ECUADOR Law and Practice Contributed by: Randy Arévalo, Diego F. Amen, Darío Vicuña and Sandra Touma Faytong, VIVANCO & VIVANCO
8.4 Income Tax Withholding for Foreign Investors The Ecuadorian tax regime distinguishes between the operational generation of income and the even - tual liquidation of assets, applying specific withhold - ing and reporting obligations to both residents and
8.5 Tax Benefits In the Ecuadorian legal framework, real estate own - ership and development are incentivised through a structured series of fiscal benefits designed to encour - age capital investment and urban sustainability. Depreciation Owners of corporate real estate can deduct deprecia - tion as an expense. Under Ecuadorian tax law, the standard depreciation rate for buildings is 5% per year (a 20-year useful life). Interest Deduction Interest paid on loans used to acquire or develop real estate is tax-deductible, subject to thin capitalisation rules. Eco-Efficiency Incentives In cities like Quito, buildings with certified eco-effi - ciency can receive a reduction in property taxes for several years. Special Deductions For 2026, certain “new investments” under the Organ - ic Law for Economic Efficiency may allow for an addi - tional deduction or a reduction of several points in the corporate income tax rate for a fixed period.
non-residents. Rental Income
Rental income is considered taxable income. Local entities pay the standard 25% corporate income tax. Foreign investors are subject to a 25% withholding tax on the gross rental income if paid from Ecuador.
Capital Gains (Disposition) Here, the following applies.
• Asset deal: The seller pays a municipal plusvalía tax (10% on the gain). Additionally, for corporate sellers, this gain is part of their taxable income, but the municipal tax paid is usually deductible. • Share deal: The seller of the shares pays capital gains tax to the national government on the profit from the sale of shares, with a progressive rate up to 10%. • Dividends: If the investment is held through a local company, dividends sent abroad to a non-resident are generally exempt from further withholding, provided the local company already paid its 25% corporate tax.
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