Ecuador Taxes for Expats — What You Owe, to Whom, and How to Stay Out of Trouble

Taxes are the topic most expats avoid until it bites them. Ecuador's tax system is simpler than the US system, but "simple" doesn't mean "nothing to worry about." And if you're American, you're dealing with two tax systems at once — Ecuador's and the IRS's — whether you like it or not.

Here's what you actually need to know.

Ecuador's Tax System: Territorial (With a Big Asterisk)

Ecuador historically operated a territorial tax system, meaning you only paid Ecuadorian tax on income earned inside Ecuador. Pension from the US? Not taxed by Ecuador. Social Security payments? Not taxed. Rental income from a property in Ohio? Not Ecuador's concern.

The asterisk: Starting with tax reforms in recent years, Ecuador has been tightening rules around tax residency. If you are a tax resident of Ecuador (more than 183 days per year in the country), you may be required to report worldwide income. The practical enforcement of this has been inconsistent, but the legal framework is there.

Currently, the key distinction works like this:

• Ecuador-sourced income (rental income from Ecuadorian property, Ecuadorian business income, employment by an Ecuadorian company): Taxable. Period.
• Foreign-sourced income for tax residents (US pension, Social Security, foreign investments): Subject to reporting requirements, but foreign-source passive income from countries with which Ecuador has a tax treaty or information-sharing agreement may be taxable. Ecuador has been expanding its treaty network.
• Foreign-sourced income for non-residents (spending fewer than 183 days/year): Generally not taxable in Ecuador.

Bottom line for most retirees: If your only income is a US pension and Social Security, and you're not earning anything in Ecuador, your Ecuadorian tax liability is likely zero or very low. But you still need to understand the reporting requirements. Get a local accountant (more on that below).

The SRI — Ecuador's IRS

The SRI (Servicio de Rentas Internas) is Ecuador's tax authority. Think of it as the IRS — they administer income tax, IVA (value-added tax), and other federal taxes. They're more digitized than you'd expect; most filings happen online through their portal at sri.gob.ec.

SRI offices exist in every major city. In Cuenca, the main office is on Benigno Malo between Gran Colombia and Bolívar. In Quito, the headquarters is on Av. Naciones Unidas.

RUC Number — Your Tax Identity

A RUC (Registro Único de Contribuyentes) is Ecuador's tax identification number. It's a 13-digit number based on your cédula number.

Who needs one:

• Anyone earning income in Ecuador (employment, freelancing, rental income, business ownership)
• Anyone buying or selling property
• Anyone starting a business

Who doesn't need one (probably):

• Retirees living on foreign pension/Social Security with no Ecuador-sourced income
• People who only have a cédula and are enrolled in IESS but aren't earning money in Ecuador

If you're a retiree, your accountant may still recommend getting a RUC for proper tax filing, even if your liability is zero. It makes things cleaner.

To get a RUC, go to any SRI office with your cédula, passport, and proof of address (utility bill). The process takes about 30 minutes. It's free.

Income Tax Brackets (2026)

Ecuador uses a progressive income tax system. Rates apply to annual taxable income:

Annual Income (USD)	Tax Rate
$0 – $11,722	0%
$11,722 – $14,930	5%
$14,930 – $19,385	10%
$19,385 – $25,638	12%
$25,638 – $33,738	15%
$33,738 – $44,721	20%
$44,721 – $59,537	25%
$59,537 – $79,388	30%
$79,388 – $105,580	35%
Over $105,580	37%

These brackets apply to Ecuador-sourced income. Deductions are available for personal expenses (housing, education, healthcare, food, clothing) up to certain limits, which can significantly reduce your taxable income.

Key point: The 0% bracket up to ~$11,722 means that many expats with modest Ecuador-sourced income owe nothing.

IVA (Value-Added Tax)

IVA (Impuesto al Valor Agregado) is Ecuador's version of a sales tax, currently set at 15% as of 2024 reforms (it was 12% for years). It's included in the price of most goods and services.

Some items are IVA-exempt: basic groceries, medications, education, public transportation, financial services, and rent on primary residences.

If you run a business in Ecuador, you'll collect IVA from customers and remit it to the SRI. If you're just a consumer, you don't need to worry about IVA filings — you're paying it automatically every time you buy something.

Pro tip: Keep your receipts (facturas). Personal expenses documented with facturas with your RUC number can be deducted from your income tax, up to annual limits. Ask vendors for a factura with your RUC rather than a generic "consumidor final" receipt.

Property Taxes

The impuesto predial (property tax) is paid annually to your municipal government, not the SRI. As covered in our buying property guide, these are remarkably low — typically $50–300/year for residential properties.

You'll also pay a one-time alcabala tax (1% of the assessed value) and a utility transfer tax (1%) when purchasing property. These are paid at closing.

Vehicle Taxes

If you own a vehicle in Ecuador, you pay an annual vehicle tax (impuesto a la matrícula vehicular) based on the vehicle's assessed value, age, and engine size. For a typical sedan worth $15,000–20,000, expect $200–400/year. Luxury vehicles and large SUVs pay more.

This is paid when you renew your matrícula (registration) at the ANT (Agencia Nacional de Tránsito) or SRI.

US Citizens: You Still File US Taxes

This is the part many American expats don't want to hear. The United States taxes its citizens on worldwide income regardless of where they live. Moving to Ecuador does not change this. You file a US tax return every year, same as if you lived in Kansas.

The good news: several provisions reduce or eliminate your actual US tax bill.

FEIE (Foreign Earned Income Exclusion)

If you earn income from working (not passive income like pensions or investments), you can exclude up to $130,000 (2026 amount, adjusted annually) from US taxation using the Foreign Earned Income Exclusion. You must meet either the Physical Presence Test (330 days outside the US in a 12-month period) or the Bona Fide Residence Test (established residence in a foreign country for a full tax year).

FTC (Foreign Tax Credit)

If you pay taxes to Ecuador on income that's also taxable in the US, you can credit those Ecuadorian taxes against your US tax liability dollar-for-dollar. This prevents double taxation.

FBAR (Report of Foreign Bank Accounts)

If the aggregate value of your foreign financial accounts (Ecuadorian bank accounts, investment accounts) exceeds $10,000 at any point during the year, you must file FinCEN Form 114 — the FBAR. This is filed electronically through the BSA E-Filing System, separate from your tax return. Deadline: April 15, with an automatic extension to October 15.

This is not optional. Penalties for not filing an FBAR are severe — up to $10,000 per account per year for non-willful violations, and much worse for willful violations. If you have an Ecuadorian bank account with more than $10,000 in it at any point during the year, file the FBAR.

FATCA (Form 8938)

If your foreign financial assets exceed $200,000 at year-end (or $300,000 at any point during the year, for single filers living abroad), you must also file Form 8938, Statement of Specified Foreign Financial Assets, with your tax return. This is separate from the FBAR and filed with your 1040.

Social Security and Pensions

US Social Security benefits are generally not taxed by Ecuador. On the US side, up to 85% of your Social Security may be taxable depending on your total income, but the FEIE and FTC can offset this. Your pension income follows normal US tax rules — it's taxable income on your US return.

Common Tax Mistakes Expats Make

1. "I moved abroad so I don't file US taxes anymore." Wrong. You file every year, forever, until you renounce citizenship. Even if you owe nothing. The filing requirement doesn't go away.

2. Not reporting foreign bank accounts. The FBAR catches people off guard. You opened a bank account at Banco del Pacífico to pay your IESS and rent. The balance hit $11,000 once during the year. You owe an FBAR filing. Many expats don't know this until they get a letter from FinCEN.

3. Thinking territorial means zero tax. Ecuador's territorial system means your US pension probably isn't taxed by Ecuador. But if you earn rental income from an Ecuadorian apartment, run a business here, or do freelance work for Ecuadorian clients, that income is absolutely taxable in Ecuador.

4. Not keeping facturas. Ecuador lets you deduct personal expenses — housing, food, education, healthcare — from your taxable income. But only if you have facturas (official receipts with your RUC). Every time you buy groceries at Supermaxi, pay your dentist, or pay rent, ask for a factura with your RUC number. Those receipts reduce your tax bill.

5. Ignoring Ecuador's filing deadlines. Ecuadorian tax returns are due based on the ninth digit of your RUC/cédula, on dates ranging from March 10 to March 28 each year. Miss the deadline and you'll face interest and penalties.

6. Not paying the SRI when you sell property. Capital gains on Ecuadorian property sales are taxable. The notary will withhold a percentage at closing, but you may owe additional tax depending on the gain.

When You Need an Ecuadorian Accountant

The short answer: as soon as you have any Ecuadorian income, own property, or run a business here. Even retirees with no Ecuadorian income benefit from having someone who understands both systems.

An Ecuadorian accountant (contador) costs $30–80/month for basic services — monthly or quarterly tax filings, bookkeeping, and annual returns. For businesses, expect $80–200/month depending on complexity.

A good contador will:

• File your Ecuadorian returns on time
• Maximize your personal expense deductions
• Handle IVA filings if you run a business
• Keep you compliant with SRI regulations
• Advise on tax planning (timing of property purchases, business structure, etc.)

Find one through expat recommendations. Many contadores in Cuenca and Quito are accustomed to working with foreigners, though few speak English fluently. If language is a barrier, some bilingual accountants charge $100–150/month.

US Expat Tax Filing

For your US returns, you need someone who specializes in expat tax preparation. A regular CPA in the US who's never dealt with foreign income, FBARs, and FATCA will either miss things or overcharge you to figure it out.

FileAbroad specializes in US expat tax returns, with specific expertise in Ecuador. They handle the 1040 with FEIE/FTC, FBAR filing, FATCA reporting, and coordination between your US and Ecuadorian tax situations.

Other options include expat-focused firms like Greenback Expat Tax Services and Bright!Tax, but if you're in Ecuador specifically, working with a firm that understands both the Ecuadorian and US sides saves you from having to explain the same things twice.

Tax Calendar for Ecuador Expats

When	What	Where
January–February	Pay property tax (impuesto predial) — 10% discount for early payment	Municipal office
March 10–28	Ecuador income tax return due (date varies by cédula digit)	SRI (online at sri.gob.ec)
Monthly	IVA and income tax withholding (if you run a business)	SRI
April 15	US tax return due (auto-extended to June 15 for expats, further to October 15 by request)	IRS
April 15	FBAR due (auto-extended to October 15)	FinCEN BSA E-Filing
Annually	Vehicle tax, paid with matrícula renewal	ANT / SRI

The Big Picture

Ecuador's tax system is more favorable to expats than most countries. If you're a retiree living on foreign pension income, your Ecuadorian tax bill is likely zero. If you earn income here, the rates are reasonable and deductions are generous. Property taxes are negligible.

The danger isn't Ecuador's taxes — it's the US side. Americans abroad who don't file, don't report foreign accounts, or don't understand how the FEIE and FTC work end up with IRS problems that are expensive and stressful to fix. File everything, file it on time, and get professional help from people who do this every day.