Taxes in Ecuador

Unless you are running a business in Ecuador, your tax liability as a foreign resident is very low. If you live in Ecuador but obtain your income from overseas sources, there is no reporting requirement. The practice of monitoring and taxing banking transactions in Ecuador has been abolished.

 

Income tax in Ecuador

 

Foreign residents of Ecuador are taxed on their Ecuadorian-sourced income but not on income earned outside of the country. Income taxes are charged at progressive rates, ranging from 5% to 35%. The first $8,570 of an individual’s income is not taxed.

Sales tax

Most of Ecuador’s tax revenue is generated by the IVA, which translates in English as value added tax (VAT). The rate for this tax is currently 12%, and it is added to most purchases.

Property tax in Ecuador

Residential property taxes are based on a percentage of the municipal value of the property, and city and rural properties are taxed at different rates. Even on large properties it is unusual to pay more than $200 a year in property tax. Homeowners over the age of 65 pay half of these rates.

Capital gains tax

This tax is based on the change in the municipal value of the property between the time you bought and sold it. Technically, the percentage is 0.5% of the difference between the purchase and sale price. There may be discounts on this fee based on the amount of time between the purchase and sale of the property. A short time span between the purchase and sale will mean a higher capital gains tax.

*Prices as of 2013

 

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