: January 26, 2015
More and more people are moving to Ecuador every year. Aside from the beautiful weather, the gorgeous vistas, and the plethora of activities you can find across its different regions, this Latin American country is also known for its low annual cost of living. Here are some things you need to know about taxation in Ecuador.
Property tax. The country’s low property tax is considered one of its biggest draws, allowing foreigners to enjoy comfortable living arrangements in Ecuador. The percentage of your property’s municipal value determines how much you’ll be spending for annual real estate property taxes. It should be noted that properties in an urban and a rural area are taxed at different rates. Homeowners aged 65 and above are subject to special discounts and pay half of usual rates. Tax rates range from 0.025 percent to 0.5 percent and vary annually depending on inflation.
Income tax. As a foreign resident with an Ecuadorian-sourced income, you are obliged to pay income taxes, which range from 5 percent to 35 percent. On the other hand, foreign residents with income earned from outside the country are not liable to pay income taxes.
Capital gains tax. This kind of tax applies if you are selling or you’ve recently completed a sale of property. Capital gains tax is determined on the difference between your property’s municipal value when it was bought to the time it was sold. Certain particulars, such as the total amount of time between the purchase and sale, can affect the fee you need to pay and may result in discounts.
Whether you are planning to relocate permanently to Ecuador (or to any other country), it’s important to acquaint yourself not just with the country’s culture and people, but with other equally significant aspects as well. Should you need to speak to a tax professional, connect with us today.