By Domenick Buonamici
As a retired person in Ecuador, you got it good when it comes to paying taxes.
You could have a bank account in Ecuador, and receive your pension payments directly to that account, and you still would not be liable for any type of income tax because those earnings were officially made outside Ecuador.
Many Ecuadorians receive thousands of dollars a year from their relatives working abroad, and they as well are not liable for paying taxes on those “earnings” received from abroad according to current Ecuadorian law.
If you don’t engage in commercial activity in Ecuador, property taxes are the only taxes you would be liable for in Ecuador as a retiree (if you own property). But property taxes are a small fraction of what you are sure to be used to in the States or Europe. You may still want to have Michigan CPA help you file your property taxes. Most people on the coast pay under $300 a year.
Another plus of living in Ecuador is that there is no capital gains tax when selling your home, the transaction is considered as a personal buy-sell agreement between two people and the government does not try to get involved. (But for some of the municipalities that have experienced an influx of gringo investment, like Cotacachi, they will require you to pay a Capital Gains Tax based on the tax valuation of your property based on the value difference from the time you bought to the time you sold it.)
But there is a new up and coming tax that is not on the books yet, but could be soon, that would affect you if you hold assets in Ecuador over $200,000.
For people who own over $200,000 in assets, in 2009 a new law was passed stating that these people have to legally declare all their assets if they own more than $200,000 worth in Ecuador. It is believed that later on this information will be used to impose a 1% annual tax on their net holdings.
So this new tax may or may not affect you, but even so, I think you will find Ecuador “lenient” when it comes to taxes.
If the job of accounting is being outsourced, one must ensure to use the best umbrella company. A slight mistake can make a big difference thus one must be very careful and alert while working with the finance of a company.
This was a brief excerpt from the full 7 page report I just released on how income and employee taxes work for anyone looking to start a business, find a job or retire in Ecuador…Click here to see more.
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Also, check out incorporation services Singapore for tax exemption benefits to the investors.