- Overview: Ecuador
- Global HR Compliance
- Global PEO and payroll
- Expand without a company set up
- Contractor vs. employee: which is better?
Global PEO and Payroll in Ecuador
Getting your business up-and-running in Ecuador can be challenging, especially if you do not speak the native language. Establishing your own business entity in Ecuador is an option to be considered as you expand abroad. But before you invest valuable resources in setting up business in Ecuador, you should be fully aware of the risks involved.
Acumen’s Global PEO and Payroll solution was designed especially for companies like yours, to smooth the way for quick, easy and risk-free business operations in Ecuador, without having to establish a legal business entity.
Acumen International – Your Professional Employer Organization in Ecuador
Navigating the Ecuadorian legal system and adhering to regulations governing employment and taxation can be challenging for businesses, especially if you are not a native Ecuadorian speaker. Partnering with Acumen International as a global Professional Employer organization (PEO) provides you with the local knowledge and support you need to conduct business in Ecuador without concern for legal and compliance risks.
Whether you represent international client companies or you are taking your own business operations abroad, Acumen International’s Global PEO and payroll service allows you to hire and payroll local and expat employees in Ecuador. With Acumen in your corner, you can quickly and easily onboard and compensate your employees without risk of legal repercussions.
International Global Payroll and Taxation in Ecuador
Employment related taxes
Ecuador currently taxes its citizens and foreigners mostly on their Ecuador-source income, which is defined as any income derived from activities executed in Ecuador, regardless of where the income is received or paid.
Income generated abroad by Ecuador-resident individuals, local or foreign, is tax exempt provided that an income tax has been paid abroad; income received from low-tax jurisdictions countries is not excluded.
Non-residents are subject to tax on their Ecuador-source income regardless of their domicile or place of residence. Payments made to non-residents occasionally working in Ecuador, when not charged to an Ecuadorian company or branch of a foreign entity, do not give rise to income tax. Foreigners with resident visas are subject to income tax on any earnings and are not entitled to exclusion of income for periods of temporary absence from Ecuador.
Payroll Cycle in Ecuador
Salaries are paid on a bi-monthly, or monthly basis on the last day of the month.
13th salary in Ecuador
Staff in Ecuador are entitled to two extra bonuses, known as the 13th and 14th salaries.
The 13th salary is an annual bonus companies pay their staff at the end of each year. The amount should be paid in full by 22 December – although, note that employees can choose to have this bonus paid to in monthly portions. The total of the 13th salary is calculated based on the individual employee’s overtime, bonuses and commissions accumulated throughout the year.
The 14th salary is a bonus equal to the current amount of the legal minimum wage. Depending on the location of the employee’s workplace, the 14th salary should be paid in either March or August of each year.
If employees are not union members, companies are not legally bound to consider particular annual raises or bonuses.
Non-payroll taxes in Ecuador
No VAT applies on employment services under a labour relationship. Personal services provided under a professional fee contract relationship are subject to VAT, which, when provided to companies, is subject to withholding by them.
Professionals are required to file VAT returns.
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How Acumen’s International PEO and Payroll Service can Benefit Your Business in Ecuador
Compensating your local and expat workforce in Ecuador and closely adhering to Ecuadorian taxation requirements can divert your attention and resources from activities that help your business grow. A reliable global employment solution like Acumen’s Global PEO and Payroll service can take a substantial burden off your shoulders so you can focus on running your company.
Outsourcing the administrative and compliance tasks involved in employee payroll is one approach, but we have a better solution. Acumen International offers a global PEO and payroll solution that goes beyond outsourcing. We hire and compensate your global workforce on your behalf, and take care of all the details of payroll while ensuring full compliance with Ecuadorian labor and taxation laws.
It is important to note that Acumen does not provide international global payroll services as a standalone solution, but only as a part of our global PEO and Payroll solution.
Our comprehensive global PEO and payroll services are just some of the benefits of partnering with Acumen International. We make it easy for you to achieve your business goals in Ecuador by officially employing and compensating your best selected global talent – both locals and expats – without concerns for legal and compliance risks faced by global employers.
Disclaimer: Any of the above information is subject to changes imposed by Ecuadorian laws. To get the latest updates on taxation in Ecuador and in 190 countries worldwide, contact Acumen’s team of global employment experts.