Ecuador’s New Immigration Law: Snowbirding Just Got Easier

Ecuador’s National Assembly voted unanimously on January 5, 2017 to pass a new immigration law called “La Ley Orgánica de Movilidad Humana.” The law (number 60 of  the 2013-2017 legislative period) has not yet been published in the official registry so we haven’t yet been able to access the full 90 page version. This post will summarize what information we have been able to gather until the law is officially published.

Ecuador National Assembly

Ecuador’s National Assembly passed the new immigration law on January 5, 2017. Photo from El Telegrafo

Some broad-sweeping points of this new law (as translated from the opening arguments from the head of the Committee who helped draft  the new law) are that it will recognize the equality of rights between Ecuadorians and foreigners and emphasizes that no human being can be qualified as illegal in Ecuador because of their migratory status. The new law largely addresses Ecuadorians living abroad, Ecuadorians returning home after living abroad, and refugees, stateless persons, and victims of trafficking.

However, there are also changes that will affect foreign residents in Ecuador, either as tourists or permanent residents.

My in-laws have been enjoying their Ecuadorian residency since 2012.

My in-laws have been enjoying their Ecuadorian residency since 2012.

A notable change that has implications for foreigners is the extension of a tourist visa from the previous 90 days to 180 days. This “tourist visa” is simply the stamp you receive in your passport upon entering the country. This extension for up to 6 months is great news for folks who want to split their time between living in Ecuador and their home country (grandparents, snowbirds, and many others will no doubt celebrate this change!). Previously, acquisition of another visa was required to extend one’s time in Ecuador beyond 90 days (for example a 12-IX visa which is fairly costly and can be time-consuming). There is apparently the option now to also obtain a special tourist visa that would be good for up to 1 year (but which will be limited to using once every 5 years).

And for foreign residents of Ecuador who are excited about exploring other regions of South America, they will now be able to do so as part of the Union of South American Nations (UNASUR) by only presenting their Ecuador ID card (“cédula”) instead of being required to show both their passport and cédula.

Another significant change is that proof of health care insurance will be required for tourists entering Ecuador. It will be interesting to see how this rule is actually enforced and applied; however, this change will NOT apply to foreigners who are permanent residents in Ecuador.

Once we have access to the public record of this new immigration law, we will add the link here.

Information Sources:

New Ecuador “Capital Gains Tax” Explained

The Ecuadorian government just passed a new law titled “Tax on Speculation on the Value of Land” (“El Impuesto a la Especulación sobre el Valor de las Tierras”) which takes effect now in the new year (2017).  This law has been referred to as “The New Capital Gains Tax” or the “Ley de Plusvalia”.  The concept behind the creation of this law is to prevent a future speculative bubble in real estate prices (which many of us from the US can attest might be useful).

For retirees who plan to live here for 3+ years, investors who plan to own and rent over a 3+ year period, or for those who buy land and build a home, this new law will generally save them quite a bit of money as fairly substantial gains can be realized tax-free.  Even those purchasing relatively inexpensive lots in the $39,000 range and flipping the land in less than a year can receive up to a 22% return on investment before they would have to pay a single cent of Capital Gains or Appreciation Tax under the new law.

For those planning to buy large pieces of land to flip over a short time period without making improvements… this tax is meant to make you think twice and advice from a lawyer on how best to structure your purchase and sale is recommended.  Creative short term investors will still find solutions such as buying and selling “purchase options” on a property, transferring their rights via a “promise of sale agreement”, or by creating development partnerships with project developers to be paid upon completion and final sale of the developed property.

Whether or not this new law will actually stick after the presidential elections in February remains to be seen but, not surprisingly, various interpretations of the law are being spun by different parties for their own interests.  This is especially the case as election day nears in Ecuador.

The purpose of this post is to provide you with a detailed, cut and dry summary taken directly from the government website and includes a translation of their sample calculation.  This is the scoop on the new tax law minus the sensationalism.

capital-gains

The “sensational talking point” of the new law is that sellers will be taxed 75% on their “illegitimate” capital gains. What the whaaat?!?  That was our initial response as well. But let’s take a closer look.

If you purchased your Ecuador property prior to 2017 when the law goes into effect, this new capital gains law will not apply to you when you sell.

For properties purchased in 2017 and beyond (assuming the law remains in place), here are some standards used for determining the basis for the new capital gains tax:

  1. There is a standard allowance of $8,784 of profit that is not taxable on any purchase and sale over any time frame.
  2. There is an allowance of 7.52% compounding annual appreciation that is not taxable and that appreciates on the total of your purchase value PLUS improvements.

Let’s take a look at the example provided by the government website (see our translated image below). For this example, a property is purchased for $85,000 in 2017 and sold for $135,000 in 2020.  Property tax (“Plusvalia”) due at the time of sale would only be $1,437.72, not 75% of the total difference in purchase and sale price. In fact, the capital gains tax for this example is actually less expensive than what it would have been based on the previous law ($2,975 versus $1,437).

Let’s find out the specifics for how this new capital gains tax gets calculated.

  • Purchase Price in 2017 of $85,000
  • Sum of renovations, improvement costs, etc. = $15,000
  • Initial investment ($100,000) plus interest compounded at 7.25% over 3 years = $124,299
  • Plus a set profit allowance of $8,784 brings us to a total NON-TAXABLE property value of $133,183.
  • Sales price in 2020 is $135,000
  • Difference between the sales price of $135,000 minus the non-taxable property value of $133,183 is $1,917.
  • 75% of $1,917 is $1,437.72.

plusvalia

The government provides a capital gains calculator here. It should be noted that the property value used for calculating capital gains is the amount shown on the property title (“escritura”).  In many cases, the property value on the title is the municipal value, which tends to be significantly lower than the actual purchase or sale price.  It’s worth discussing options with your accountant or lawyer prior to sale to make sure that you are making the best decision for your given situation.

So will this new law affect foreign investments in Ecuador?

capital-gain

The new law will discourage those looking to do relatively large, short-term (less than 1 year) flips with no investment in improvements and who seek to earn significantly more than the standard tax-free profit allowance of $8,784.

The new law will actually tend to benefit most others, in particular, those who own their property for any length of time.  Property value plus money spent on improvements can appreciate at a rate of 7.52%, compounded annually, tax-free.  The accumulated compounded appreciation is above and beyond the automatic $8,784 of allowable tax-free appreciation.  Based on the 7.52% compounding interest rate, the property can double in value over 10 years and the owner would pay ZERO in capital gains tax or “Plusvalia” upon sale.

The new law also does not apply to the first sale of a property. In other words,  those who build their own homes (either as individuals or companies), or develop their properties will be completely exempt from paying capital gains tax when they sell their homes.  That means that if you purchase a beachfront lot at a great price and build a home, you will pay zero capital gains tax upon the sale of that property.

In addition, there are no capital gains collected on the transfer of a property as a result of an inheritance, prize winnings, or donations. There is also a statement in the new law that foreign institutions and international organizations are exempt from paying capital gains, something warranting further investigation.

Overall, the law allows for solid tax-free gains via property appreciation and should help to limit the speculative appreciation of prices.  While this new law may temper gains from short-term, high-value property flips, it should also prevent the formation of a real estate bubble that would leave buyers underwater.

Following Election – Interest in Moving/Investing in Ecuador Peaks

Below is an article Tom published on his LinkedIn page on November 9, 2016.

Change multiplies uncertainty. Now, as greater uncertainty comes into play, US Citizens and International Investors seek ways to hedge existing bets on the direction and volatility of the US and World economy.

The labyrinth of unknowns instantly created by the results of the latest election cycle have brought “thoughtful pause” to many of us looking for a safe, solid ROI and a high quality of life today and through our retirement years. After being blindsided by bubbles and bailouts, we seek presently-undervalued real assets that will maintain or increase their value despite, or as a result of, the ups and downs around us.

Ecuador has been described as Costa Rica with real estate prices 40 years behind the curve. Ecuador recently received a HUGE upgrade in terms of infrastructure (new roads, new hydro plants, new refinery, new airport) and international recognition as the world’s highest-value retirement destination by CNBC, Forbes, International Living Magazine and the New York Times. The official currency of Ecuador is the US Dollar and its two main cities of Quito and Guayaquil are a short (4 hour), direct flight from Miami or Ft. Lauderdale (via Jetblue). Ecuador’s time zone coincides with either EST and CST depending on daylight savings time in the US, making it a viable base for the digitally mobile worker.

Despite all the recent attention and upgrades, Ecuador still has many undeveloped beachfront destinations. You can still have large undeveloped beachfront lots at prices ranging from $35,000-$100,000. Investors can still find large parcels with beachfront at very low prices such as this property we will soon be announcing near the surf town of Canoa:

29-Acres of Gorgeous Beachfront for Sale

This gorgeous property has a brand-new concrete road designed and built complete with a bike-lane by a national government focused on developing tourism along its coastline. Here is a look at the road and the property looking to the north:

Gorgeous beachfront property for sale in Ecuador

 

For those looking to move down soon or buy now and rent until retirement, beachfront condos can provide exceptional value and appreciation. New condo projects are just beginning to become available for the forward thinking retirees and investors along the beaches just outside of the busy cities. One example is our Ensenada del Pacifico project located in San Clemente, Manabi that is now nearing completion. Demand for the first phase of the project was strong and only two units are available as resales at only $154,000. The majority of the project was sold prior to completion.

Beachfront condos for sale in Ecuador

Click here for the listing

And for those seeking a quiet single-family home on or near the beach, we have a number of house listings well-under the $200K mark, including a newly constructed 2 bedroom/2 bath beachfront home in a stunning location:

Beachfront home for sale in Ecuador

Click here for the listing

With the ups and downs of the US and World Economy, purchasing tangible assets in Ecuador in the form of land, investment, or an income-producing vacation property that is presently well-undervalued in the global market might be just the right move for you.

If you are looking for more information about Ecuador for retirement, investment, or both – enter your email by following the link below so we can send you our “Know Before You Go” guide that reviews each town on the Central Coast and provides vital tips for the foreign traveler planning a visit:

"Know Before You Go" trip guide

“Know Before You Go” Guide

Also, please take a look at our Frequently Asked Questions page for answers to questions like, “Can foreigners own clear title to property in Ecuador?”:

Frequently Asked Questions

 

Renting a Car in Ecuador: What You Should Know

Are you one of the intrepid souls who wish to rent a car here in Ecuador? If so, then here’s some up-to-date information about car rentals, provided by a client of ours who returned his car yesterday. Note: this information is from October of 2016 so if you are reading this 2 years (or even 2 months!) from now, some of the facts may well have changed.

Also, for more details on what you need to know while planning your visit to the coast, sign up to get our in-depth “Know Before You Go” trip planning guide.

"Know Before You Go" trip guide

Our Free guide for planning your visit to the coast of Ecuador

So let’s get started. Many people who are planning their visit to Coastal Ecuador like the idea of renting a car during their visit so they can explore the country at their leisure. Makes sense, right?

First things first.

Driving a vehicle in Ecuador is, no kidding, an adventure in and of itself, and is not for the faint of heart, especially if you have only have driving experience in places where there is good signage and most people abide by traffic laws. Tom often warns newbies of the “virtual 3rd lane” that is common on double lane roads.

City traffic can be grueling and stressful

City traffic can be grueling and stressful

Here, you can expect to get lost at least once (even with GPS), be cut off and honked at regularly in the cities, get passed by Kamikaze drivers on blind, hairpin curves, dodge dogs wandering (or even sleeping) out in the roads, motorcycles with no headlights, and the list goes on. We’ve definitely heard our share of stories from clients who say they’ll be hiring a driver next time!

Also, note that if you don’t know how to drive a stick shift, unfortunately you’re out of luck. Virtually all cars here have manual transmissions.

 

If You’re Still Game, Then Where to Begin?

First, be aware that you are allowed to drive in Ecuador using your foreign driver’s license the first 30 days you are in the country. After that, technically you are required to apply for an Ecuadorian license (good fodder for a future blog). The Avis website says an International Driving Permit (IDP) is required in addition to a valid license from your country of residence. From our client’s experience, no one ever mentioned the IDP. And from our experience, having an International Driver’s Permit was never particularly helpful as the local police who stopped us at routine checkpoints on a couple of occasions were never impressed by the little paper booklet as it does not look “official” enough.

 

Where to Rent Your Vehicle From?

To save you time and unwanted headaches/stress, our usual recommendation is to fly into Quito and then take a 30 minute domestic flight into Manta. And then from Manta, rent the car to explore the coast. (Again, more specifics on a variety of topics related to planning your visit can be found in our “Know Before You Go” guide. Sign up HERE to get your free copy.)

We generally do NOT recommend renting a vehicle from Quito. Although the drive out of the Andes Mountains is gorgeous, it also pretty harrowing for most newcomers and can vary between 6 to 12 hours (depending on if or how often/ badly you get lost!!).

Andean rainforests are part of the beauty of driving out of the mountains to the coast.

Andean rainforests and waterfalls are part of the beautiful scenery of driving out of the mountains down to the coast.

Your other option is to fly into Guayaquil. You could rent a car from there but signage isn’t great and it’s common for people to get lost or become very stressed attempting to get out of the city. From Guayaquil you can take a bus to Manta (~$5, 4 hours), a shuttle (~$25, 3.5 hours), or hire a private driver (~$100, 3.5 hours). There are NO flights between Guayaquil and Manta.

 

How to Find a Secure and Reliable Car Rental?

How to go about finding and reserving a rental? The EASIEST and MOST SECURE way is to just type in Manta, Ecuador or Manta’s airport code (MEC) into an online site like Kayak.com or Orbitz.com. Currently, the only option that comes up for any online site that I have tried thus far is Avis. Budget used to come up for Manta but their office has closed.

Screenshot of a search using Expedia.com

Screenshot of a search using Expedia.com

Daily rates though an established, international car rental agency may be higher than a local company but there are countless tales of poorly operating vehicles, getting charged up the nose for *previously* incurred damages, poor customer service, and unexplained charges that show up a month or so after the fact. You’ll have a far better chance for a positive experience and have more power to rebuke any unwarranted charges with an established and reputable company.

 

Summary of important details from our client’s recent AVIS rental car experience (He’s rented out of Manta twice now over the last 3 months):

  • Avis’ cars are now available AT the Manta airport. In the past, you had to hire a taxi to take you into Manta proper to pick up your rental. So this is a very nice improvement.
  • Note: The Avis rental office is apparently ONLY open around flight schedules (online the hours are listed as 6:30am to 8:30pm but they close in between flight times).
  • The economy car is very small but functional for most people unless they are very large or have an excess of luggage. My husband is about 6’2″ and he fit ok.
Example of an Economy vehicle

Our client’s Economy vehicle that he rented from Avis in Manta

  • Low clearance on the economy vehicles obviously means to WATCH OUT and TAKE IT EASY over those speed bumps and potholes!
  • The economy car comes to about $18 per day with taxes and fees. There is also generally a mileage allowance of 100 km (60 miles) for each day you rent. If you go over, you will be charged another $0.20 per km (which adds up!). In some cases, you might be able to find a deal with unlimited mileage but it is not common.
  • A $5,000 authorization is held on your credit card to cover costs of any damages, driving violations, etc. This authorization is kept on the card for 1 month following the end of your rental in case you are caught speeding by speed-detecting cameras.
Speed limits in Ecuador

Speed limits in Ecuador. “Urbana” = urban areas, “Perimetral”=major roads on outer parts of cities, “Rectas en Carretera” Highway, straight sections, “Curvas en Carretera” = Highway, around curves.

  •  If you opt into paying for insurance (a wise idea) then you can purchase it for $11/day at the time of making your reservation; however, this is NOT REFUNDABLE if paid for in advance. Alternatively, you can purchase your insurance at the time of pick up for $35/day. A BIG difference so if you are confident about your dates it is worth doing.
  • Be aware that although online you may be able to select add-ons such as car seats and GPS, these options are actually not available. For our client, such was the case for the GPS he was assured he would have (after speaking with an agent in the Quito office). Once in Manta, he was told they hadn’t had vehicles equipped with GPS for at least a year.
Interior view of Scott's rental car

Interior view of rental car

  • Bring your own smartphone with GPS. Check with your carrier for roaming fees and/or download the navigation areas you will be needing in advance to be able to navigate offline:

Don’t forget to pick up your FREE copy of our “Know Before You Go” trip planning guide!

Find out what you need to know...before you go

Our Free guide for planning your visit to the coast of Ecuador

Good luck out there! We’ll look forward to seeing you here on the beach soon!

*Update (Oct 31, 2016): Here are some more great car rental tips from another friend and client who has rented on several occasions. Here’s what he had to add:

  • We always use a different city drop-off.  We either pick up in Manta and drop off in Guayaquil, or vice versa.  It depends on the plans for travelling the coast.  AVIS charges $60 for the alternate city drop-off.
  • For collision damage waiver (DDW) insurance, I added it to my credit card.  Any reservation I make, and pay for with that card, has CDW coverage.  It is a lot less expensive.  The only drawback, I am told, is that you will have to pay for damages up front, and be reimbursed by the credit card insurance.
  • Photo radar is rampant in Ecuador!  The government has a website that you can check to see if you got any tickets. To do so, go to www.ant.gob.ec and then click on Consulta de Citaciones (menu on far left), then drop the top box down for Placa (“license plate”) and enter your plate number on the lower box. You also have the option to select Pasaporte (your passport number).

Perks for Being 65 and Over in Ecuador

Ecuador was ranked as the #1 retirement destination in the world in 2014 and again in 2015 (and #2 in 2016). Apart from the great weather, inexpensive cost of living, and a host of other attractive advantages, Ecuador also boasts some great perks for people aged 65 and over.

beach retirement

Photo from the US News and World Report, “The 5 Best Places to Retire on the Beach in 2016.”

While government-mandated incentives for people of “tercera edad” (the equivalent of “senior citizens”) are geared towards its own citizens, foreign residents are afforded the same rights as nationals so all of these advantages apply to expats with Ecuadorian residency.

 

Here are some of the benefits you are eligible for as a senior citizen living in Ecuador:

No Waiting in Lines

Senior citizens automatically may go to the front of lines. Isn’t that great? The same applies to pregnant women and women with infants in their arms (which has been quite handy in my case!).

50% off Certain Forms of Transportation

This discount applies to public service transportation via buses and flights. My in-laws usually have to “remind” the money collector on local buses to get their 50% discount: “Disculpe, soy de tercera edad.” (“Excuse me, I’m a senior citizen”).

For flights, you must purchase your plane ticket at one of the in-country agency offices (Avianca, Tame, Copa). Unfortunately, you are not able to get the senior discount if you make your purchase online. Even if the tickets are on sale, you are eligible for the discount. The discount is NOT applied to taxes and fees.

When making your reservation you will need to show your cedula (the national ID card that you will receive once you are a resident).

It’s worthy to note that these flight discounts include trips to the Galapagos as well as round trip international flights initiating in Ecuador.

Note: This discount does NOT apply to other forms of transportation such as taxis, rental vehicles, boats, and trains.

Discount

Your 50% discount includes airfare to the Galapagos.  As residents (of any age) you will also enjoy $6 park admission compared to $100 for non-residents.

 

50% Off Utility Bills and Free Landline Telephone Service

Senior citizens are eligible for discounts on their electric, water, and landline telephones. To sign up to receive the discount, you must go to the service provider and show your cedula when you set up your account. The discount will then be automatically applied to your future monthly bills with the following usage limits:

  • 50% off electric on one electric meter up to 120 kWh/month
  • 50% off water up to 20 cubic meters/month
  • Free basic landline telephone services on one landline (does not include long-distance calls and other services)

If you exceed any of these monthly limits, you will still receive the discount up to the specified limit and then you will pay 100% on the excess consumption.

You may receive this benefit as a renter as long as your name is on the utility bills.

 

50% Off Entertainment Events

Folks who are 65 and over also receive 50% off tickets for cultural and sporting events, including movies. Again, you will likely be required to present your cedula as proof of age and residency status.

Quito-FootballFlag

Attending a game of soccer (“fútbol”) in Ecuador is an experience to be remembered!

 

Reimbursement of Sales Tax

Senior citizens are eligible to receive an reimbursement of their sales tax. Ecuador’s sales tax on most goods and services is 12%. It is called IVA (“impuestos de valores agregados”) and is the equivalent of “value-added tax” or VAT. You will see this IVA charge added to your restaurant, grocery, hotel bills, etc..

There is another sales tax, ICE (“impuestos de consumos especiales”), whose value varies significantly, from 10% for soft drinks to 300% for firearms.

Senior citizens are eligible to receive a reimbursement of their IVA and ICE; for 2016 the maximum annual amount is currently $1,830.

Seniors can submit their reimbursement forms online and receive their monthly reimbursement in a matter of days as a direct deposit to their Ecuadorian bank account.

Senior citizens are eligible to get sales tax back up

Senior citizens are eligible to get their sales tax reimbursed each month for their food, housing items, clothing, transportation, communication, and cultural and sporting events.

To set up your account with the SRI (the equivalent of the IRS), you are required to have a cedula, a copy of your Certificate of Visa Registration (“Certificado de Empadronamiento”) and proof of an Ecuadorian bank account in your name. When you register, you will be given a pin to access the website. Your receipts (“facturas”) must be in your name with your cedula number. Details can be found on SRI’s website (in Spanish).

Note: If you are renting, you shouldn’t be charged IVA. Nor are you charged IVA for purchasing property. You do need to pay IVA if you rent out a space for commercial use.

 

Reduction of Income Tax

Income tax rates in Ecuador are based on one’s annual salary. This tax is paid when an individual’s net yearly income exceeds a certain limit and is called the “Impuesto a la Fracción Excedente.” For people over 65, the minimum income limit is doubled. For example, the minimum limit for 2016 is $11,170. In other words, senior citizens with a yearly income under $22,340 will not be required to pay any income taxes.

 

Exemption of Municipal Taxes

When selling property, the seller is typically responsible for paying a municipal capital gains tax called “Alcabalas.” Senior citizens have the advantage of being exempt from paying alcabalas for the sale of a property valued at $183,000 or less (the equivalent of 500 times the monthly minimum wage, which for 2016 is currently $366/month). If the property value exceeds this amount, taxes are paid on only the excess.

An interesting case study to be aware of is the example of a property owned by spouses, one of whom is 65+ and the other is under 65. According to Ecuadorian law, the property is automatically owned equally by each spouse, and thus each spouse in theory is responsible for paying 50% of the acabalas at closing. However, according to law, the 65+ spouse would be exempt so the actual cost of this tax would be half of the declared amount.

My in-laws have been enjoying their Ecuadorian residency since 2012.

My in-laws have been enjoying their Ecuadorian residency here on the coast since 2012.

 

Note: This post was created in April 2016 and any information provided here may be subject to change!

Tom Shares Our Story and Some Insider Tips: An Interview with Expat Kingdom

Learn more about our story and get some insider tips about living and buying real estate in this two-part interview with Lain Livingston from “Expat Kingdom.”

Tom’s face is shadowed throughout the interview so here’s a little family photo so you can actually see what he looks like!

Tom and Lynn Saunders Ecuador

Part I: “Expats Building Dreams and Finding Freedom in San Clemente, Ecuador”

Tom Saunders Ecuador

 

Part II:  “Exploring in Ecuador Before Buying in Ecuador”

Tom Saunders Ecuador Real Estate Interview

Wherever You Go…There You Are

The U.S. News & World Report ran an article on August 26, 2015 reporting that according to a survey of 14,000 expats in 64 countries, Ecuador topped the list of best countries to live in as an expat. This is the 2nd year that Ecuador made the number 1 spot. Click HERE to read the article.

August 26, 2015 Article in U.S. News & World Report

August 26, 2015 Article in U.S. News & World Report

 

The survey was conducted by InterNations, a social network for expats with over two million online members around the world. Ecuador received the highest scores for the following subcategories: “personal happiness,” “feeling welcome,” “personal finance,” and “cost of living.”

As full time expats first coming to Ecuador in 2005 and then running a business and raising a family here since 2010, Tom and I have a pretty well-rounded perspective of life here on the coast of Ecuador. We can attest that, in our  own experiences, Ecuador deserves high marks for these subcategories. We have witnessed many clients who arrive here in fairly poor health and often stretched to the limit with stress, that, a year or so later, are hardly recognizable to their former selves, having lost a considerable amount of weight and donning flip flops, a golden tan, and a relaxed smile.

The caveat? Ecuador may well score high on these kinds of surveys, but there is absolutely no guarantee that relocating to Ecuador be will be the solution to your problems. We have seen firsthand that this is especially true for those expats who come here strictly seeking a lower cost of living.

“Wherever you go, there you are.” ~ Jon Kabat-Zinn

If you tend to be more of an optimist you will see the smiling, welcoming faces as you wave. You will see families laughing and playing volleyball or soccer together at the end of the day. You will notice the lack of beggars (at least here on the coast) despite there being evident poverty. You will see a gorgeous coastline with warm water and breathtaking sunsets. You will quickly make friends who welcome you, arms wide open, to dinner in their home at a moment’s notice.

If you tend to be more of a pessimist, you can be in the exact same time and space and experience an entirely different reality. You will see what you perceive as poor people lounging about in hammocks in front of their unfinished shack-like homes. You will see trash. You will see countless dogs roaming the streets and notice with alarm men walking around town with machetes in hand. If you do not tend to trust people, you will be suspicious, questioning people’s motives for being friendly to you. You will focus on the lack of efficiency, how “they” do “everything” here backwards compared to where you are from.

Speaking of which, an article came out yesterday in Cuenca High Life that provoked considerable commentary from its readers, entitled “The Arrogant Expat: Let me tell you how we do things in the USA.”  Important Note: If you come to Ecuador and attempt to change what you perceive to be wrong with it, you will drive yourself crazy.

A couple of related insider tips and insights:

  • In the U.S. there is a culture of becoming snide, loud, and even threatening towards employees in an attempt to get them to affect whatever it is that you want/need done. In Ecuador, this approach will not work. It will back-fire and they will simply move on to the next person in line (believe me, I ashamedly admit that I learned this early on firsthand). Instead, try to befriend and empower people whose assistance you are seeking. Ask calmly and with a [genuine] smile if there’s anything they might possibly be able to do to assist with the situation. While not foolproof, it’s amazing the difference it can make.
  • When facing a frustrating, mind-numbingly “illogical” situation (and there will be many!), instead of  banging your head against a brick wall, try your best to reflect upon the experience as an opportunity to strengthen your patience “muscle.” (Think how strong you’ll get to be after a year or so-Yay!).  Our friend  Kris used to refer to our province of Manabí as “mañana-bí.” And there is the famous saying here that mañana doesn’t necessarily mean tomorrow (or even next week, for that matter). Always try to find the humor in the situation and with yourself. It just makes life easier that way.
  • Consider the possibility that there might actually be logic behind what you perceive as illogical or a faulty way of doing something. A classic example we often use to illustrate this point is getting the bill at a restaurant. Newbies to Ecuador are quick to complain that the server never brings them the check. They are unaware that it is considered rude here to “rush” clientele out of the restaurant. When you are ready to leave, you simply request the bill.  (And even then, it might take a while to get the check. And then they might not have change for your $20 so they’ll have to send their 10 year old son out to go find you change). Remember, you’re building your patience muscle!
  • Pick up a copy of the book CultureShock Ecuador: A Survival Guide to Customs and Etiquette  by Nicholas Crowder

 

While some of our clients have thrived as coastal Ecuador expats, there are others for whom Ecuador simply wasn’t a good match, high expat survey scores notwithstanding. Some arrived here and immediately did an about-face because their Ecuador experience did not match their expectations.

Then there are others who, like most of us, first delighted in Ecuador (the “honeymoon phase” of the widely accepted “stages of cultural adaptation“).

Proposed stages of cultural adaptation (taken from xx)

Four proposed stages of cultural adaptation (image taken from this site). I would venture to say that the realistic length of time for adapting is more like a year or two for most Ecuador expats.

 

During the honeymoon phase, newcomers appreciate and even celebrate the myriad differences in culture, food, and can find the humor in not being about to communicate well in the local language, at waking up at 4am to the crowing of a rooster in the city, or not being able to find products they were used to having back home.

However, as time passes, the honeymoon inevitably comes to a crashing halt and a new stage begins. Now the focus becomes disproportionately on what is wrong, instead of what is good and new. For some, this so-called “hostility stage” is but a passing phase as they continue to move through the ups and downs of adapting to a new culture and life. Those who eventually adapt arrive at a middle of the road experience where they generally accept and enjoy their new life. That is not to say there are no longer challenges, delays, or frustrations. But by now they have learned to better navigate the obstacles and move on.

There are others, however, who may stay stuck in the “hostility” phase. Their negative perception of their reality can become further compounded if they have already sold or moved everything they previously owned, cannot afford to return, and now feel trapped in a place where they are just as unhappy (or more so) than they were before relocating.

So if you have been considering becoming an expat in Ecuador:

(1) Do your due diligence and visit/rent first to make sure Ecuador will be a good match for you before you make the official leap;

(2) Come with an open mind and an open heart. Don’t assume you know better than the “locals.” There is a good chance that your perceived “solution” does not fit with the context in the same way it would back in your home country. Often, there actually is some semblance of logic where many new expats assume there to be none;

(3) Expect that, like anywhere in the world, you will face many unexpected challenges, especially as you are adapt culturally. Try your best to embrace the inevitable hurdles as they arrive and view them as opportunities for growth.

(4) Ecuador is no panacea for one’s problems. If you were unhappy in your home country, chances are you will find reasons to be unhappy here as well.  “Wherever you go, there you are. You take yourself with you.”

places you'll go

Bringing in Goods through Ecuador’s Airports Tax Free

As you make your travel plans to Ecuador, it’s important to be aware of current laws regarding what is allowed to be brought in duty-free to avoid paying hefty import taxes.

Below is a synopsis of duty-free items that can be brought in through airport customs. More information is available on Ecuador’s Customs website page for international airport travelers.

Ecuador customs

Summary of tax-free items that can brought into Ecuador, some with restrictions

 

If you bring in merchandise that is not considered to be a personal item and its commercial value is greater than $500, you will be required to pay import taxes at Customs in the airport.  The amount due is calculated based on the commercial value of the good plus the cost of freight (equivalent to  $ 1.50 per kilogram) plus the insurance value (calculated as 1% of the commercial value).

We recently learned about paying import taxes at the airport firsthand when Tom brought in a drone he had purchased in the US so we could capture aerial footage of Ecuador’s coast, properties and construction projects.

Airport customs officials determined that the drone was valued at over $5o0 and would not consider it to be a personal item despite Tom’s initial attempts at friendly persuasion. They asked Tom if he possessed a certified letter demonstrating that he was a professional who required use of a drone. He didn’t so they proceeded to move him over to an adjacent office to calculate the import tax due. They looked up the retail value of the drone from the internet. Their value nearly coincided with what he actually paid.

Here’s the breakdown of what was charged: the base import tariff (“arancel advalorem”) was determined to be $573.80. Plus, there were two separate taxes charged: The first tax was $14.35 to FONDINFA, a fund supporting infant development. The second tax was the IVA (Ecuador’s standard value-added tax) which came to $414.86. The grand total due was $1,003 or a whopping 35% of the retail value (ouch!). They gladly accept cash or credit cards.

Some insights gleaned from the experience: In this case, the value estimated by customs was pretty close to what we actually paid, but to be safe, it would be wise to bring in your own receipts to avoid being overcharged. Tom could have tried to fight their conclusion that the the drone was not for personal use and he could have filed an official complaint to try to avoid paying the tax. However, this would have required him to leave the drone in the Customs official’s care until the case was resolved. Never, ever a good idea! So, take your chances! In retrospect, Tom could have bought the same model here in  Ecuador for about $600 more than what he paid in the US. However, he was banking on the drone being considered a personal item in a similar manner that high-end digital cameras would be considered personal regardless of their cost.

Monday photo: San Clemente Beach on a Sunday Afternoon

Just a quick post. Yesterday, we went for a short hike through the hills above San Clemente and then looped back home along the beach. A beautiful and relaxing way to spend a Sunday afternoon.

View overlooking the northern end of San Clemente

View overlooking the northern end of San Clemente

 

During the week, the beaches here in San Clemente are typically empty with only a handful of people walking or playing in the water in addition to the occasional group of fishermen bringing in their catch. The beaches on weekends, while rarely ever crowded except for major holidays, are nevertheless full of activity. Families visit the beach from nearby inland towns and spend the day together jumping in the waves, making sand castles, and playing the requisite game of soccer.

Our dog Coco with the view of Punta Bikini

Our beach bum canine Coco with a spectacular view of Punta Bikini as the backdrop on a “busy” Sunday afternoon. On the right, fishermen and locals crowd about a fishing boat to inspect the catch.

 

Tom

Tom with more of our crew

 

Landscaping Your New Home in Ecuador

The year-round warm climate here on the coast makes for great opportunities for creating beautiful tropical gardens. However, there’s not exactly a plant nursery section in a big box store here in this part of Ecuador’s coast. There’s really not even a big box store, with the minor exception of Mi Comisariato at the El Paseo shopping center in Portoviejo. So, where can you buy palms, fruit trees, and flowers for your new home?

The place to go is the small town of Sosote, just outside of Portoviejo. Sosote is better known as the source of tagua jewelry for this part of Ecuador. Here as you pass through the town, bisected by the new four-lane highway to Portoviejo, you’ll see a dozen or more road-side stores selling tagua jewelry in addition to clay pots of all sizes, coconuts and  ropes of blood sausage. I should mention that the latter is not recommended. Poor Tom learned the hard way a few years back and still recoils at even the mention of sausage from Sosote.

In the midst of these numerous roadside establishments, you will to come a row of flowers, fruit trees and palms along with a sign saying “Vivero,” meaning nursery.

Plant nursery in coastal Ecuador

The plant nursery in Sosote offers a tremendous variety of plants for incredibly affordable prices.

 

Here you can find ornamental plants that you’ll no doubt recognize from back home. The only difference perhaps is the price where most flower varieties run between $0.50-$2.00 each.

sosote nursery (1)

sosote nursery (3)

sosote nursery (4)

sosote nursery (5)

 

I was treated to some fresh coconut water to sip as I wended by way through the maze of color during my plant shopping spree .

sosote nursery (10)

 

You will also have many varieties of palms to choose from, from coconuts to sago palms. I bought one of the papyrus plants on the right below for $8.

sosote nursery (2)

 

And of course fruit trees abound, many already bearing oranges, limes, etc.

sosote nursery (6)

 

And here’s a mango tree line-up for all you mango fans.

sosote nursery (8)

 

A final view of the nursery from the road to Portoviejo.

sosote nursery (9)

 

The nursery also sells large bags of mulch for $5 each and even will come do custom landscape work your property. I loaded up both the back seat and the bed of the truck with 4 bags of soil and LOTS and lots of plants and the bill came to $100. I also bought four large clay pots for $25 each (they wouldn’t budge below that price, even with buying four). So my final cost for the day was $200.

sosote nursery (11)