The country of Ecuador covers a variety of terrains and it can seem as though you are visiting several different countries at once. There are three distinct geological regions called Sierra, Oriente and Costa. The country also controls the Galapagos Islands.
The region of Sierra is home to the Andes mountain range which runs through the centre of the country and has peaks topping over 19,000ft. The landscape is made up of volcanoes and Ecuador's main cities are situated in the large valley known as the Avenue of Volcanoes.
An Ecuador resident is liable for taxation (impuestos) on all income which is not considered to be exempt and all income earned worldwide. Non residents are only obliged to pay taxes on income that has been earned with Ecuador. If a person has been living in Ecuador for more than half of the tax year then they are considered to be resident unless they have a permanent home outside the country and can prove that they do not intend to live in Ecuador on a permanent basis.
Taxable income includes income earned from a business, from employment, some capital gains, income from renting out property and interest earned on savings. There are a number of allowances that individuals can claim when they file their tax return (declaración de impuestos), such as donations to charity, interest on certain types of savings and reasonable work related expenses. Married couples are not permitted to file a joint tax return and must complete individual forms.
Those who are self employed will find that they have to pay some tax (impuestos) in advance. This is called an ‘interim payment’ and is an estimated tax payment based on the calculation from the previous year. When the return is filed the amount is adjusted, with any shortfall made up by the individual or any overpayment returned by the tax office or offset against the following year’s interim payment.
Visa, Residency & Immigration Laws
The regulations for obtaining visas for working and living in Ecuador change frequently and it is a good idea to obtain the latest details from your local Ecuador embassy or consulate prior to making your application. Visitors can apply for a tourist visa but if you enter Ecuador on this type of visa you will not be allowed to apply for another type of visa while you are there. Visitors must return home and apply from their country of origin. Applying for a visa for a stay of more than 90 days requires a certain amount of documentation. There are individual visas for students, volunteers and those who are on exchange visits.
It is possible for expats to simply obtain resident status and settle in Ecuador. The process of application can take several weeks and applicants can be in one of several categories. Retired people who receive a pension in their home country who have a minimum income can apply for this status. Those who are willing to invest in the country, those who have skills which are in demand and those who have a university degree may also apply for this status. As long term residency is fairly easy to obtain many people do not bother to apply for citizenship, though this is a possibility if you prefer.
When buying property in Ecuador there are a number of fees which are the responsibility of the purchaser. These include a 1% real estate transfer tax, an additional transfer tax of 0.5%, the notary’s fees of 3.75% and legal fees which can be as much as 3%. The seller is only responsible for the estate agents fees and these will vary according to the agency that is being used.
The process of buying a property in the country can take just a few weeks, with the registration process taking a maximum of 21 days.
Expats often find that due to the low cost of living they are able to afford to employ domestic staff and there are agencies which can help you to recruit maids and gardeners. For your own peace of mind, it is recommended that you thoroughly check any references that you are given.
Retiring in Ecuador
Those who are in receipt of a pension from their country of origin are welcome to apply for the status of a permanent resident of Ecuador. They must be able to prove that their income is regular and will be enough to support them and any dependents – such as a spouse or young child – for the time they will be staying in the country.
Claiming your pension from your home country should be fairly easy. It is important to discuss your planned move with the pensions department in your home country as they will be able to advise you on the procedures you will have to follow to claim from them. It may be that your country has an agreement with Ecuador and that monies can be easily transferred. If not, you should still be entitled to the pension and can have this paid into a bank account in your home country for you to transfer yourself. If this is the case you should be aware that there will be charges from the banks for transferring monies from one country to another and you will be responsible for those charges yourself.