If you are a 65+ year old expat with temporary or permanent residency in Ecuador, you are eligible for certain benefits. But, sometimes there can be a startling difference between what the Tercera Edad laws provide and what actually happens in practice.
This article explores the particular benefits that you can obtain in Ecuador from tax rebates to cell service and utility discounts. We also show you how to obtain them whilst highlighting some of the potential challenges.
I’d really like it if you can comment below this article if you have any additional information about an existing Tercera Edad benefit we’ve included or even include any that we’ve missed.
Thank you to the various expats who have already provided their input through a short survey we conducted via this website & social media.
And away we go…
The chasm between promises and reality
Though the article is not designed as a social commentary, a quick review of the lives of older Ecuadorians may help you to understand the need to pay closer attention and allocate more resources towards fulfilling the Tercera Edad laws and widening their application.
Despite a national sensitivity and respect for older Ecuadorians (adultos mayores), they can suffer a much poorer existence than other adults. The average income of seniors is about $300, which is far below the monthly minimum needed of $712 established by the government. Sadly, seniors without an IESS pension can find it much harder to get by, potentially even contributing to seniors dying in poverty without this much-needed assistance.
Other gaps can be found within guaranteed rights to housing, health and medicine not being fulfilled for a lack of economic resources. Even IESS health services which many seniors’ health depends upon can be woefully inaccessible, with persistent funding issues a common theme since even before the Correa administration.
One of the main mandated benefits that have been somewhat fulfilled are those associated with tax exemptions and IVA refunds. Yet even for these benefits, there is a lack of awareness and communication, which ultimately means some Ecuadorians miss out on the intended financial relief.
The Constitution of Ecuador promises people over 65 years old certain benefits that are reaffirmed and expanded in The Organic Law of Older Adults in July 2018. If you are like me, you probably won’t take the time to read all 37 pages of Spanish legalese. So, we’ve included translated excerpts (below Additional Notes) from an informative article published on October 21, 2021 in the Ecuadorian daily publication El Universo.
The expat and Ecuador’s Tercera Edad benefits
The plight of most of our 65+ Ecuadorian counterparts should remind us expats just how lucky we are to live with relatively much greater wealth and health. However, even we expats lack basic awareness and understanding of the benefits.
For example, I just turned 65 so I started searching the gringo interwebs and questioning some of my Cuenca sources and I found 2 things:
- A lot of expats are posting the same questions on social media (repeatedly), and
- Several people are actually posting some helpful answers – which can be very rare on social media.
But there just doesn’t seem to be a place that consolidates the information. Until now.
Indeed there are savings to be had. But I learned that the general “50% tercera edad” discounts you hear about are restricted by category and often conditional. For example, you receive 50% off a basic service plan and not on those with more features of capacity (ex. internet). Or in the case or plan tickets you may only receive the 50% discount off the list (highest base) fares. Or for water and electric only the property owner whose name is on the account can claim the 50% water and electricity discount and they must be a senior to receive it. So, as the tenant your tercera edad status does not get you the discount if your landlord is under 65. Another example is real estate tax where some tax recapture rules and rates vary geographically.
Summary of Tercera Edad benefits
Here is a quick summary of the benefits protected by law. The first 2 are not actually available based on my inquiries with local experts. The last 3 are those that expats may know about.
- Preferential care in cases of disasters or emergencies
- Special care and assistance for those with chronic or degenerative diseases
- Tax exemptions on IVA and some municipal and utility taxes
- Exemption from notary and registration fees
- Discounts on various transportation, cultural and sporting events, cellular services and utilities.
In addition, there are some unofficial goodies too. These include airfare price reductions off already discounted fares codes (such discounted fares are NOT eligible for the legally imposed 50% discount on bases fares) plus preferential treatment and reduced time waiting in line at both public (SRI) and private service providers (banks, supermarkets etc).
Rules of thumb
To facilitate getting the benefits, carry your actual cedula and remember to ask about discounts whenever you pay for something. Get a factura showing a card or piece of paper with your name and cedula number. Save receipts to use when requesting the IVA refunds discussed below.
Some expats will tell you to carry only a copy of your cedula because replacing a lost one is a hassle and costs money. But be aware that many providers offering Tercera Edad benefits will only accept the real thing.
Tax exemptions on IVA and some municipal and utility taxes
IVA tax refunds
You can recover the 12% on qualified purchases (up to $100 per month) of Ecuador’s value added tax, called IVA. Eric Fraterman covered this topic in a lot of detail in the Yapatree article, Stalking the Elusive IVA Refund.
Summarizing Eric’s article, IVA is the Ecuadorian value added tax. It’s usually 12% of the value of most goods and services, collected at the point of sale and documented by a factura (receipt). If you have a cedula and are over 65, you can claim an IVA refund up to about $100 per month (up to $1200 per year.)
You may claim up to 60 months’ worth of IVA for qualifying purchases. For example, if you are 70 and have never collected a refund, you can claim up to $6000 back to the month in which you turned 65. But not all your IVA contributions are refundable. They are generally limited to the categories of Education, Communication, Culture, Health, Food and Transportation.
How to claim and collect your refunds is covered thoroughly in the article. One must create a local bank account (or at a cooperativa) and go in person to the SRI office at Ave Remigio Crespo Toral, to set up an account and request the first refund. You may want to enlist the help of a bilingual helper or accountant to help you set up both types of accounts.
After that, you have some options to process your refund requests. Requests can be made at whatever interval you choose. Some people request refunds each month while others do it just once a year. You can process requests personally through the SRI system using data that merchants have reported there and in conjunction with your saved receipts.
Or like many, you can outsource the claim process to a third party, typically an accountant who will take your receipts and process your claims with them in exchange for a percentage (10% is common) of your refund.
Real estate tax refunds
Property owners can get back up to 100% of their real estate tax. In Cuenca the refund is 50% Regardless, this can be a substantial amount each year wherever you pay property tax so it is worth pursuing the details for your property. A good local accountant should know the process and steer you to obtaining your refund. Jessica Figueroa is a bi-lingual, CPA, Accountant and Translator at Accro Accounting (Whatsapp +593 996 191 775) who helped us research this topic. In just one example of outside assistance, one senior expat reported that Diana Vera, a popular facilitator (Whatsapp +593 991 744 740), helped him get his refund after he struggled for several years to accomplish that through other means.
Outside of Cuenca, expat ValJeanne, owns her own home and recaptures her annual property tax payment. As an example, she mentioned that a person owning a house with an assessed value of $175,000 would recover $500 in property tax in some cantons. Assessed values can be well under market value, by the way.
ValJeanne’s process is to check her general tax bill first. In her case, property tax appears in the first line. Then she obtains a letter from the catastral office verifying her age. And subsequently, she presents the letter with her escritura (notarized property deed) again at the catastral office. Both of those steps are naturally conducted in Spanish so you may want to work with a Spanish-speaking helper who can demonstrate prior experience working through the bureaucracy.
ValJeanne also notes that each canton may have its own rules and procedures so your experience may vary in terms of the percentage of your tax refunded, a maximum refund limit (her canton’s refund cap is 100% of property tax calculated on a maximum assessed value of $150,000.)
I will update this section soon to include a description of the property tax refund process in Cuenca soon. I’ll keep digging for you!
Real Estate Transaction Taxes
Taxes are assessed for the purchase and sale of real estate. Both the amount of these transaction taxes and the percentage of exemption for seniors is set by GAD’s (Gobiernos Autónomos Descentralizados de Ecuador) which are divisions of local government. And so taxes and their exemptions differ by GAD. Per Jessica, Cuenca’s transaction tax exemption is 50%. But Cañar province sets transaction taxes and exemption percentages at very different rates than Azuay province.
Discounts on various transportation, cultural and sporting events, cellular services and utilities
Cuenca bus and tranvía
Get 50% off Cuenca bus and Tranvia fares when you purchase rides on their respective fare cards. Ride the Tranvia for just $.17! Visit the ETAPA office in El Centro at Tarqui and Gran Colombia and you can get both cards the same day and load them with half-price fares. View ETAPA office locations and recharge points or the Tranvia Website for more info.
Receive 50% off published fares by showing your cedula or passport at the ticket window of the bus line(s) you use to other cities and provinces. So, if you take the bus from Cuenca to Guayaquil, your fare is $4 instead of $8.
The private companies offering service to other cities on mini-buses offer a discount. For example, Alizana will knock $4 from their $12 fare from Cuenca to Guayaquil.
Get 50% off airfares (less IVA) on trips originating in Ecuador. As I shared in our article International Travel Tips and Tricks, this benefit comes with a variety of conditions and restrictions but you can maximize your savings by working with a good travel agent.
You can also obtain the discount by visiting the local office of the carrier. But a travel agent can find you the lowest total cost for your trip given your Tercera Edad status and will probably charge you a fee of $35 for this service because they are not compensated for booking tickets by airlines.
The context is that you receive up to 50% of the base ticket fare for your route originating in Ecuador and excluding taxes and fees like IVA. In fact, sometimes airlines offer better deals than what you can get at 50% discount on their base fare. However, they usually offer a Tercera Edad discount even from their discounted fares but it is discretionary and smaller than 50%.
Another qualification is that many but not all airlines participate. Participants include: AA, Iberia, Avianca, Latam, Air Europe, KLM, Copa, Delta, UAL, Aeromexico. Others like JetBlue and Spirit do not.
Exemption from notary and registration fees
Save on notary fees (lease registration, etc.) Notary fees are published or at least made known at the point of purchase and you should ask about a discount. Notary fees are set at the national level being under the control of the Council of the Judiciary. In the case of these fees for real estate transactions, these fees apply to the buyers only. (But the seller can save 50% of capital gains tax.) And if you own a car, you can save on your annual registration fees which add up over time.
“Ecuadorian law states that an Ecuadorian citizen or resident either Temporary or Permanent who is 65 or older is considered a senior and is granted a discount of 50% for government fees such as municipal, notary, driver license, car registration, transportation fees and other services which are considered basic and a priority for daily life. To request the discount one must present one’s Ecuadorian cedula and in certain cases submit a formal request, as well. According to my experience, 70% of institutions with which I have worked respect the law.”
Regarding immigration fees such as fines, tourist Visa extension and others, these fees are paid in full even by seniors. In this case, the discount does not apply.”
Sara’s comments are supported by the experience of my friends who have received cost-saving, fee exemptions. We have heard second hand that a 50% discount is given on immigration/visa processing fees and you should ask but that seems to contradict Sara’s experience.
Cultural and sporting events
Save 50% on your admission to concerts, movies, soccer games, theater, etc. All you have to do is present your cedula and ask.
Get 50% – 100% off utilities
Electricity and water are discounted at 50% (up to a certain usage level) but only if those accounts are in your name which is not the case for most expats who rent from landlords that keep those accounts in their names. According to Victor Ojeda, a highly referred facilitator who works through various bureaucracies (Whatsapp +593 98 731 3565), there is no workaround for this. If you pay the utilities directly and the accounts are in your landlord’s name, you pay his/her applicable prices even if you are tercera edad. But you may want to ask your landlord (over 65) whether he/she receives the senior discount and ask them to apply for it if they don’t.
Check the Facebook or website of your electric and water suppliers for how to apply. Some allow you to apply by email or WhatsApp, saving you a trip to their office.
Basic landline telephone service is 50% off to free.
Most expats don’t use a landline. The main reason for maintaining a landline is if your home security company requires it for the security system to function. Some have indicated they get service for free. Others pay 50% of the basic landline service. Just ask your phone company and ye shall receive what is offered.
Get a special senior discount on internet service from ETAPA, Puntonet, etc. ETAPA shares a special 20Mbps plan on its Facebook page for about $25 per month. It is a bit slow for some but they will also discount whatever plan you are currently using by about $10. I applied in person at ETAPA and got $10 knocked off my $38 bill which is now $28. All I had to do was show up at their office in Mall Del Rio with my cedula and ask. This is the same story I hear from other expats.
Go get’em tiger! Who doesn’t want to save $120 per year? That’s about 60 Tutto Freddo ice cream cones which is a much better use of those funds in my opinion.
Save 50% or more on your cellphone service with Claro, Movistar or CNT. I personally breathed a big sigh of relief when I first opened our giant capacity $28/month cell plans here. But adulto mayor customers are also eligible for an ample $8.40 plan at all cell service providers which is 50% of the regular basic plan price including IVA.
Here is the basic plan:
- 200 multidestination minutes + unlimited calls to carrier
- 200 multi-destination SMS
- 5 GB data included
- 2 GB for collaborative tools Zoom, One Drive, Outlook, Teams and Utilities, including Word, Excel and PowerPoint.
- Free WhatsApp
So, guess who signed up for the $8.40 within days of turning 65? That’s right. This guy.
I sold Verizon wireless services to Chicago businesses costing 10X my senior price here. And I should be ashamed of myself – but I’m not. The best part of this plan, besides the savings, is telling my U.S. friends what I pay and watching them turn green with envy.
Save time by queueing in Tercera Edad lines
Businesses and government offices offer special Tercera Edad preference that jumps you in front of the regular queue or puts you at a window/or checkout reserved just for you (and pregnant or disabled people).
Look for Tercera Edad lines at SRI, IESS, banks, cooperativas, Supermaxi, Coral, and even Airport check in and inbound Ecuadorian immigration at the airports. (yes! a potentially huge time and stress saver). This may sound trivial but people who value their time or their backs find this a great benefit. Expat Candace reported she saved almost 3 hours in a single turn at SRI. This one is an especially big win for antsy, impatient people like me.
Some conclusions follow. While some of the bigger promises under the 2018 seniors law may never see the light of day – like the rights to work, housing, a good standard of living along with streamlined senior healthcare and special healthcare for chronic conditions, there is a significant array of other benefits to being an “adulto mayor”. These can make living in Ecuador considerably lighter on one’s wallet. Transportation, communications, taxes, government fees, entertainment and cellular services are all a bargain for us here at full price and even a better deal at 50% off. And in most cases, getting these recurring savings only requires you to ask.
We’re hopeful this article can also help prevent future doomscrolling through expat Facebook groups and reading the same Q&A that has been repeated there hundreds of times. And you can thank me by letting me in line ahead of you next time you spot me at our exclusive Supermaxi checkout.
Non-tax benefits and exemptions
- Exemption of 50% of air, land, sea and river transportation fees and tickets to public, cultural, sports, artistic shows, tourist and recreational packages. In addition, they will have free access to museums.
- Exemption of 50% of the value of the consumption caused by the use of the services of an electric energy meter whose monthly consumption is up to 138 kW/hour; of a drinking water meter whose monthly consumption is up to 34 cubic meters; and 50% of the basic rate of the residential fixed telephone owned by the beneficiary at his home.
- Exemption of 50% of the value of consumption in a basic cell phone and internet plan.
- Any person who has reached 65 years of age and with monthly income estimated at a maximum of 5 unified basic remunerations, or who has assets that do not exceed 500 unified basic remunerations, will be exempt from the payment of fiscal and municipal taxes.
- This benefit is protected by article 37 of the Constitution. Older adults are entitled to a refund of the value added tax (VAT) paid for their purchases of essential goods and services acquired for personal use and consumption, with invoices authorized by the Internal Revenue Service. As of January 2020, the maximum monthly VAT refund amount is $96.
Among the most important rights included in the law are the following:
To a decent life
Guarantee the comprehensive protection that the State, society and the family must provide to older adults, with the purpose of achieving the effective enjoyment of their rights, duties and responsibilities; shall have the right to access employment, economic, political, educational, cultural, spiritual, and recreational resources and opportunities.
Voluntarily access decent and paid work under equal conditions and not be discriminated against in employment-related practices, guaranteeing gender equity and interculturality. They will have the same guarantees, benefits, labor and union rights, remuneration applicable to all workers facing the same tasks and responsibilities. The work assigned to an elderly person must be in accordance with their abilities, limitations, potentialities and talents, guaranteeing their integrity, in the performance of tasks and accessibility.
Older adults have the right to enjoy decent and adequate housing; to reside in their own home for as long as necessary, without their family or guardians being able to limit their right to use, enjoy and dispose of it. The national authority in charge of housing and the decentralized autonomous governments will guarantee priority access for older adults to the social interest housing programs that they design and implement in the exercise of their powers.
Older adults who lack economic resources for their subsistence, or when their physical or mental condition does not allow them to subsist on their own, will have the right to alimony from their relatives that allows them to satisfy their basic needs and have a life in conditions of dignity. The monthly maintenance allowance will be set by competent judges of the family, women, children and adolescents through the procedure defined in the current regulations.
The State will guarantee older adults the right without discrimination to physical, mental, sexual and reproductive health and will ensure universal, supportive, equitable and timely access to services for promotion, prevention, recovery, rehabilitation, palliative care, priority, functional and comprehensive, in the entities that make up the National Health System, with a gender, generational and intercultural approach.