  We present a detailed functional renormalization group analysis of spin-1/2
dipolar Heisenberg model on square lattice. This model is similar to the well
known $J_1$-$J_2$ model and describes the pseudospin degrees of freedom of
polar molecules confined in deep optical lattice with long-range anisotropic
dipole-dipole interactions. Previous study of this model based on tensor
network ansatz indicates a paramagnetic ground state for certain dipole tilting
angles which can be tuned in experiments to control the exchange couplings. The
tensor ansatz formulated on a small cluster unit cell is inadequate to describe
the spiral order, and therefore the phase diagram at high azimuthal tilting
angles remains undetermined. Here we obtain the full phase diagram of the model
from numerical pseudofermion functional renormalization group calculations. We
show that an extended quantum paramagnetic phase is realized between the
N\'{e}el and stripe/spiral phase. In this region, the spin susceptibility flows
smoothly down to the lowest numerical renormalization group scales with no sign
of divergence or breakdown of the flow, in sharp contrast to the flow towards
the long-range ordered phases. Our results provide further evidence that the
dipolar Heisenberg model is a fertile ground for quantum spin liquids.
