March 17, 2013
When a US citizen one considers moving to Mexico, is there a rational approach to figuring out how to minimize our tax burdens? Can we possibly structure (adjust or control) how & where we work and where we are paid, to legally minimize the taxes we pay to the two countries? . . . (yes)
Consider how apparently simple rules or principles may not actually work in practice as they appear on paper. For example, Hacienda has a general policy that Mexican resident’s worldwide income must be reported by expats whose principal place of activity is Mexico. Pause. Just what does that “principal place of activity” really mean?
Then, consider how does our “principle place of activity” affects Americans moving to Mexico. (For reference: “Principal place of activity” is US terminology – aka “center of vital interests” in the Mexican ISR tax code. ) One practical but unexpected result: While doing past research on tax obligations, Hacienda and INM supervisors have personally explained: If an American residing full time in Mexico works online , works for a Canadian internet company (doing no work for a Mexican employer), and they receive their pay outside of Mexico, then no taxes are owed to Mexico. In this case, taxes are owed in the USA where the income is paid, even though the expat is a full time Mexican resident working for a Canadian company. …continue reading here…
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Full article can be read at:Comparing Tax Rates and Tax Policies for US Earned Income and Mexican Earned Income
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Feel free to copy while giving proper attribution: YucaLandia/Surviving Yucatan.
© Steven M. Fry
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