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%.

There is no tax treaty or social security agreement between the United States and Ecuador.

If your employer funded your pension plan, your pension income is taxable. Both your income from these retirement plans as well as your earned income are taxed as ordinary income at rates from 10–37%.

Ecuador personal income tax rates are progressive, up to 35%. Income tax is payable by Ecuadorian resident individuals on non-exempt income derived from all sources. Non-resident individuals are required only to pay tax on Ecuadorian-source income.

Property tax: Residential property taxes are based on a percentage of the value of the property, with urban and rural properties taxed at varying rates, ranging from 0.025% to 0.3% for rural properties and from 0.025% to 0.5% for urban properties.

Inheritance/estate tax – Inheritance tax is levied at progressive rates up to 35% on donations, inheritances and legacies. A tax-free allowance (USD 72,060 for 2019) is granted.

How to minimize taxes on your Social Security

1. Move income-generating assets into an IRA.
2. Reduce business income.
3. Minimize withdrawals from your retirement plans.
4. Donate your required minimum distribution.
5. Make sure you’re taking your maximum capital loss.

When you retire, you will have to pay tax with any of the following: Social benefits repayment – You may have to repay all or a part of your old age security (OAS) pension (line 11300) or net federal supplements (line 14600) when you file your tax return if your income exceeds a yearly threshold.

Cost to Retire in Ecuador A retiring couple can live comfortably for about $1,800 per month. A single person can retire well for around $1,400 per month. Plus, Ecuador uses the U.S. dollar as its currency. This eliminates any currency transfer fees.

Because Ecuador’s constitution guarantees foreign residents the same rights as its citizens, retirees 65 years and older can also save on things like taxes and healthcare. For instance, Ecuador offers retirees tax exemptions on certain utility and municipal taxes. Exemption also extends to registration and notary fees.

As per Ecuadorian property held/owned in Ecuador by foreigners, currently that is ONLY subject to Inheritance Tax in Ecuador in the case of any amount above $72,000, and the rate of that tax, when applicable, is just 5-10% per most foreigners (i.e. for those foreigners having total combined assets in Ecuador of not more than around $300,000).

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. Foreign residents of Ecuador are taxed on their Ecuadorian-sourced income but not on income earned outside of the country.

Retirees are turning to other countries that offer low-cost retirement options. Ecuador is just one of the many countries that offer economically competitive conditions for U.S. retirees. With ideal weather conditions and favorable economic circumstances, an Ecuadorian retirement could be right for you.