Expat Tax Guide for Americans Living in Ecuador

Expat Tax Guide for Americans Living in Ecuador

Living as an American Expat in Ecuador

Ecuador has rich cultural and historical attractions nestled against natural wonders. From the tropical rainforests to whitewater rafting down the Amazon, Ecuador has become a popular destination for American expats. But what are expat taxes like for US citizens living abroad in Ecuador? Read on to get answers to all your questions!

Ecuadorian Taxes at a Glance

  • Tax Year: January 1–December 31
  • Tax Deadline: March–April
  • Currency: US Dollar (USD)
  • Population: 17.2 million
  • Number of US Expats: Estimated 7,500
  • Capital City: Quito
  • Primary Language: Spanish
  • Tax Treaty: No
  • Totalization Agreement: No

What Are Expat Taxes like for Americans Living in Ecuador?

As an American living in Ecuador, you still must file US taxes. (And as an expat, you may have additional US reporting requirements. More on those below!) Every US citizen is required to file a tax return every year regardless of where they live.

On top of your US tax obligations, you will probably also have to file an Ecuadorian tax return. Let’s take a closer look at what that means for you.

Who Has to File Taxes in Ecuador?

Ecuador has a residence-based taxation system. Residents are taxed on their worldwide income, while non-residents are taxed only on income from Ecuador.

If your entire income comes from an Ecuadorian employer, your income tax will be withheld from your wages, and you will not need to file a separate tax return. However, you will need to file a return if you receive other forms of income, such as:

Who Qualifies as a Tax Resident in Ecuador?

Because Ecuador taxes residents and non-residents differently, it’s essential to know how the Ecuadorian government defines residency. If you are present in Ecuador for at least 183 days within any 12-month period, you will be considered a resident for tax purposes. (These days do not have to be consecutive.) If you do not meet this standard, you will be regarded as a non-resident.

What Types of Taxation Does Ecuador Have?

Income Tax

In Ecuador, residents are taxed on their worldwide income at progressive rates ranging from 0% to 37%. (All amounts are given in USD.) below, you can see the 2022 Ecuadorian income tax rate.

Annual Income (USD)Tax Rate
0 – 11,3100%
11,310 – 14,4105%
14,410 – 18,01010%
18,010 – 21,63012%
21,630 – 31,63015%
31,630 – 41,63020%
41,630 – 51,63025%
51,630 – 61,63030%
61,630 – 100,00035%
100,000 and over37%

Non-residents are taxed on their Ecuador-source income at a flat rate of 25%.

Social Security Tax

Like the US, Ecuador maintains a social security system funded by a payroll tax. Typically, employees will contribute 9.45% of their salary, while employers will contribute 12.15% of their total payroll.

Capital Gains Tax

Capital gains are generally taxed as ordinary income. Certain capital gains on investment shares and immovable property are tax-exempt.

Inheritance Tax

Ecuador taxes inheritance at progressive rates ranging from 5% to 35% based on the value of the bequest. Bequests below a certain threshold are exempt from this tax. For the tax year 2022, the exemption threshold is $72,750.

Value-Added Tax

Ecuador levies a value-added tax (VAT) on certain goods and services. The standard rate for this tax is 12%.

Real Estate Tax

Real estate is taxed at the municipal level. The rate for this depends on the municipality, generally ranging from 0.025% to 0.3% of the commercial value of the property.

Corporate Income Tax

Ecuador’s residence-based taxation system applies to corporate income as well as individual income. Resident business entities are taxed on their worldwide income, while non-resident business entities are only taxed on Ecuador-source income. The standard rate for the Ecuadorian corporate income tax is 25%.

When Are Taxes Due in Ecuador?

Like in the US, the Ecuadorian tax year is the same as the calendar year. It begins on January 1 and ends on December 31. For expats who receive only employment income from an Ecuadorian employer, there is no need to file an Ecuadorian tax return. If you receive other forms of income, you must file a return. This return is due in March, though the exact day will vary depending on the ninth digit of your Ecuadorian tax identification number.

Does the US Have a Tax Treaty with Ecuador?

No. There is currently no US-Ecuador tax treaty. This leaves Americans living in Ecuador at risk of being taxed twice on their income. (More on those below.) fortunately, the IRS provides several tax benefits to help expats avoid double taxation.

Does the US Have a Totalization Agreement with Ecuador?

No. The US and Ecuador do not currently have a totalization agreement in place. This means that Americans who live and work in Ecuador may be required to contribute to both nations’ social security systems.

Get Help with Your Expat Taxes Today

What expat taxes do Americans living in Ecuador have to pay? Hopefully, this guide has helped answer that question. If you still have questions, we can answer those, too.

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