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YucaLandia

Nov 30, 2011, 11:31 AM

Post #1 of 3 (1003 views)

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Tax Liability In Mexico - 2

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The issue of expats' tax liabilities for work performed in Mexico comes up over and over on forums across the web. The situation becomes even more interesting if they live here full-time, doing work for a non-Mexican company, and receive their pay in foreign (non-Mexican) accounts. This ball was kicked-around at length on a separate Mexconnect thread: http://www.mexconnect.com/...;;page=unread#unread

Mazbook & I continued the discussion in PMs, and we realized that there appeared to be a conundrum between: Hacienda's policy that worldwide income must be reported by expats whose principal place of activity is Mexico and INM's policy for (not?) giving visas to expats work online and live in Mexico, who do not work for Mexican employers and recieve their pay outside of Mexico.

Here's one more perspective on the issue: I spoke with an INM supervisor today about these specific issues, and she made a phone call to her manager to check on her understandings. She then said that:
1. INM would issue this person a "No Inmigrante Visitante Otros - No Lucrativa" visa/permit.
2. No taxes are owed to Mexico.
3. The expat should not register with Hacienda.

She then gave me the following written instructions for an INM application for the "No Inmigrante Visitante Otros - No Lucrativa" visa/permit.

Register your INM application online at the "Solicitudes de Tramite" website.
Choose FORMATO MIGRATORIO PARA TRAMITES DE ESTANCIA
Under "QUE DESEA HACER": Choose "Realiza actividades diferentes a las autorizades"
Complete the online application, and bring a copy of the printed final form that shows your Pieza Number, to your INM Office.
Bring passport & copies.
Bring a comprabante & copy proving your address, your original "forma miigratoria vigente", your "comprabante de pago de derechos por recepcion, examen y esudio de las solicitud, si las caracteristica del extranjero es la de turistica ... $491.00" for expats who have just entered Mexico on a tourist visa.
Bring "El pago de derechos corespondiente al otorgamiento de la nueva caracteristica por adquirir debera realizarse al momento de tramitar la expedicion de la forma migratoria. Comprabante de pago de derechos. Actividades No Lucrativas: $1.294.00, con fundamento en el Articulo 8, fraccion II, b) de la LFD"
and: "Las cartas deberan estar bien especificadas que su salario lo recibira en Estados Unidos."

The supervisor said they would gladly issue an "No Inmigrante Visitante Otros - No Lucrativa" "FM3" visa/permit to a foreigner who met these requirements.
steve
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Read-on MacDuff
E-visit at http://yucalandia.wordpress.com/

(This post was edited by YucaLandia on Nov 30, 2011, 11:55 AM)

mazbook1

Nov 30, 2011, 2:43 PM

Post #2 of 3 (961 views)

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Re: [YucaLandia] Tax Liability In Mexico - 2

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I didn't know about the visa status "Otros - No lucrativas", but otherwise it appears that most of what I posted was correct in concept, just not necessarily the details. Actually, it makes sense that since the INM regulations changed and ANY holder of a no inmigrante visa (FM3) is no longer considered an actual "resident" of México, their actividades lucrativas OUTSIDE of México should not be considered taxable by México. In that those persons have now lost their capital gains exemption in México, it would be adding insult to injury to require them to pay tax on income earned outside of México.

It appears that Hacienda is hung by its own petard over reporting worldwide income yet not giving an RFC to any extranjero who doesn't have a visa with the endorsement "actividades lucrativas". Watch the fur fly if they ever catch on and start requiring all expats who have any worldwide income other than non-taxable pensions to start filing income tax returns in México.

(This post was edited by mazbook1 on Nov 30, 2011, 2:52 PM)

Memo

Dec 3, 2011, 2:21 PM

Post #3 of 3 (808 views)

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Re: [mazbook1] Tax Liability In Mexico - 2

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I havent read everything in these threads yet but I did go and talk to a very good Mexican international tax lawyer. He deals with a lot of Germans, big companies like Heiniken, Volkswagen, etc.

He explained to me that there is your social residence which would be determined by INM and your fiscal residence determined by Hacienda. With an FM2 whether it be non inmigrante or inmigrante if you assert fiscal residence is outside Mexico (less than 50% of income earned in Mexico) you are not liable to pay Mexican tax on that foreign income partly because they assume you are paying it in that country. If you had business dealing in a country with low or no tax, that would be ideal.

Whatever money you earned within Mexico would be taxable of course. He also advised me not to obtain citizenship and just stick with inmigrado as the tax entanglements and other responsibilities are less as an immigrant as opposed to a citizen.