{"id":39879,"date":"2017-08-22T05:53:12","date_gmt":"2017-08-22T09:53:12","guid":{"rendered":"https:\/\/www.escapeartist.com\/?p=39879"},"modified":"2021-03-01T15:34:16","modified_gmt":"2021-03-01T20:34:16","slug":"taxation-of-expats-living-in-mexico","status":"publish","type":"post","link":"https:\/\/www.escapeartist.com\/blog\/taxation-of-expats-living-in-mexico\/","title":{"rendered":"Taxation Of Expats Living In Mexico"},"content":{"rendered":"

Taxation Of Expats Living In Mexico<\/strong><\/h2>\n

Mexico has become one of the more aggressive countries in Latin American when it comes to taxing its residents. Mexico taxes residents on their worldwide income<\/a>. If you\u2019re living and working in Mexico, the government wants its cut. Here\u2019s a summary of the taxation of expats in Mexico. <\/span><\/p>\n

Many of our clients in Mexico are audited each and every year by the SAT (known as Hacienda). This agency is very happy to deny any and all expenses of a business that are not documented or are paid to a tax haven<\/a> country. If you\u2019re a gringo or European, expect the Mexican SAT to be even more hostile. <\/span><\/p>\n

For example, one of our clients is a large real estate developer in Mexico. They buy all kinds of products from around the world. <\/span><\/p>\n

They\u2019re unable to buy from Panama because payments to Panamanian corporations are not being allowed as deductions by their auditor. This forces them to buy from the United States at a higher cost. All expenses paid to high tax countries are allowed while payments to low tax countries are denied. <\/span><\/p>\n

Expert Tip<\/strong>:<\/span> If you have operations in Panama and Mexico, income should go into Panama and <\/span>Mexico should bill the Panama corporation for services rendered<\/span>. If income goes into Mexico, the SAT can deny the corresponding deduction when you make a transfer to Panama. If income goes to Panama, Mexico has nothing to say about the inbound transfer.
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Handpicked Related Content: Offshore Tax Planning – The Need Of The Hour<\/strong><\/em><\/a><\/p>\n

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Taxes On Expats
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Keep in mind that <\/span>this article is intended for expats living in Mexico<\/a><\/span>, not Mexican nationals. The laws for citizens are different than for foreigners. <\/span><\/p>\n

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Do You Have To Pay Taxes?<\/strong><\/h3>\n

Mexico taxes expat residents on their worldwide income. In most cases, you\u2019re a resident for tax purposes if Mexico is your primary home (your home base) and you spend more than 183 days in the country. <\/span><\/p>\n

It\u2019s also possible to be classified as a resident if you spend less than 183 days a year in Mexico. If SAT believes Mexico is your \u201ccenter of vital interests\u201d, they will classify you as a resident for tax purposes. <\/span><\/p>\n

Mexico might be your center of vital interests if:<\/span><\/p>\n