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New Inheritance Tax hikes being proposed by Ecuador President Correa

Rafael_Correa_in_France_(cropped)This week President Correa brings new Inheritance Tax hikes for approval of the government to be implemented. These hikes are a large spike from current taxes and could have effects on locals and expats alike.

The current taxes are as follows:

Inheritances under $66,000 USD dont pay any tax. For inheritances valued $100,000, they pay a 5% tax. For $200,000 10%, $300,000 15% and up until the max for inheritances over $796,000 you´d pay 35%.

The new law creates two separate tables, and distinguishes between indirect heirs who are not direct (spouses, children) and direct heirs.
Heirs that inherit money or property valued under $35,000 pay no tax. Heirs who inherit $100,000 will pay a 7.5% tax, $200,000 a 17.5% tax. At $300,000 is where you start to see the difference as now you would pay 32.5% tax compared to 15% tax from before.
At amounts over $566,000 you would pay 47.5% tax if you are a direct heir, 52.5% tax if you re an indirect heir compared to the current rate of 25%.
For indirect heirs who inherit over $849,000 you would have to pay a 77% tax!

Here is a link to the current taxes……………………………….
http://www.imgroup.com.ec/…/tabla-impuesto-herencias-legado…

Here is a link to the proposed taxes…………………………….
http://www.lahora.com.ec/…/Dos_tablas_para_el_impuesto_a_he…

With that said and while we live and work here in Ecuador…we here at Vista Pacifica have always recommended you look into purchasing property through a self-directed IRA or in your and your children’s names, which could possibly have some benefits from taxation. On top of that we always recommend an Ecuadorian will should be made and filed to coincide with your existing will from whatever country you are from. You also might want to consider adding children to your existing escritura now. These thoughts, although certainly not the only ways, (please speak to your financial planner/international tax attorney/international accountant) might fit into your estate planning. Your advisors might have other options that work for you.

We believe Ecuador to be a wonderful place to invest and live in and want to be as up to date with information as we can be. If anything changes within the new law being proposed we will inform all of our friends and clients here.

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