Mexico is a country rich in natural resources and paradisiacal places, making it an attractive destination for retirement. Additionally, its privileged location makes it an ideal country for doing business with its northern neighbor, the United States of America, which is one of the world's leading economies.
In recent years, the movement of people for personal or professional reasons, such as new foreign company establishments due to the phenomenon of nearshoring, has resulted in the relocation of people from their home countries to Mexico.
For the reasons mentioned above, many expatriates have made their homes in various parts of Mexico, such as Puerto Vallarta, Punta Mita, Nuevo Nayarit, or parts of Bahía de Banderas, Nayarit, Cancún, Los Cabos, Ajijic, San Miguel de Allende, Guadalajara, etc.
This decision may bring with it Mexican tax obligations if you meet either of the two criteria for tax residency as dictated by domestic legislation, detailed below:
An individual (natural person) who establishes their sole residence worldwide in Mexico will be considered a Mexican Tax Resident.
If an individual (natural person) has a residence in Mexico in addition to another residence elsewhere in the world, such as the United States of America, Canada, etc., a tie-breaker criterion will be applied to locate their center of vital interests:
a. They will be a tax resident in the country where the majority of their income is sourced, or
b. In the country where they have established their base of professional activities.
Note: Additionally, if another decision criterion is needed, the next step would be to consider their nationality.
Final Considerations:
If you meet the criteria to be considered a Mexican tax resident, it is important to follow up on tax obligations such as:
Obtaining a Mexican tax identification number.
Depending on the type of income the individual has, it will be analyzed whether it is necessary to comply with monthly, quarterly, semi-annual, or annual tax declarations.
Annual declaration with worldwide total income with the option to credit foreign taxes paid in countries with which Mexico has a double taxation treaty.
It is important to perform this analysis along with immigration issues before settling in Mexico, as a Mexican visa is required to engage in lucrative activities in the country.
We are at your service to assist you in this transition and to safely protect our clients' interests.
In terms of Article 89 of the Federal Tax Code in force, the content of this reproduction, exposition, presentation, program, or transmission and/or the documents and/or examples used to present it may express positions that do not coincide with the criteria of the Mexican tax or judicial authorities. This reproduction or exposition is not intended to and may not be used by any person for the purpose of evading (i) a federal, local, or municipal tax, or (ii) the imposition of tax penalties in the United Mexican States. Cadena, Barrio y Asociados, SC Consultants, is not responsible for the use or the criteria that any user might apply or have derived from this reproduction or exposition.
Likewise, the writer is responsible for the originality and content of the work in front of the company and for any invasion or infringement of third-party rights that may occur, thereby obligating themselves to hold the company harmless and to respond for any damages and/or losses caused to it.
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