With its vibrant culture, stunning landscapes, affordable cost of living, and close proximity to the United States, Mexico has become one of the top destinations for expats seeking a fresh start.
In this guide, we’ll walk you through everything you need to know about relocating to Mexico from a personal tax perspective, including tax residency, income tax, special tax regimes and tax return obligations.
TaxPilot recommend that you organize your affairs in good time to get ahead and make the most of favorable tax treatment while making sure you’re meeting your tax return obligations.
Mexico follows a residence taxation model. If you are resident, you will pay tax worldwide incomes. If you are non-resident, you will pay tax on local incomes only.
if you have a home in Mexico and no home overseas during the tax year.
if you are a Mexican citizen who resides in a tax haven for less than five years.
Providing that you hold the temporary resident visa and maintain a non-tax resident status, foreign incomes and gains will be exempt from taxation in Mexico for four years. Mexico can be a very tax efficient place to live in and as such, Global Tax Consulting recommends seeking personalized tax planning advice to take advantage of the special tax regime.
Exempt from Mexico taxation.
Applied for four years.
Tax on property and share sales
Tax on value of owned assets
Tax on assets passed to heirs
Tax to contribute to state welfare
If you receive incomes overseas while you are living in Mexico, you may find the source country, as a starting point, continues to tax the income which may cause double taxation unless you are using special tax regime.
Double taxation agreements can be used to mitigate double taxation and receive tax free income. As such, the more double taxation agreements a country has, the better, as agreements will ensure you’re not taxed twice and even better, ensure your income is tax free.
At present, Mexico has 60 double taxation agreements signed.
