Drawing a German or Austrian pension in Paraguay: what works and what to watch for

Is the German pension even paid to Paraguay?

Yes. Statutory retirement pensions from the Deutsche Rentenversicherung (DRV) are paid worldwide, including to countries without a social security agreement such as Paraguay. The DRV transfers the money to a German or a foreign account. Regular retirement pensions from German contribution periods are paid in full.

The transfer costs matter. Within the SEPA area this is straightforward, but Paraguay lies outside it. For a payment beyond SEPA, the DRV only bears the costs up to the first correspondent bank. Everything after that, meaning further bank fees and the exchange rate from euros into guaraníes or US dollars, is at your expense. Many pensioners therefore have the pension transferred to an account in their country of origin and then move the money to Paraguay themselves.

The annual life certificate: mandatory, or payment stops

Because Paraguay has no electronic exchange of death records with Germany, you have to prove to the DRV once a year that you are still alive. This life certificate is typically certified by the German embassy in Asunción or another competent office. If it is not submitted in time, the pension payment can be suspended until the proof is in.

The same principle applies to the Austrian pension with its own deadlines (see further below). In both cases the life certificate is a pure formality, but one you have to keep in your calendar. If you miss it, there is no money until you submit it.

No social security agreement: what that means in practice

There is no social security agreement between Germany and Paraguay; Paraguay is not on the DRV's list of agreement states. For the normal retirement pension from your own contribution years this changes nothing, it is paid in full. In two special cases, though, the missing agreement has consequences.

First: a full reduced-earning-capacity pension that was awarded to you only because of the situation on the German labour market (a so-called labour-market pension) is not payable outside the EU, the EEA and the agreement states. So it stops when you move your residence to Paraguay. Second: pensions based on foreign pension periods (that is, on periods completed abroad that were credited under the Foreign Pensions Act) can be reduced if you live outside Germany.

Taxation: Germany keeps the full right (no treaty)

Since 2005, German pensions are taxed at source in Germany, governed by Section 49 EStG. As a pensioner abroad you are subject to limited tax liability in Germany. The central authority is the Finanzamt Neubrandenburg (RiA), the office for pension recipients abroad. That is where you file your tax return.

Because there is no comprehensive double taxation treaty between Germany and Paraguay (there is only an air transport agreement from 1983), Germany keeps the full right to tax the pension. Paraguay does not tax the German pension due to the territorial principle, foreign income stays tax-free there. So no double taxation arises, but there is no tax exemption on the German side either.

An important drawback of limited tax liability: the basic tax-free allowance is generally not granted (2025: 12,096 EUR). On application, treatment as unlimited tax liability is possible if at least 90 percent of your worldwide income is German or your foreign income stays below the basic allowance. Whether this application is worthwhile for you depends on your specific income situation and is a case for the tax adviser.

Health insurance: the gap pensioners most underestimate

Your statutory health insurance (GKV), including the pensioners' health insurance (KVdR), ends when you move your residence and habitual abode to Paraguay. Because there is no social security agreement, the German GKV covers nothing in Paraguay. Your pension is then paid out without GKV deductions, but you are left without health cover as soon as you are in Paraguay.

This means you have to insure yourself from day one in Paraguay, either through international private health insurance or through a local Paraguayan policy. For the 60-plus age group in particular, this is the point that needs the most thorough planning, because prices, age limits and exclusions play a big role here. You will find the details in our guide to health insurance in Paraguay.

Austrian pension in Paraguay

For Austria the picture is essentially the same. The statutory pension is paid worldwide and unreduced, monthly in arrears and exclusively by bank transfer. Here too you have to submit a life certificate once a year; the relevant form is sent out each January and is due by mid-June; since January 2025 there has been a partly digital variant via QR code. If the certificate is missing, payment is suspended. You have to report address changes within two weeks.

For tax purposes you are subject to limited tax liability in Austria with the pension. Because there is likewise no double taxation treaty between Austria and Paraguay, Austria taxes the pension, and Paraguay does not. For the Austrian side too: the exact tax calculation is individual and belongs with an Austrian tax adviser as well as the preliminary advice from the pension insurance provider.

Riester and company pension: just briefly, then to a professional

Two building blocks of retirement provision behave differently from the statutory pension when you move to Paraguay, and both are too individual for a blanket answer. Riester contracts are usually unattractive for a permanent move outside the EU and the EEA, because subsidies and tax advantages generally have to be repaid. The details, for example on the timing of the harmful event and on possible deferrals, have changed recently and belong in an individual review.

A company pension (occupational retirement provision) is generally paid abroad too, but remains German income under Section 49 EStG and is therefore taxable in Germany; without a treaty there is no treaty relief, and Paraguay does not tax it either due to the territorial principle. How your specific company pension is treated depends on the contract. For both: get advice from a professional before emigrating rather than relying on rules of thumb.