ORIGNAL ARTICLE PUBLISHED ON YUCALANDIA….. For people who do not track multiple expat forums from around Mexico, there are some real-world updates that are worth noting regarding both: 1. taxes on Mexican-sourced income, and, 2. “tourist” visas.
Since their 2012 rule changes, INM has been gradually cracking down on foreigners’ abuses of “tourist” 180 day Visitante visas. INM’s general policy is that if we are frequently living in Mexico, even part-time, and that if we are working in Mexico (especially if we are renting out our Mexican property for income), then we really must
1. Get a Residency Visa … either a Residente Temporal or Residente Permanente Visa
See ~ Current Rules and Procedures for Immigration, Visiting, and Staying in Mexico
2. If we have Mexican sourced income, we must register with SAT/Hacienda by getting an RFC number
3. We must report that income from Mexico & pay taxes on it.
A recent first-hand report from a popular expat forum described some dramatic new shifts in enforcement of INM immigration & SAT tax regulations:
“A couple, which has been “coming and going on 180 day tourist permits (FMMs)”: technically not a “tourist permit”, but permission to be in Mexico, but not to work in Mexico, for a short period of up to 180 days] for several years” got off the plane recently, “they were then asked to step into the interrogation room and to hand over their phone and laptop, along with the password for their email.”
“They hold an on-line job from outside of Mexico. They were questioned about where they live, how long and what was their source of income. The agent then discovered an email on the computer that was an exchange regarding a VBRO email. It was a rental confirmation for a house that they manage for a Canadian friend. The money went into a Canadian account but as far as he was concerned they had income in Mexico.”
“The lecture they got included three main points. They had been residing in Mexico on FMMs intended for Tourists. They would need a Resident Visa to stay in Mexico. They were not permitted to work in Mexico. ´Managing´ Mexican property is a lucrative activity. Lastly they would be responsible for paying tax on the rental income. [Although given a 30-day tourist permit, if they wished to return, the immigration officer said they would need “to visit a Mexican Consulate and apply for residency.”
This report describes the increase in several trends of the Mexican Government no longer tolerating foreigners breaking Mexican laws.
1. As Mexico’s INM, SAT / Hacienda / Aduana agencies gradually get all their local office computers connected to national databases, individual government agents (including clerks) can now pull up our personal records of past entrances & exits from Mexico and our past import/export & income generating activities, including violations of Mexican law.
2. The report (and many other similar recent internet reports by expats & ‘tourists’) pretty clearly shows that some INM airport offices now are more closely scrutinizing foreigners trying to get 180 Day “tourist” Visitante visas when flying-into Mexico.
3. INM no longer presumes that foreigners are somehow entitled to automatically stay up to 6 months on a “tourist” Visitante visa simply because they exited & then returned to Mexico.
4. We can no longer assume that INM & SAT/Hacienda will not track down income foreigners get from lucrative activities in Mexico. This includes operating rentals or even managing rentals, pet sitting, house sitting, etc.
5. People who intend to earn Mexican sourced income need to get visas that allow working in Mexico: Visitante con Permiso de Trabajo … Residente Temporal con Permiso de Trabajo … and Residente Permanente visas. These visas must be applied for outside Mexico at your local Mexican Consulate … and yes, some Consulates (like Laredo, San Antonio, Chicago, Portland & Phoenix) are far more friendly~lenient in granting these visas than the Mexican Consulates in California, Houston, Boston, et al.
6. Foreigners who get visas that allow them to work must also register their work with SAT / Hacienda, reporting income using their RFCs. Note that the RFC’s generated by Mexican banks are generally not valid for use for reporting & paying taxes on Mexican sourced income.
… and …
Keep doing your best to color inside the lines,
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© Steven M. Fry