Hello all, First the typcial stuff. My husband and I are considering moving to Mexico in 2010. I am researching and learning before we commit to anything. I have a question about paying taxes in Mexico. I am a US Citizen who is an independant contractor for a company based in the UK. I bought a book called Living Abroad in Mexico by Ken Luboff and in it he says, "You can, on the other hand, live in Mexico and work for a company not doing business in Mexico and do so without Mexican governmental approval and without having to pay any income taxes to Mexico." This doesn't seem to be right to me. How would I get to stay in Mexico on an FM3 (or an FM2? since I'm technically self employed?) without having to pay taxes to the Mexican government? And without the Mexican governmental approval? That doesn't exactly seem like a legal road to travel and in considering this move, I don't want to do the, "move down, get a tourist visa and just leave every 6 months for a few days." If I owe taxes in Mexico, I don't want to not pay them (Well I don't WANT to pay taxes..does anyone really?) but I think you understand what I mean. Thanks for any help.
It depends on the type of work you are doing for that foreign company. If the work is from your computer in your own home, then certainly yes you can "work" from Mexico without permission from Immigration here. In that case you would get an FM3 that is Rentista, meaning that you show income from outside the country (from your foreign employer). As far as Mexico cares you've got income from an outside source, you work over the internet, it's not their business. If your work for that foreign company involves renting office space here, buying property, employing people, being very public about your work...well, that won't work. You can't do all that without having the company be a legit legal entity in Mexico. I recommend that you talk further with Mauricio Mendoza, who is an immigration lawyer here (who many on this board have employed). He knows this stuff better than I do.
visa Meg27599, To further add to your confusion, I'll tell you my situation. I am an American living in Cancun. I'm self-employed (with proper approval from immigration) and my company is based in the US (only because I don't want to jump through all the hoops to technically say it's a Mexican company). I have an FM3 (NOT rentista). Since I don't have Mexican clients, I've not had to pay any taxes here in Mexico. I have an account at Hacienda (Mexico's version of IRS), but my accountant simply files a declaration every month saying I collected no money from Mexican clients. If I have Mexican clients, I will have to pay taxes, of course. So, you CAN work legally in the country and still (legally) not pay taxes, I guess. It just depends on your situation. Unfortunately, I still have to pay taxes in the US. Blah.
The FM3 has to be renewed annually. And it is no simpler for the renewals than for the original. The Rentista version is more common for retirees but as Rivergirl says, there are exceptions that more or less would apply to you. You pretty much have to prove that you can live here without working. To do that when you apply for the original or renewal FM3, you provide original or internet copies of the most three recent bank statements and they have to be translated into Spanish. But the lawyer takes care of all that. I think you need to show about $20000 USD, prorated, going into your account. My first go around, I gave them to my attorney toward the end of the month. She did not get the application in during that month. I got rejected (happens to me all the time though) because I was then missing the most current available statement. Just a simple printing out of the new one but another trip to Migracion for the runner. When you apply you turn in your FMT, the white and blue immigration doc you fill out on the plane and they keep that. If you have to leave the country before you get the FM3, you have to get this other form that costs about $50 US. I have read that Mauricio, and everyone seems very happy with him, gets it turned around in less than a month. I know this is a bit off point but it may be helpful.
Thanks so much for all of your answers and help! I haven't rsearched the FM3/2 enough yet to realize there were different categories of them. The work I do definately does NOT involve Mexico in any way, and I would not need to rent office space, employee people, buy property, etc as it's something I do by sitting on my arse in my living room using my laptop each day. As we are not looking to make this move, as I said, until 2010, I will keep updated on the rentista FM3. *Something to cross off the list and something else to add to the list.
When was this TJ? Three years ago print outs were acceptable but two years ago I was told they were not acceptable and had to courier originals across at extra expense. Last year I just made sure I had the originals in the first place. If print outs are acceptable again that would be good for me.
Re: visa That's interesting as I (well, Jannet's company) has no Mexican clients but still have to pay tax. I guess it's because even though the clients are US, Canadian etc they are going via a Mexican corporation (e.g. Best Day etc) to which we have to provide a factura and it is the corporation that actually pays us. That's one of the Great things about Britain. You only pay tax if you are a resident.
In the US there are some breaks for people living outside the country. I forget what it is but you can earn up to a certain amt and not pay income taxes on it. You still have to pay social security taxes though, so you still have a tax burden but it's lower than it would be if you earned the same were a US resident. I can afford to be vague and not know what I'm talking about because I have the best accountant in the world back in Colorado. The guy is a genius.
visa Steve, My clients are mainly from USA or Canada. They pay me by PayPal and it goes straight to my US bank. No money ever makes it to Mexico...until I go to the atm, that is. I suppose that is why I don't have to pay taxes here. I don't have to deal with facturas unless I have Mexican clients.
Steve, I renewed in Octtober and just printed out copies of my statements from the internet. I did print them in color though so maybe they fooled someone.
