No Factura? No deductions? No RFC?

by Linda Jones Neil ABR®, CIPS, SRES, RSPS, (US)

FOR COMPLIANCE WITH U.S., MEXICAN AND CANADIAN REPORTING AND 
TAX FILING OBLIGATIONS

PAYMENT OF TAXES, NO DEDUCTIONS, NO RFC:
According to a resolution issued on February 15, 2010 by SAT, the fiscal arm of the Mexican government, foreigners renting properties can pay taxes with no RFC and no-resident status providing they do so through a Mexican company or individual.
Under the terms of this resolution, gross income is subject to a 25% Income Tax (ISR) with no deductions.   The declaration must be filed within two weeks of receipt of the income.   
Since it is a payment of tax, not a retention, no annual filing is due.  IVA tax (16%) must be collected from the tenant and must be paid by the company paying the foreigner’s tax and filing the declaration.  
The foreigner does however receive proof of payment of taxes for use in tax declarations in
his/her native country.

Example:   1,000.00 USD gross income   
                    250.00 USD.  25% ISR tax
                     ______________________
                   750.00 USD   after income tax

The Settlement Company® is able to assist you in paying taxes on your rental income. In order to do so, we must receive the following:
1.    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.  It can also be obtained through a Mexican Notary Public if you are in Mexico.   We will prepare the instructions for the Notary to prepare this document.

2.     Tax Payment 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.

3.    An original of your latest property tax receipt, including property tax number.
4.     A copy of the deed to your property.
5.     A copy of your passport.
6.     The information sheet and authorization, attached.

CONSIDERATIONS:

Payment of taxes on rental income under this program is in strict compliance with Mexican law and will provide you with legitimate receipts for filings in your native country, to avoid double taxation.
No RFC, nor special immigration status is required to comply with Mexican laws under thisogram;
Properties owned in Limited Liability Companies (LLC) and other foreign entities are eligible for the program;

GENERAL:

    Upon receipt of your information, your initial set up fee and payment for first quarter, 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 start with the process, we will prepare the declaration of income for  federal taxes, 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.

FEES:   AN OVERVIEW
THE FOLLOWING SERVICES ARE INCLUDED IN THE QUARTERLY PAYMENT:

PREPARE quarterly declarations and file taxes for the following:
    ISR     Income Tax Retention
    IVA     Added Value Tax








Initial Set Up fee:   $ 250.00 USD plus IVA 16% = 290.00 USD




Copyright January 2006, Consultores Phoenix, S.C., reproduction prohibited without permission.
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Co-Author Linda Neil is the founder of The Settlement Company®.  It is the first escrow company in Mexico, and is dedicated to processing the trusts and title transfers of Mexican real estate for foreign buyers and sellers for properties located ANYWHERE in Mexico. Ms. Neil is also licensed as a Real Estate Broker in California, is an Accredited Buyer Representative through NAR, and has over thirty- five years of hands-on experience in all aspects of Mexican real estate.  She holds membership in AMPI, NAR and FIABCI and PROFECO Certificate 00063/96. E-Mail; linda.neil@settlement-co.com, website: Web Site: http://www.settlement-co.com.