Life as a foreign retiree in Mexico can be great. There are many advantages to moving south of the border for retirement. However, one of the common questions I get on this website is about the situation for paying taxes as a foreign retiree in Mexico.
Paying taxes as a foreign retiree in Mexico
The first and most important thing to consider when it comes to paying taxes as a foreign retiree in Mexico is to verify with your tax authorities in your home country. Get to know the details of the present tax policy, especially procedures and requirements related to pension and investment income which you earn in your home country but you receive while you are an overseas resident. Double taxation is one thing to watch out for. Be careful that you do not pay taxes in both your home country where the income is generated as well as in your resident country where you are living as a retiree.
Avoiding double taxation as a foreign retiree in Mexico
Several countries including the USA, Canada, the UK, Ireland, and other European countries now have Double Taxation Agreements with Mexico, which means that paying taxes as a foreign retiree in Mexico should be easier than in the past. These agreements will give you the privilege to choose which country to be taxed and that is only one country between the two. This means you will only be taxed once. Before retiring to Mexico, it is wise to plan for the most efficient tax payment scheme since taxation varies every now and then and individuals also have unique characteristics.
Professional tax advice
Another important thing to do is to contact the local tax authorities in the country where you retire. Information and advice regarding taxation matters should be given free of charge. Fees may incur from advice coming from professional tax planners, advice from a qualified financial expert or from an accountancy firm. Getting advice from a reputable accountant is highly recommended.
Relocating to another country can even give benefits which can maximize your income tax efficiency. Just remember that laws may change every year so it is also necessary to consult professional aid to give the latest information and pertinent news. These tax advisers should not only knowledgeable with Mexico’s tax system, but also understands the tax system of your place of residence and the place of origin of your income.
An accountant’s professional service is a real asset when paying taxes as a foreign retiree in Mexico. These financial experts will help you in filing your tax returns. There are many available accountants in Mexico who would charge you with reasonable fees. If you think you are well-versed with the Spanish language and culture and with its bureaucratic procedures and paperwork, you might skip hiring an accountant, but it is still more beneficial if you ask the help of one. There are also information and advice available online about paying taxes as a foreign retiree in Mexico, but it is more reliable to seek one-on-one professional assistance.
Before you retire in Mexico, it is best to get enough information and plan carefully your tax concerns. It is best to consult an accountant, a qualified financial advisor, or other tax experts for these matters. Your first stop should be Mexico’s Treasury department is known as “Hacienda”: http://www.gob.mx/hacienda.
Accessed on November 1st, 2016.