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Understanding Ecuador VAT Nexus Rules

How to determine if your business has a VAT obligation in Ecuador.
Updated 3 months ago

Nexus is the legal connection between your business and a tax jurisdiction that creates an obligation to collect and remit tax. This article explains when nexus is established in Ecuador and what that means for your business.

Ecuador's Nexus Threshold

Ecuador has a $0.00 USD threshold for VAT registration. This means there is no minimum revenue or transaction volume before an obligation is triggered. Your obligation begins immediately.

When Nexus is Established

Business Type

When Nexus is Triggered

Registration Deadline

Resident Business with Physical Presence

Upon commencing any business activity in Ecuador.

Prior to or immediately upon starting business activity.

Non-Resident Remote Seller (B2C Digital Services)

Upon the first B2C sale to an Ecuadorian resident. Threshold is $0.00 USD.

Prior to or immediately upon making the first B2C sale in Ecuador.

What Counts as a Taxable Connection?

For non-resident digital service providers, nexus in Ecuador is established when:

  • You sell digital goods or services (such as software, SaaS subscriptions, or online content) to consumers located in Ecuador.

  • The consumer is an individual (B2C), not a registered Ecuadorian business.

  • The sale occurs regardless of the amount, as the threshold is $0.00 USD.

NOTE: B2B sales to registered Ecuadorian businesses do not trigger a registration obligation for non-residents in the same way, because the reverse charge mechanism places the VAT responsibility on the buyer.

Consequences of Not Registering

Failing to register once nexus is established can result in:

  • Fines ranging from $30.00 to $125.00 USD, with up to $1,500.00 USD for large taxpayers.

  • Being placed on a watch list, where local banks automatically withhold 100% of the VAT from all customer payments.

  • Late payment interest charges based on Ecuador's variable reference rate (approximately 0.9% to 1.1% per month).

Frequently Asked Questions

Q: Do I have a VAT obligation in Ecuador if I only have one customer there?

A: Yes. Ecuador's threshold is $0.00 USD for both resident businesses and non-resident remote sellers. Even a single sale to an Ecuadorian consumer triggers a registration obligation.

Q: Does selling to Ecuadorian businesses (B2B) create a registration obligation for me as a non-resident?

A: Not in the same way. When you sell to a registered Ecuadorian business, the reverse charge mechanism applies, and the buyer handles the VAT. However, if you are also making B2C sales, you are required to register.

Q: What is the RIMPE Regime?

A: RIMPE (Régimen Simplificado para Emprendedores y Negocios Populares) is a simplified tax regime available to resident businesses with annual turnover up to $300,000.00 USD. It is not currently in scope for Kintsugi's V2 Ecuador support.

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