the costs to invest in mexico

by Daniel Ruiz de la Peña Sandoval, Attorney at Law

Before making the decision to invest in Mexico, it is very important to review the suitable way to acquire a property or make an investment, as well as consider the cost of the procedure that would be needed to formalize the investment.

TRUST (FIDEICOMISO)
In order to acquire real estate in the Restricted Area (zone of 50 kilometers from the coastline or 100 kilometers from the international border), a foreign corporation or individual has to formalize the purchase through a Fideicomiso, which in Mexico it is always managed by a bank.   

SECRETARIAT OF FOREIGN AFFAIRS (Secretaría de Relaciones Exteriores – SRE) payment 
In accordance with Article 26, Section V, of the Mexican Federal Fees Law, the costs of creating and managing the Fideicomiso are the following:

1.- $13,911.0 pesos (773 dollars) to create the Fideicomiso.

2.- $6,258 pesos (350 dollars ) to modify the Fideicomiso.

3.- $6,258 pesos (350 dollars ) for not submitting on time the renewal of the Fideicomiso.

4.- $460 pesos (25 dollars) for another procedure different from the above.                                                                                     
You can double check this information in the a law aforementioned Mexican law, or in this web page http://sre.gob.mx/costos-tiempos.

BANK FEES  (Dependant on the Particular Bank used*)
In order to formalize the Trust, a payment to the bank of approximately 600 dollars is required, and 600 dollars for the first year of using the Trust. In the following years, it will be necessary to pay the bank an annual fee of about 600 dollars (these amounts could change from bank to bank, and they could increase if the property has a big area).

MEXICAN COMMERCIAL CORPORATION

The foreign individual or corporation can obtain real estate through a Mexican corporation that has a minimum of two stockholders.

The Notary and registration fees needed to create this type of corporation are approximately of 1,500 dollars, which would be used to formalize the incorporation of the company. These costs are high since, before 2016, all the corporations are required to be formed by a Notary Public or Corredor Público.  (Prices are dependant on the Notario used*)

It is important to mention that the corporation will need to send monthly notices to the SAT (Mexican IRS) about the tax situation, and submit an annual tax return. In most cases, the corporation needs to hire an accountant to submit these monthly notices. If the company has no operations, it can apply for the suspension of such notices.

SAS (One stockholder corporation) 

The SAS was created in 2016. This type of corporation is a good option for acquiring real estate in Mexico without a partner or a trust, however, the SAS always needs to have a business or commercial purpose.

There are no registration payments since the SAS does not formalize before the Notary or Corredor Público. The SAS is created through the internet with an electronic signature given to the legal representative-stockholder by the SAT. 

It is of the utmost importance to hire a lawyer to review the best way to invest in Mexico, and assess all issues that could appear during the formalization of the investment. 

All of the costs mentioned above just include the formalization of the entity that will be used by a foreign individual or corporation in order to acquire property in Mexico, but these costs do not consider the formalization of the deed of the property.

FEDERAL TAX

As Benjamin Franklin once said: “In this world nothing can be said as certain except death and taxes”, therefore, it is very important to review such investment with a lawyer and an accountant, or with a Mexican Tax Lawyer.






 

As an example, if the foreign entity is planning to buy land with a corporation, it is essential to formalize the investment as capital stock or draft and sign the loan agreement, so the SAT does not consider all the money received from the sale of the property as taxable income.  

AMPARO vs COUNTY ACQUISITION TAX

The County Acquisition Tax in most jurisdictions is taxable for 2% of the value of the property, but there is a possibility to obtain the refund of such investment submitting an Amparo (constitutional protection) against such tax

*Editor’s notes4) 3-09-62-09 Office + 52  (664) 6840287, daniel@ruizdelapena.com