children (€100,000 per child if concerned by article 750 ter). Bare ownership/usufruct split of real estate (bare ownership to children, usufruct retained). Regularly fund Luxembourg life insurance.
55-65 years old	Verify your children's tax residence (have they become French residents 6+/10 years?). Adjust strategy. Second cycle of gifts if the first cycle was 15+ years ago. Review the beneficiary clause of life insurance (update if family change).
65-75 years old	Third cycle of gifts. Payments to life insurance (caution: after 70 years old, article 757 B replaces article 990 I — only a global allowance of €30,500). Review the Paraguayan will. Consult a French notary if assets in France.
75-85 years old	Final adjustments. Verify that all structures are in place. Up-to-date will. Up-to-date life insurance beneficiaries. Estate file prepared for heirs (list of assets, lawyer/accountant contacts, access to accounts).

Fatal errors in estate planning

Error 1: Ignoring Article 750 ter

Most expatriates in Paraguay are unaware of Article 750 ter. They think: "I live in Paraguay, Paraguay has no inheritance tax, so my heirs pay nothing." False — if your heirs live in France (6+/10 years), France taxes everything. Ignoring this reality can cost hundreds of thousands of euros.

Error 2: Not making gifts during your lifetime

Every year without a gift is a wasted allowance. Allowances renew every 15 years — if you start giving at 45, you can do 2-3 cycles of gifts before your death. If you wait until 75, you only have one cycle. Time is your ally in estate planning — don't waste it.

Error 3: Forgetting life insurance

Life insurance is the most efficient transfer vehicle (€152,500 per beneficiary at 0% tax). Not having it = giving up a massive exemption. Take out Luxembourg life insurance as soon as you settle in Paraguay — even with a modest initial payment. Fund it progressively. Upon death, it will be your most powerful transfer tool.

Error 4: Not drafting a will

Without a will, the inheritance is governed by legal rules (Paraguayan Civil Code for PY assets, French law for French assets if the deceased had French nationality — European regulation 650/2012 allows choosing national law). Legal rules do not always correspond to your wishes — and they can create conflicts between heirs. Draft a clear will (in Paraguay and in France if you have assets in both countries).

Error 5: Not coordinating between jurisdictions

An expatriate in Paraguay with children in France, an account in the USA, a portfolio in Ireland, and life insurance in Luxembourg lives in 5 tax jurisdictions simultaneously (for inheritance). Each jurisdiction has its own rules. Without coordination, heirs end up with 5 probate procedures in 5 countries, conflicts of laws, and potentially double taxation (France taxes the same asset as the USA, for example). Coordination by an international private law attorney is essential.

Conclusion

Multigenerational tax planning is the most important — and most neglected — chapter of expatriation to Paraguay. You have optimized your taxation during your lifetime (0% on foreign income). But without estate planning, your assets can lose 30-45% at generational transfer — because of an article of the French tax code (750 ter) that you may not even have known about.

The keys to multigenerational planning:

• Paraguay: 0% inheritance and gift tax. Ideal base — but insufficient if your heirs are in France.
• Article 750 ter: France taxes French resident heirs (6+/10 years) on worldwide assets. This is the number 1 risk for expatriates in Paraguay whose children live in France.
• Tools: Progressive gifts (€100,000 per child every 15 years), Luxembourg life insurance (€152,500 per beneficiary at 0%), bare ownership/usufruct split, family SCI, Paraguayan will. Combined, these tools reduce taxes by 50-70%.
• Timing: Start early. Each 15-year cycle is an opportunity to transfer tax-free. Waiting means wasting allowances.
• Coordination: Multi-jurisdictional assets require an international private law attorney + a French notary + a Paraguayan escribano + your DNIT accountant. The investment (€5,000-€15,000 for advice) is negligible compared to the hundreds of thousands of euros in avoided taxes.

Your wealth is not just what you earn — it's what you pass on. Paraguayan territoriality allows you to build this wealth at maximum speed (0% tax). Multigenerational planning allows you to transfer it with minimum loss. The two together form a complete strategy — from accumulation to transfer, from your generation to the next.

Do you want wealth that spans generations — not the tax coffers? Contact our team for comprehensive wealth support: Paraguayan residency (from €1,400), DNIT accounting (€30/month), and coordination with your notary, tax lawyer, and Luxembourg life insurance manager. Build for 0%. Transfer for the minimum. Protect for generations.