In February 2022, Ecuador government stated interest in regulating cryptocurrency and launching its own digital currency. Ecuador is one of the few South American countries with the US dollar as its currency and thus a stable legal tender. It has in the past banned cryptocurrencies but given the latest trends and seeing the benefits crypto holds, it had lifted the ban and permitted transactions of existing crypto currency. Ecuador has fairly low crypto ownership rates with only 2.73% of its population owning crypto.
Do you have to pay crypto tax in Ecuador?
It is unclear if crypto tax in Ecuador is levied or not. Although, according to income tax rules of Ecuador, any income received, from any and all resources are taxable. Therefore, gains from transactions of crypto might be subject to taxes.
When do you have to pay tax on crypto in Ecuador?
If any income is being generated from crypto transactions, then you have to pay taxes on them in Ecuador.
What crypto transactions are taxable in Ecuador?
Selling crypto while making a profit might be taxable. Whether swapping or encashment of crypto is taxable or not, is unclear.
Encashment of crypto may be subject to taxes as with appreciation in value, you are making a profit. Swapping might be taxable as it is considered a swap of property and it might be taxable.
What are the Crypto Tax Rates in Ecuador?
Taxes in Ecuador on personal income of individuals is levied on a progressive rate of up to 37%.
Ecuador Income Tax Brackets (2023)
|Taxable income (USD)||Tax on excess (%)|
Ecuador Capital Gain Tax Rates (2023)
Capital gains in Ecuador are taxed at a rate of 10%.
How is Tax Calculated on Cryptocurrency in Ecuador?
If crypto gains are taxed in Ecuador then there are two way of finding the cost price of your crypto asset in order to calculate the net gain: FIFO and ACB method.
According to FIFO Method, you sell your oldest acquired coin first and cost is calculated according to the respective prices at which the coin was bought. Whereas, in ACB, time of buying doesnt matter and average cost is taken into account.
Let’s take an example,
Say you bought 2 BTC for $ 20,000 in 2020 and 4 BTC for $ 60,000 in 2021. Then you sold 4 BTC in 2022 for $ 1,00,000:
- FIFO METHOD
You sell 2 BTC from 2020 and 2 BTC from 2021. So cost price is:
= 20,000 + (2/4)*60,000
= $ 50,000
Profit = 1,00,000 – 50,000
Here, taxes are levied on $ 50,000 .
- ACB METHOD:
All coins are of the same denomination. Therefore, cost price for one coin:
= (20,000 + 60,000)/6
= $ 13,333
So, cost price of 4 coins:
= $ 53,333
Profit = 1,00,000 – 53,333
Here, taxes are levied on $ 46,666.
Crypto Tax in Ecuador – FAQs
Do you have to pay tax when you buy crypto in Ecuador?
No, buying crypto is not subject to taxes in Ecuador.
Do you have to pay tax when you sell crypto in Ecuador?
Yes, gains from selling crypto might be subject to taxes in Ecuador.
Do you have to pay tax when transferring crypto in Ecuador?
No, transferring crypto is not subject to taxes in Ecuador.
Do you have to pay tax when spending crypto in Ecuador?
Spending in crypto for goods and services might be subject to taxes in Ecuador.
Is swapping crypto taxable?
Swapping crypto for another crypto might be subject to taxes in Ecuador.
How much tax on crypto gains in Ecuador?
Taxable income (USD) Tax on excess (%) Over 0 0 11,722 5 14,935 10 18,666 12 22,418 15 32,783 20 43,147 25 53,512 30 63,876 35 103,644 37