Mexican newspapers are full of headlines about the growing problem of foreigners who are renting their homes or condominiums and failing to pay Mexican taxes. Not only is this a violation of the terms of most bank trusts (fideicomisos), but also it is a violation of Mexican tax law and reprisals are severe.
FOREIGNERS ARE OBLIGATED TO PAY TAXES ON INCOME GENERATED IN MEXICO. Mexico’s tax law is patterned after those of the United States and Canada (world rental system) which states in the First Article::
Article One: Physical persons (individuals) and legal persons (companies) are obligated to pay an income tax in the following cases:
I Residents of Mexico, must report and pay on all income no matter where the source is located;
II. Those with residence in a foreign country with a permanent establishment in Mexico must report and pay on all income generated from the permanent establishment in Mexico.
III. Those with residence in a foreign country, must report and pay on the income produced by property located in the national territory, when there is no permanent establishment in the country or, even if there is, but not covered by the situations outlined in I and II above..
If you own a property in Mexico and rent it often or only occasionally, ENJOY your rental income and SLEEP EASILY KNOWING YOU HAVE COMPLIED WITH TAX LAWS!
The Settlement Company® with many years of experience in the transfer of titles and resolution of problems related to title, is now able to assist you in receiving your funds in an escrow account, complying with your fiscal obligations in Mexico, and providing you with the overage and the documents you require in your country of residence to avoid double taxation!
Additionally………..as part of our service, if requested, we pay your annual property taxes and, if your property is in trust (fideicomiso) bank trustee fees! We also can pay other property related expenses, at your request! We are able to provide you with a limited or a complete accounting service, based upon your requirements.!
In conformance with Attachment 25 of the Miscellaneous Fiscal Resolution published on May 4, 2007, all persons earning and reporting income must obtain a Mexican Federal Taxpayer Number (RFC) issued by SAT, the fiscal arm of the Mexican government.
The Settlement Company® is able to obtain this number for you, if you do not already have it.. In order to do so, we must receive the following:
If you are non-resident of Mexico: This means you live and work elsewhere and make only occasional trips to Mexico with a tourist visa..:
I. A certified copy of your taxpayer number in your country of residence.
This is the number you use for paying taxes in your home country. It may be your social security number, or a taxpayer ID number. The identification number must match the name on the title for your Mexican Property. If title to your Mexican property is in an LLC, the statement of incorporation, showing the members of the LLC and the tax numbers for each will be required..
This document must be certified and either an Apostille obtained or if you are a Canadian citizen, legalized before the Mexican Consulate nearest you.
2. Appointment of Consultores Phoenix, S.C. (The Settlement Company®) as your legal representative for the payment of taxes. We will prepare this document for you, in English and in Spanish. This must be signed before a Notary Public and an Apostille obtained or the document legalized before the Mexican consulate.
3. Escrow and Settlement Instructions authorizing The Settlement Company® to collect and pay out rental income on your behalf, delivering audited statements and funds to you. This document is also prepared by us and will need to be initialed on each page and signed on the last page.
4. An original of your latest property tax receipt, including property tax number.
5. A copy of the deed to your property.
6. A copy of your passport.
7. Completion of the bank transfer information.
8. The information sheet and authorization, attached.
IF YOU ARE A RESIDENT OF MEXICO, with a RESIDENT DOCUMENT:
We require a certified copy of your immigration document and items two through eight above.
Upon receipt of your information, we prepare your documents. Once executed and returned to us, we can establish your individual custodial account and are able to receive and pay out funds.
Once we have obtained your RFC document, we will prepare monthly declarations of income for federal, state and municipal taxes and will pay them from the funds in your rental account, providing you with e-mail copies (PDF file) of your receipts, for use in your tax declarations in your native country.
We hope to be able to serve you in the payment of your taxes. The next step is to complete the attached form, providing us with the information for the parties on your title. Upon receipt of same, we will prepare and send your documents for execution.
Please contact us if you have concerns or questions. We look forward to having the opportunity to serve you!