U.S.-Mexico Dual Taxation: Residency Rules, Filing Requirements, Planning Opportunities

Tax Treaty Provisions, Center of Vital Interest Standards, Fideicomisos and Structures for Owning Land in Restricted Zones

Note: CLE credit is not offered on this program

A live 110-minute CPE webinar with interactive Q&A


Thursday, July 18, 2019 (in 3 days)

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

or call 1-800-926-7926

This webinar will provide tax advisers with a thorough and practical guide to the tax reporting requirements and planning opportunities for U.S. taxpayers with earnings or assets in Mexico, as well as Mexican citizens with U.S. tax presence and reporting obligations. The panel will discuss U.S. tax law and treaty provisions designed to avoid or mitigate dual taxation and will focus on the Mexican tax and other consequences for U.S. taxpayers who own or plan to invest in Mexico-situs real estate and other assets.

Description

The proximity between the U.S. and Mexico have resulted in significant economic migration between the two countries. Many Mexican nationals have well-established tax presence in the United States, and increasingly U.S. citizens have property interests in Mexico. Tax advisers serving clients with ties in both countries need to understand the critical differences between the two countries' tax regimes to avoid dual taxation on income and gains.

The U.S. and Canada have a tax treaty system that helps define proper tax payment in dual taxation scenarios. Mexican rules for tax residence tie into whether the taxpayer maintains a "center of vital interest" within Mexico. Mexico imposes global income tax on all individuals with Mexican tax residence and treats unearned income such as dividends and capital gains differently than the United States.

Mexican law also imposes restrictions on direct ownership of real property by non-Mexicans in specified locations, known as "restricted zones," requiring foreign taxpayers to structure purchases through either Mexican corporations or bank trusts (fideicomisos). Additionally, in many cases, transfer of Mexico-situs property to non-Mexican taxpayers is a taxable transaction requiring Mexican tax withholding.

Looming over Mexico's tax treatment of American taxpayers with cross-border activities is the extensive U.S. income and information reporting requirements. Mexico is a participant in global bank and asset disclosure programs, and U.S. taxpayers with presence in Mexico must coordinate their U.S. disclosures with required Mexican tax filings.

Listen as our expert panel provides practical guidance on navigating U.S.-Mexico cross-border tax planning and reporting issues.

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Outline

  1. Basics of Mexico income tax
    1. Mexico has global taxation of income from deemed Mexican tax residents
    2. Tax rates and treatment of earned income
    3. Dividend taxation
    4. Tax on capital gains
    5. Tax on gratuitous transfers between non-linear ascendants/descendants
  2. Mexican residence and sourcing rules and center of vital interest standards
  3. Ownership of Mexican real estate by non-Mexican citizens
    1. Restricted areas
    2. Fideicomisos: Mexican bank real estate trusts
    3. Creating a Mexican corporation to hold real property sitused in restricted areas
  4. Tax treaty provisions
  5. Coordinating Mexican tax compliance with U.S. income and information filings
  6. Mexican estate and trust transfers
  7. Filing and reporting requirements; deadlines

Benefits

The panel will review these and other relevant topics:

  • What are the standards for determining a taxpayer's "center of vital interest" for establishing tax residency?
  • Differences in U.S. and Mexican treatment of dividends, capital gains and other unearned income
  • What considerations impact U.S. taxpayers wishing to hold real estate in one of Mexico's "restricted zones"?
  • Treatment of sale, gift or inheritance of Mexican-situs property
  • Key risks and challenges of passive/unearned income in U.S.-Mexico cross-border situations

Faculty

David A. Matos, Jr.
David A. Matos, Jr.

Founder and President
The Matos Group

Mr. Matos is a seasoned government relations professional with thirty years of experience in government and community...  |  Read More

McCormick, Patrick
Patrick J. McCormick, J.D., LL.M.

Principal
Drucker & Scaccetti

Mr. McCormick specializes in the areas of international taxation, tax compliance, and offshore reporting...  |  Read More

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