Exploring Residency, Investment, and Business Opportunities in Mexico

Join me and Mauricio Peña, a lawyer from Outbound Mexico, in this informative video where we delve into the intricacies of living, investing, and doing business in Mexico. Whether you’re considering temporary residency, seeking investment opportunities, or planning to establish a business, this discussion covers essential topics. We examine various types of visas, including work and investor’s visas, share insights into investing in Mexican assets and real estate, and provide guidance on opening businesses in Mexico. Learn about the nuances of taxation, from global income to local and state taxes. Join us to gain a comprehensive understanding of Mexico’s landscape for expatriates, investors, and entrepreneurs. 

TIMESTAMPS

0:00 Introduction
3:18 Residency and Investment Opportunities in Mexico
22:20: How to Open a Business or Launch a new Company (for foreigner entrepreneurs and freelancers); General Overview
29:15 Should I Pay Taxes in Mexico?
41:42 State-Specific Taxes and Regulations in Mexico

Emily: Hello, hello, everyone. It’s me, Emily Bron owner of international lifestyle consulting. Currently, I’m speaking with you from my native Toronto home, and today we have another exciting topic of which actually will help us to answer the main question, how to find the best relocation place abroad.

And today, again, we are speaking about Mexico and just a little bit about logistic. I will introduce to you my today’s guest immigration lawyer from Mexico City, Mauricio Pena. How are you? 

Mauricio: Nice to see you too. I’m great. Thank you. And you? 

Emily: I’m okay. Thank you. So last week we were speaking with your partner Miguel about like general residency and visa immigration perspective. And I believe some people might have question regarding last week topic. But today, we’re I decided to put light a little bit on, on the different topic because I know that your agency actually outbound Mexico it’s a boutique legal company of which dealing with different kind of a business.

Okay, better. You will tell a little bit about outbound Mexico in different business directions. You are developing now. 

Mauricio: Yeah, thanks. Well, outbound Mexico started around August of last year. It was designed as a boutique law and consulting firm designed For people and companies that want to relocate into Mexico you know, it started as a small niche project and we noticed a huge trend, a huge upward strand of remote work and of other trends in the market right now that it’s, impulsing a lot of people that want to move from countries that are considered more developed into parts of the global South and so outbound was really conceived as a, as a, as a, as a firm that was specifically designed to attend to the needs of our clients that come from those countries and not only have envisioned, you know, the typical retirement or just a couple of weeks in here in Mexico, but really to you know, start a new life here.

And a lot of them want to buy property. A lot of them want to open a business. And so you, you, you do need lawyers and accountants for that. And so we do offer these types of services to our clients. 

Emily: So it’s, it’s really direct me to ask my first question, which I wanted to clarify for myself as a actually a temporary resident of Mexico, as you know, and for me, others who Who might be interested or looking for information regarding it.

So residency and investment opportunities and like in general, I know it’s a big question and yes. And I know that having some investment in particular investment types might help some people actually to get residency. It’s kind of one part of the question and actually investment opportunities in Mexico.

What people need to know, please. 

Mauricio: Well, first of all, they need to know three basic things. The first of all, is it configuration of the Mexican? Immigration system as a whole. So in countries such as the US and Canada, you’ve got specific types of visas that have their own specific regulation and allow you to do a specific set of things.

In Mexico, you only have this two very broad categories, which are the. either the permanent or the temporary residency. Now out of these two can come a lot of types of visas, which kind of are the most specific part of what you, what you’re trying to do. And depending on what type of visa do you have, you can acquire a residency in an easier way.

Depending on what you’re trying to do. For example, there is the work visa, which grants you a temporary residency and the work visa requires, for example, an employer to hire you from Mexico before you come here. The second example, which is the one you mentioned is, of course, the investor’s visa.

Now, this is, this is a very broad option. If you have the equivalent of 200,000 US dollars. I think it’s around 204,000 US dollars. But with that amount of money, what you can do is invest in Mexican assets. So there are, of course, a variety of asset classes in Mexico. Now, the most common one is, of course, real estate, because when the visa was when this specific type of visa was thought of back in 2011, 2012, it was conceived as a way of getting retirees to buy homes in Mexico and so grow the real estate market here. So it was giving like an easier fast forward process. However, it was expanded through our reform in 2014 to include other types of investment opportunities that you can have in Mexico. So, so for example, if you buy Mexican stocks.

If you buy maybe other types of assets financial assets, maybe you deposit or you, you give off some sort of financial loan to a bank in the form of a vare that also counts as fi financial investment. So any type of investment that you do here, Mexico, which is acquiring asset classes can be, can be considered for an investor’s visa.

Now this 200, 000 can be spread out. A lot of questions we get from clients is do I have to put 200, 000 in a single asset class? And the answer is no. You can put 150, 000 And for example, a home and the other 50, 000, it may be stocks in the Mexican stock exchange. And, and so all you have to do is prove to the authorities in this case, the consular authorities, the either in the embassy or, or in a Mexican consulate that you have these investments in, in, in, in your books, that the money is actually in a Mexican financial institution.

Or an equivalent and or that the assets that you invested in come from your money and the assets are yours. So usually you have to bring the, the anything that can prove the property rights, right? So, so you can prove all these in investments, but as long as these 200, 000 are invested in Mexico they, they would work.

Now, where to invest it? Well, that’s, that’s up to the clients. There is a variety of options depending on the type of region, the type of prices, the type of asset classes that you want. If you’re a more you know, savvy investor and maybe you want to buy a business, well, you might be looking somewhere.

In a city such as Mexico City or Guadalajara or Monterrey, which have this huge. Populations that, you know, increase the chances that your business will, will do well but this depends a lot. For example, if you have a type of business that is more catered to tourists, more catered to maybe travelers that would only stay a few weeks then maybe you would like to consider to move to, to other areas, such as a coastline or more Tourist attracted places.

And of course, if you’re looking into real estate, it everything depends on the location and the purpose of that real estate. For example, if you want to buy commercial real estate, I think a great option right right now would be. Which is growing extensively, you know, and this is not a bias because it’s my hometown.

It’s actually a great option to do that. 

Emily: And by the way, we have a picture of Curator behind us. It’s a place that I personally like and actually where we found each other. Yes. Yes. I love to work with Mauricio. Yes. 

Mauricio: Yeah. And, and, and well, of course, if you, if you have. Maybe a more residential type of catering, you could go to pretty much any city in Mexico.

Of course, the most prime residential real estate market for expats in Mexico, I think, would be either Mexico City, San Miguel de Allende, and perhaps anywhere of the tourist destinations in the Pacific coast, such as Puerto Puerto Vallarta Puerto Vallarta, Nayarit, Nayarit San Miguel de Allende. 

Emily: What about Riviera Maya? I’m sorry, you forgot about it?

Mauricio: Yeah, I think Riviera Maya, I didn’t mention it because it’s so, it’s, it’s it’s a mature market. It’s not up and coming. It’s been around for many years. Prices tend to be higher. Access to services is better. But of course, you can burn up through those you can burn up through those 200,000 very easily in the Riviera Maya. So if you’re looking to diversify, maybe other.

The destinations where prices are a bit lower still can be a better option for you. 

Emily: Interesting. And kind of side question speaking about the amount, if person invested, say five years ago, and today we know about inflation. So how is it value is calculated based on initial investment or today market value for the real estate, being it personal or commercial?

Mauricio: Yeah, it’s based on the face value of the purchase. It’s not based on the current value. Right? So, you know, what we advise our clients is. If you want to get the residency, don’t buy their property and wait four or five years for that property to go up in price and then go to the embassy and say, this is worth this.

It’s not, it’s not how things you usually go because the bank, I’m sorry, the, the embassy will, will consider the face value of what you bought initially. Yes. 

Emily: But it cannot be kind of taken in the total. Like from my experience, like property price plus your saving as a person 

Mauricio: Oh yes if the money is in a Mexican bank account that, that can serve, right?

The investor’s visa, I think we’re still talking about the investor’s visa, the specific case in the, investor’s visa, it’s no use that the money Is in a US or Canadian bank account or in a trust in those country that owns property here. You want to bring that money into the Mexican financial system or into the Mexican economy in any sort of way.

You know, so. This is why it’s important to prove that you actually invested, that you actually bought the house, that you actually bought the stock. 

Emily: I’m sorry, how can you can prove it? To show your FIDEI commission? 

Mauricio: yes, yes. Or deed? Yes, and prove that you own it, that you prove that you bought it, that you prove that you bought it for a certain price.

And a lot of people get anxious about exchange rates. Right. So for example, if the exchange rate I bought, it was a different one from the exchanger that is today, will the embassy or consulate have a problem with that? The answer is no. If the exchange rate when you bought this 200,000 of assets was 18 pesos, for example, for 1 that the, the embassy will, will respect that exchange rate at the time.

So I think that that that is a concern that many people have what value can I get for my U. S. dollars or my. Canadian dollars. So be assured that whatever the exchange rate is as of the moment that you invested in Mexico, that exchange rate will be the one that will be used for your application process.

Emily: Oh, practical question I have now. So what you would suggest for people who considering this option to buy property and after them to apply to residency? Oh, and you can help with both direction. Yes, yes. 

Mauricio: Yeah, of course. We’ve had clients that like that option. You know, a lot of them are retirees that have their savings and you know, they don’t like the cold anymore in Canada and the States and so they say, well, we want to buy a property in Mexico.

So they come here, they contact us, we help them with the entire process of land finding. So they give us their objectives. They give us their, their price range. They give us what kind of amenities and what kind of community would they like to live in. Anything from food accessibility to weather to medical services.

So we, we, we look up for properties based on those catering options that they want us to. Look for we find something we find something that’s in a range of their price and our, our job is to present them with options from there. We take it in the more and the more legal side of things, which is, I think, 1 of the advantages that outbound has that it really is a complete process from not just.

Having a real estate agent and then having a lawyer and then having an accountant and then having it. We do everything in 1 in 1 stop shop. And so after that, after that finding process happens, we do the legal side of things with a patio. The property is acquired. We go with the property papers of the, Escritura Pública as we say in Spanish. And from there we scan it, we, we send it through the embassy or consulate that you are located nearby. We set an appointment, you go, you get your investors’ visa. And then you come here to Mexico. We do the can here at the Secretaria de Relaciones Exteriores, at the Instituto Nacional de Migracion, the INM.

And so they give you your residency card and you’re good to go. That’s pretty much the whole process. 

Emily: And this way, depending on what amount was invested, people can get temporary residence. Or permanent residency card, correct? 

Mauricio: Yes usually the more you invest means that the more availability of resources you already have.

So for a permanent residency, you do have to prove that you need to have a certain amount in the bank for the past 12 months and an income above a certain amount. I don’t like to give specific numbers here because of the simple reason that it changes from consulate to consulate and from embassy to embassy.

And if I give I know your clients and my clients love to have certainty, but if you give them a specific number, chances are that it won’t be right. Because it constantly changes and it’s a very dynamic thing, 

Emily: what I’m telling my customers and sharing with them link of the local embassy consulate depending on where they’re located.

Mauricio: Yeah, exactly. So, if you do have, if you’re in the higher spectrum of income, now, this is not a lot. I mean, we’re talking about maybe $2,000 more of monthly required income for the past 6 to 12 months of stable income for the permanent one, then off the temporary one, right?

So, I think we’re talking about in the average, you would say that for a permanent one, you need something like $100,000 saved up in the bank for the past 12 months. In the US, it’s much lower, something more than. 70,000 but in Europe, it tends to be higher. And yeah, yeah. And some European countries .

And you also need something like $6,000 a month, anything between three and $6,000 a month. of income for you to get the permanent one. So this is, again, it’s a fluid situation. I understand that in the US the requirements are much lower, but if you’re in another country or in your country in Latin America, the things might change.

For example, in a lot of embassies and consulates, you cannot apply for a permanent residency without being a physical resident of that country. That is a case for Colombia. For example, if you’re not a legal resident of Colombia, you cannot go to the Mexican embassy or consulate and apply from a residency from there.

Also, what happens a lot of the times is that if you want to apply for a permanent residency, it’s not always available for people that are not retired, right? Because in the law, it was conceived as a retirement type of thing but for younger people who do have the income requirements, but they don’t simply have the age.

Maybe they’re very successful and they’re 30 to 40. There is a specific set of countries that will accept applications for Mexican residency without actually having the age required by law, an example of this is Panama, for example the Panamanian, the Mexican embassy in Panama accepts permanent residency requests from anyone.

So, you know, it’s, it’s really about knowing your case, knowing your income, knowing what you want to do and building from there. There’s no predisposed package. This is why consulting is really a core of what we do. 

Emily: I think it’s very important work, and the more I’m listening, the more I understand actually benefits of such kind of holistic and as far as I understand, so clients actually by working with outbound Mexico saving money, even on legal, 

instead 

of paying for like lawyer for real estate lawyer for immigration lawyer, I don’t know what taxation here you in kind of one, a solution in one bundle, dealing with you, people have a lot of savings.

Mauricio: Yeah, I think that’s our added value. I think that’s a reason for, for recent success. I mean, the firm is very young and we are we have still a lot of clients sometimes more than we can keep up with. And I think there’s, yeah, and I think that the reason for that is that very few people in Mexico, if any understand that moving here to Mexico and starting a new life in Mexico and opening a business in Mexico is a, is a whole holistic approach.

As you said, it’s not just about solving 1 thing. It’s about knowing your entire context of anything from your finances to your legal situation in your home country, then planning on a transition. So we always have to most of the time we actually have to look. Upon local laws, maybe call foreign lawyers or experts because a lot of the time, it’s not as easy as people would imagine as to sell everything and move here, there is a transitional period of sometimes even years.

where people, you know, buy things from time to time. Maybe they take a couple of months to select a location. Maybe they have to solve their taxes in their home country to move their tax residency into Mexico. So it’s a, it’s a, it’s a, it’s a complicated process. And so. What we do is that the value offer that we add is we say, well, we’re going to help you from the beginning from the very beginning when you have no idea what you want to do or how you’re going to do it to the very end when, when you have your business here, when you have your home here, when you have everything ready and set up for you to live here.

Emily: So it’s very aligned actually with what I am doing and offering that’s why probably we are working together I know from my personal experience and from experience of others that It’s very kind of stressful. I would say a period of life and i’m trying to make it easy for people to clarify questions along the road because things are changing and it’s good to be connected with such legal team as yourself and outbound.

There’s a second question which is actually connected with first one. In general overview, because I understand it’s very kind of information loaded question. How to open business or launch a new company for foreign entrepreneurs or freelancer who are thinking, considering, you know, their life in Mexico, and they don’t want to be just retirees, but they want to be kind of active members of Mexican society.

Mauricio: Yes, 

this is a, this is a complicated question. The answer they always give is, it depends, right? It, it really depends. But it does apply to this, question. It really depends on what you wanna do on the type of business that you have the size of that business.

And what, what are the tax exemptions, the legal proceedings of opening that type of business and regulation in Mexico. So, I’m going to divide the answer into 3 main categories. The 1st, 1 of that is the type of legal entity that you want to have here. The second of it is the type of compliance that you’re looking, depending on that type of entity.

And the third one would be tax. I think these are the most important things. Now, in Mexico, we have a wide variety of options when it comes to coming here and opening a company. Such as an LLC, for example, the equivalent of an LLC the name for this is Sociedades Mercantiles, right? And you actually have a couple of them.

You have and I’m going to say it in Spanish and I apologize if anyone does not know Spanish quite well, but you basically have six of them, which is the Sociedad de Nombre Colectivo, which is this kind of community owned type of business. We have a Sociedad en Comandita Simple, which no one uses.

Don’t don’t spend your time there. We have the Sociedad de Responsabilidad Limitada (SRL). This is the second or third most common type of entity, and it’s the equivalent of an LLC in Mexico. We have the Sociedad Anónima, which is the most common. It’s an S.A. La sociedad limitada por acciones, which do not bother yourself in that one.

And you’ve got the, Cooperative, right? There’s actually a cooperative society.

Emily: I don’t need real life. Let’s take kind of case study me as example. And when I say me, I mean, solopreneur from Canada, 

Mauricio: Mexico. So it will be now this, this was the whole list. This was the hardest part of the answer.

Everything goes downstream from there. So, so I will use your example. I will use your example, but continue. Yes. Yes. This is the list. I’m not going to give you a class on this. It’s going to be simple. So, I would say that if you are a solo entrepreneur. That you have a small business that you not a large business owner.

Someone who comes here and maybe wants to open a small. Small business, right? The best option for you would actually be to either have a SAS, which is a Sociedad por Acciones Simplificadas, which is the only type of company in Mexico that you can open as an individual. In all other types of company, you

can open it yourself. And the good thing about it is that you can open it online. You don’t have to go through the process of going to a notario or someone that is, you know middleman. You can, you could, you could register this type of entity yourself. And this was designed for small businesses to have legal security and other types of advantages when it comes to having their own business.

Now that’s option one. Option two is that if you’re really a more online type of guy and you have an online business, which is the case for a lot of our clients, they work online, they work abroad, you know, they have clients all over the world and they like to work from their laptops and they have a client base that’s very diverse.

And a lot of the workforce is also abroad. You might want to consider a SAPI, Sociedad Anónima Promotora de Inversión. Those two options are the ones I bring up because they’re designed for the type of clients that you and I encounter either small business owners or savvy entrepreneurs, people that are in tech, people that are working in consulting that are doing remote online work.

So those options I think would be the 

best. 

Emily: But you need to be a resident. You should have a residence before. 

Mauricio: Well, yes and no. You can open an entity in Mexico without being a resident. You can open an entity in Mexico by only having your RFSA. Now, the, the, the, the, the catch in this is that although you might not be.

An immigration resident, so to say, you could be a tax resident. So you need to go to the SAT, to the Mexican IRS, and you need to get your RFSA. And with that, and your e firma, and all of those things that come with the RFSA, and with that, you can start a company. And so that’s it. Now, if, of course.

You feel that, you know, that is a very complicated in terms of having an entity here in Mexico, because then the 2nd, part of my answer would be compliance. And that is not a small thing. You do have to worry about local regulations, labor laws, environmental regulations, et cetera.

And the 3rd, 1 is Taxes, but if you think that’s very complicated, and maybe you will run your business from Mexico, but not necessarily operate within the Mexican economy in a broad way. I think that the best way to do it would be through if you already have an LLC, for example, in the States or in Canada or an entity in Europe, you could actually bring that entity here and work from here.

You don’t have to open a specific Mexican entity to do that. You could, you could use your already existing LLC or your already existing company. In Mexico, all you have to do is actually go to the authorities and let them know that you have that. There’s a special registry that you have to apply to, and you also need your RFSA.

But that option can be changed. Thank you. Easier and cheaper and could take less amount of time. But if you have a big business, if you have something that’s, you know making in the in the in the range of millions of dollars a year, I would suggest that you would open an entity here in Mexico specifically for that business.

Emily: So what about taxes? No, it’s a more interesting. I mean, if you get it in Mexico, I’m just like thinking about your clients are outside of Mexican soil. And actually your company is open outside of Mexico, but you reside for some time, say four, five months in Mexico. Should I pay taxes? Would it be double taxation?

Because I need to pay taxes in my home. 

Mauricio: Oh, is just as complicated. 

You really have to answer four things, you know, so write these down. First of all, where am I, where is my income generated? What is my tax base and who am I paying to? Now, if you answer these four questions, you really have a good notion of what your tax situation is worldwide.

So, for example, if you live in Mexico below 183 days, technically you’re not a tourist. However, I’m sorry, technically you are a tourist and you’re not considered a tax resident. Now, however, if most of your money is made… Through Mexico, not in Mexico, but through Mexico. So for example, you got your workforce here.

Maybe you have a branch office here. Maybe you have most of your clients in Mexico that is income that’s generated from a Mexican source. And that makes you a tax resident in return. So it’s not only about if you live here or not, but whether you run your business from here. And if most of the money that you make is made within Mexico, those things have to be taken into account.

The second is, well, where are, where are you, where is your business at now? This question is easier said than done because there’s a lot of global businesses and a lot of entrepreneurs travel a lot these days, but generally that’s considered the entity in which. The country was created from and when you, where your bank’s accounts are, right?

So most of the case, it’s a US LLC with a bank account in the US. And so we might consider that although the income is generated globally, it is a US entity. So the 3rd thing that you have to answer is who do I pay to, right? Because maybe you live here. Maybe I spend a couple of weeks here, a couple of months even here, and I’m running my business from my laptop, sending a bunch of emails and having a bunch of calls, but, you know, I’m not generating my income here.

Well, if you’re considered a tax resident. Mexico has a global taxation system, meaning that it doesn’t matter where your income is generated. It matters that if you are administering your business from Mexico, you have to pay taxes to Mexico. Now, the good news is that double taxation is very rare in Mexico, because Mexico has signed a lot of treaties.

with a ton of countries from the OECD regarding double taxation and exchange of information, which means that what you have to take into account is, well, if my business in most of its income, it’s, let’s say, comes from Spain or from France, right? And I, and I have, and I live here and I am administering my businesses in Spain.

Well, we have a taxation treaty with Spain that specifically says that if the resident is here, but the income is generated, there exactly half of the of a pre established tax rate is applied. To the country in Mexico and the other half is applied to Spain. So, for example, let’s say that according to your income levels, 20% of your income of that business, you’re going to be paying in taxes, right?

Half of that, according to this treaty, half of that is going to go to Mexico. And half of that is going to go to Spain. In some cases, all of it is going to go to Spain. In some cases, all of it is going to go. You really have to check the treaties. Because there, there, different types of economic activities at different types of income at, are taxated at a different way.

Now, of course, this usually very boring and very hard for a lot of our clients. They want certainty. And so the good thing that we offer is we combine. international taxation consulting with local accounting practices, which means we’re able to generate very precise and very a low tax tax returns in Mexico for international clients that really want to optimize or streamline their tax here in Mexico.

But yeah, I think that the answer in tax is really it depends. However, I will say there’s good news in this and I will end up in this. If you’re running a business that’s making less than 3. 5 million pesos a year, or if you as an individual are making the equivalent of less than 3.5 million pesos a year. In Mexico, you can apply for the new kid on the block, which is this new tax scheme that is called Resico. It’s a new tax regime That’s called Régimen Simplificado de Confianza simplified Tax Regime. Right. And it’s basically one of the lowest tax regimes in the OECD, and it’s here in Mexico, and you can pay up, up to 5%, only 5% of all your income if it’s within that range of 3.5 million pesos.

For most entrepreneurs, for most people, we’re running, you know, a freelance business or an online business. They are going to be within that range. So my, and because you’re, you’re, you are protected with all these tax treaties at an, at an international. level. What you could actually do is bring your business here, start paying taxes in Mexico with Resico, and you’re only going to be paying 5%.

And a lot of people think that’s a great deal because the business taxes in a lot of countries such as Canada, such as in the European Union for small businesses are above 20%. Straight up. So I think it’s a very competitive advantage. I don’t see why people, a lot of our clients think, oh, I’m going to be paying taxes in my home country and I’m going to be paying taxes in Mexico.

No, you should be paying taxes in Mexico. You shouldn’t be. You shouldn’t be scared of the Mexican tax authorities. You should embrace them because the rates that the Mexican law is offering right now. are extremely competitive. And so I think that’s a lot of reason actually why a lot of companies are moving into Mexico.

The tax rates are considerably low if you manage to stay within that threshold of 3. 5 million pesos per year. 

Emily: Thank you very much, Mauricio. I don’t know how others, but I was really enjoying actually information you, you provided. And I believe many people who would later, maybe even listen to you because we will have a recording and the different platforms would appreciate your free advice and telling the truth like I, I had based on the previous information I’ve had opinions that.

Taxes in Mexico are really high, kind of around 20 30%. So now I learn that there is really just lack of my knowledge, and I believe lack of knowledge of many others might stop people of doing kind of correct steps. Yeah. And knowledge is power, and I’m very grateful that you found… The time in your busy schedule, and we know how legal professionals are usually busy, and I know specifically how you are busy trying to, you know, overlook many different projects your company is working on and developing new business connections and direction.

So I really appreciate your time and actually your knowledge you shared with us today. And I, I personally enjoyed because I you know, for some time, I already trying to find information and compare different countries. I mean, in regards to immigration rules, in regards to taxation rules, in regards to lifestyle options, it’s actually directly kind of matter of my company interest, but as a person and with understanding.

People need to consider all these aspects, even retirees, some of retirees would be okay doing some business and actually many people are still active in their retirement years and digital nomads or remote workers who are looking for the better lifestyle, for the better life opportunities to their families.

They and they would like to be active. They need to know how to do it, what to do it and with who to do it. So Mauricio Pena with Outbound Mexico. Thank you very much. 

Mauricio: Thank you, Emily. It’s really nice to have you. 

Emily: By the way, some of the people who just starting to. Think about, relocation. They even not familiar about, you know, this aspect that they need to be considered. It’s part actually of my work and job to bring awareness that it’s a, you need to select place. You need to know. Immigration rules.

You need to be prepared. You need to know at least that you need to think about taxation, taxation in your home country, financial preparation, taxation in your new country. And you need to be connected with professionals who actually will help along the road. Who would answer the question and make your life better and easy.

It’s what I, as a company is about, and it’s what Outbound Mexico is working. Yeah. 

Mauricio: Yeah. And I’m really glad to be working with you. Emily, I think that international lifestyle consulting has added a lot of value in terms of knowing. The client base much better than we do because we, we’re here in the local spectrum.

So, so we know things on the ground, but it’s been a challenge for us throughout these past months to really get to know our clients. From the very get go. Most of our clients actually already started their immigration process. They haven’t started it from zero. By the time we, we get familiarized with their case.

But, but you understand the whole process from the beginning from, from the moment they start even considering. And so our goal here outbound is to actually reach out to those folks because it, it, it makes them, it makes. It makes it easier for everyone. It makes it easier for them. It makes it cheaper for them.

And it makes it easier for us because if we start the process from zero, we can guide them through the most seamless way. Of moving to Mexico without without any hurdles and without having to worry about your taxes or your property or et cetera. So I think that in the future, I would love to be here more. I would love to have a conversation with maybe more consultants, with expats, with people who understand this kind of lifestyle really. And you know, add value in those conversations as well. 

Emily: Thank you very much.

It’s actually on my plan as international lifestyle consulting. And I would continue to invite people from the different walk of life. So I would see. Experts in Mexico, maybe from other countries, they would share their stories, like real life stories, as they say, of real people, other professionals from Mexico, because when we speak about life, actually, specifically a new place, Always important.

Health care. Health insurance. Oh, yes. Thinking about Mexico. My special topic, which very dear to me, medical tourism. And we will have a separate conversation probably with your company representatives as well. So there are so many things to consider. 

Okay, the last question, like taxation or specifics, Mexico is a big country with 32 different states.

When you speaking about taxation, it’s kind of federal tax law or there is some local state you know specifications that would make you know, from taxation perspective or from company settling perspective life better or less. Because, okay, I know there is more industrial states like Nueva Leon Queretaro Puebla, and there is, you know, in other states which are more busy with kind of agricultural business or with tourism.

So what is the difference from kind of taxation? 

Mauricio: Well the good news is that most taxes are at a national level. You’re gonna be paying them to the SAT. A lot of folks would be wondering then, how do states get their money? Well, there’s a federal deal, so to say, in which the, the federal

government collects most of the tax base in Mexico, and then it gets, you know, it’s given out to the states and as a proportion of what they contributed. Right? So that’s that’s I think that 90% of why you’re going to be paying in taxes. You’re going to be paying it. To the SAT. However, there are some state taxes that are tend to be very low that are not based on your income.

They’re actually mostly based around property. So if you know, you own a very large plot of land, a very large home, et cetera, et cetera, et cetera, you might, you might be paying a bit more in property tax. However, the rates are nothing like in the US or Canada. They are considerably lower. Because a lot of the A lot of the of the baseline price of the value of real estate is not measured by its commercial value, but by something that’s called the presyo cadastral which is the price that the government through its own means .

Every 5 to 10 years. So this gives a lot of advantage that if you own a considerably large home in Mexico, you’re going to be paying really a very small fraction of taxes as to the commercial value of that property. And that’s what that’s, I would say that’s most of the local taxes that you have to take into account.

However, there are other ways that, you have to contribute to the local government tax base. One example is the tenencia vehicular so you have to pay for your, the plates of your car each year, depending on the model, the, the price that you paid for the car, et cetera, et cetera, cetera. And it’s a small tax on cars, so to say.

The other. Type of taxes, if you do have a business at the local level that you have to worry about is the is the impuesto So it’s not based. It’s it’s a tax on salaries. It’s not a tax on income per se, but it’s a tax. On the salaries that you’re going to be paying your employees if you’re an employer, the local company will retain maybe two or 3% of your salary of your monthly salary for the local government.

And if you’re an employee, you have to retain, actually, you are you are, forced to pay between 1 and 3% of your employees salaries to the local state government. Now there are other small taxes, small fines that you can get worried about. But that is going into the individual level of the type of activity that, that, that you’re doing.

For example, if you are a local polluter, right? If you have some sort of waste that you need to discharge into a, you know, a river or something like that has its own specific set of taxes and regulations. But for most folks, I would worry about. only those three Property, cars, and the employment tax, sort of say, which is, yeah, between 1 and 3%.

Emily: Yeah, and I would like to outline, it’s a big difference between taxes lately, people paying in United States, Canada, and actually other Western countries. As well. 

Mauricio: Yeah, because in Mexico, you have only one income tax in the States. And then I don’t know if that’s in Canada as well. But in the States, you have a federal income tax and a state income tax.

So they test you double on which is, which is absolutely crazy. In Mexico, you only pay one time for that. 

Emily: Thank you very much for very kind of good news. All information provided, I again thankful for your time, for your effort, and I know how you dedicated to, to work and actually to helping people to get the best solution based on their particular actually unique circumstances.

I was enjoying our conversation. I’m sure people would appreciate it already appreciating it as well, and we will meet again. We will discuss some other topics based on what people need to know, what people need to consider, and what kind of questions I will receive later on from people. Thank you very much.

Mauricio: No, thank you, Emily. Thanks a lot. Have a nice day to you and to your audience as well. 

Mauricio Andrés Peña Barrena

Partner & Co-Founder of Outbound Mexico | Paving the Way for Entrepreneurs & Businesses to Thrive in Mexico

Founding Partner at Outbound Mexico | Leading Expert in Relocation, Tax Management, Job Search Assistance & Investment Advisory for Foreigners in Mexico | Personalized Solutions for Seamless Integration & Financial Growth in the Mexican Landscape.

How to Live and Invest in Mexico: A Practical Guide for Expats

Mexico, with its vibrant culture, breathtaking landscapes, and promising investment opportunities, is drawing the attention of people worldwide. Whether you’re considering a move or investing in Mexico, this simple guide will walk you through residency, investment options, and tax essentials, with insights from Mauricio Peña, a distinguished lawyer from Outbound Mexico. Mauricio has experience in administrative, corporate, environmental, and real estate law consulting and litigation. He has helped many expats relocate to Mexico and achieve their goals.

Residency: How to Get It and Keep It

Mexico has a simple and straightforward immigration system. It has two main types of residency: temporary and permanent. You can get either one depending on your purpose and situation.

Mauricio says that temporary residency is a good option for expats who want to test the waters (usually up to four years) and see if Mexico is the right fit for them. You can get it if you have a job offer from a Mexican employer, or if you have enough money to invest in Mexican assets. For example, if you want to buy a property in Mexico, you can get a temporary residency visa if you invest at least $204,000 USD. This amount is based on the original value of the property, not the current market value. The exchange rate also doesn’t matter; the embassy will use the rate at the time of the purchase.

Permanent residency is for people who want to stay in Mexico indefinitely. You can get it if you have a close family member who is a Mexican citizen or a permanent resident, or if you have lived in Mexico as a temporary resident for four years. You can also get it if you are retired and have a pension or income from outside Mexico.

Investment: How to Find and Make It

Mexico has a lot of investment opportunities for expats. You can invest in different types of assets, such as businesses, commercial real estate, and residential properties. These opportunities vary depending on the location, the price, and the asset type. You need to do your research and find the best option for your goals and budget.

Mauricio says that starting or buying a business in Mexico can be a rewarding and profitable venture, but it also requires careful planning and execution.

If you want to start or buy a business in Mexico, you need to consider the market, the competition, and the regulations. Some of the best places to do business in Mexico are the big cities, like Mexico City, Guadalajara, and Monterrey. These cities have large populations and high demand for goods and services. However, if you want to cater to tourists, you might want to look at the coastal regions, like Puerto Vallarta, Nayarit, and San Miguel de Allende. These cities have a lot of expats and visitors who are looking for entertainment, hospitality, and leisure.

If you want to buy a property in Mexico, you need to consider the location, the condition, and the potential. Some of the best places to buy a property in Mexico are expat-friendly towns, like Puerto Vallarta, Nayarit, and San Miguel de Allende. These towns have a lot of charm, culture, and amenities. They also have a strong real estate market and high rental demand. However, if you want to buy a property in a less crowded and more affordable area, you might want to look at other regions, like Oaxaca, Chiapas, and Yucatan. These regions have a lot of natural beauty, history, and culture. They also have lower prices and less competition.

Taxes: How to Pay and Save Them

Taxes are an important part of living and investing in Mexico. You need to understand how they work and how to pay them. Mexico has a federal tax system, which means that most taxes are paid to the national government. The main taxes that you need to know are:

• Income tax: This is the tax that you pay on your income from any source, whether it’s from Mexico or abroad. The income tax rate ranges from 1.92% to 35%, depending on your income level and deductions. However, if you are a resident of a country that has a tax treaty with Mexico, you can avoid double taxation and pay income tax only in one country.
• Value-added tax (VAT): This is the tax that you pay on the goods and services that you buy in Mexico. The VAT rate is 16% for most items, except for some basic goods and services that are exempt or have a lower rate. The VAT is usually included in the price, so you don’t have to pay extra.
• Property tax: This is the tax that you pay on the property that you own in Mexico. The property tax rate varies by state and municipality, but it’s usually very low, around 0.1% of the property value. The property tax is paid once a year, usually in January or February.
• Vehicle tax: This is the tax that you pay on the vehicle that you own or use in Mexico. The vehicle tax rate also varies by state and municipality, but it’s usually around $50 USD per year. The vehicle tax is paid once a year, usually in January or February.
  
  

Mauricio says that paying taxes in Mexico can be a complex and confusing process, especially for foreigners who are not familiar with the system and the language. You need to keep track of your income, expenses, and assets, and file your tax returns on time. He also says that you need to be aware of the tax benefits and incentives that you can take advantage of, such as deductions, exemptions, credits, and deferrals.

Location: How to Choose and Enjoy It

Mexico is a big and diverse country, with 32 states and hundreds of cities and towns. Each place has its own attractions, advantages, and challenges. When you choose your location, you need to consider your preferences, your lifestyle, and your budget.

Some of the most popular places for expats in Mexico are:

• Puerto Vallarta: A coastal city in the state of Jalisco, known for its beautiful beaches, lively nightlife, and friendly expat community.
• Nayarit: A state on the Pacific coast, known for its natural beauty, surfing spots, and laid-back vibe.
• San Miguel de Allende: A colonial town in the state of Guanajuato, known for its artistic scene, cultural events, and charming architecture.
• Mexico City: The capital and largest city of Mexico, known for its cosmopolitan atmosphere, cultural diversity, and endless entertainment options.
• Guadalajara: The second-largest city of Mexico, located in the state of Jalisco, is known for its rich history, vibrant culture, and modern amenities.
• Monterrey: The third-largest city of Mexico, located in the state of Nuevo Leon, is known for its industrial strength, entrepreneurial spirit, and mountainous scenery.
  
  

These are just some of the many places that you can choose from. You can also explore other regions, like Oaxaca, Chiapas, and Yucatan, which have a lot of culture, history, and nature. Wherever you go, you’ll find something to love and enjoy in Mexico.

Conclusion

Whether you’re seeking a change of scenery, exploring investment opportunities, or starting a new venture in Mexico, understanding residency, investment avenues, and taxes is crucial. This comprehensive guide offers insights into navigating Mexico’s immigration system, capitalizing on investment opportunities, and managing your tax obligations. By staying informed and seeking professional guidance, you can embark on a successful journey in Mexico while enjoying its vibrant culture, natural beauty, and business-friendly environment.