23/01/2024
TAX SEASON IS UPON US!
SAT, RFC & Taxes for expats in Mexico, a quick guide for you
It is not the end of the world. Nor as bad as it sounds. If you are wondering a bit about how taxes work in Mexico, EXO Consulting - Servicios Migratorios y de Relocalizacion. has a quick article for you to read and share.
“In this world, nothing is certain except death and taxes” said Franklin referring to the US Constitution, and to be honest, the same could be said about Mexico. If you want to live in Mexico you’re going to have to deal with matters of taxes at some point, and with that comes dealing with the SAT and the RFC. Even if you’ve just retired and you’re not planning on working here, or even if your source of income comes from somewhere outside the country, sooner or later, in some way or another, you’re going to have to deal with them.
Before anything else, it should be clear that if you don’t have any sort of fiscal obligation in the country, in no way you’ll need to make any sort of tax return to the Mexican government, however, you’ll still have to arrange and set some things in order with the SAT; as well as getting your RFC, which it really is a must, and not just for paying taxes.
What is the SAT and what does it do?
The SAT stands for Servicio de Administración Tributaria, which could roughly be translated as Service tax administration; you could think of it like the mexican version of the IRS in the United States if that helps. Its job is to collect taxes as well as making sure that everyone fulfills their fiscal obligations. And the way in which they achieve this is through the RFC.
What is the RFC?
The RFC or Federal taxpayer registration (Registro Federal de Contribuyentes) is a registration number, unique to every single person, used to identify those who are taking part in any economic activity, like a job for example, and/or those who must contribute with the public expense.
This type of RFC is known as Persona física (Physical persona), meaning that there is a single human individual we’re dealing with. There is another type called Persona Moral (Legal Entity) which makes reference to a bunch of individuals who have decided to come together as a group with a common end, to form a society or company; however, each individual from that group must have their own RFC in the first place.
The RFC is used to handle everything tax related, although one could say its main goal has to do with the payment of taxes, but that would be an oversimplification.
Do you, as an Expat, need a RFC?(And what happens if you don’t have one):
Well, the short answer is yes but that doesn't necessarily mean that you must pay taxes. Whether or not you should pay taxes to the Mexican government really depends entirely on your situation, but independently from that you do need an RFC. To explain a bit further…
Expats and taxes: If you are a resident and you don’t know if you are going to pay taxes in Mexico, everything will depend on where your income comes from.
The thing is, being a tax resident in Mexico does not exempt you from being subject to tax rules and fiscal obligations somewhere else. When you generate any sort of income from outside Mexico’s jurisdiction, you do not owe any of it to the SAT, but you could still be required to pay taxes there. So if you work remotely, or you’ve retired, or just simply do not receive a salary from Mexico, you have no fiscal obligations with the Mexican government.
However, if you receive any income coming from Mexico, because you got a job here or you decided to start your own business here, you will have to pay taxes, regardless of any fiscal obligation that you could have somewhere else.
Whatever your case may be, we do advise you to seek an expert’s help like a tax consultant to help you figure out your tax affairs.
Why you need a RFC: If you’re gonna pay taxes it's quite obvious why would you need your RFC, but even if you’re not, sorry to break it to you, but you’ll still have to go to all the trouble to get yours. You may be wondering why though, well… it is because it's the law actually. In 2022 the SAT made it mandatory that any resident older than 18 must have their RFC, it doesn’t matter if they are fiscally active or not.
For you to qualify as a tax resident you must be at least 18 years old and you must have either a permanent or temporary residence card; so tourists and visitors are exempt.
So what would happen if you don't get your RFC?: Although mandatory, there really isn’t a sanction for not having one, so do with that what you will. However, if you're planning to get a job, you’re gonna have a hard time finding one, given that, if you happen to find one, it’d be pretty illegal to work and receive a salary or any income without you being able to report it to the SAT and thus pay taxes. So unless you wanna have problems with this institution, we highly advise you to get yours.
Why you want a RFC
Aside from not wanting to get in trouble for tax evasion, it may also be in your interest to know that you will be denied many services if you don’t count with the RFC.
You´re going to have quite a hassle dealing with anything money-related; most Banks won't let you open accounts with them, any credit that you’ll ask for will have a no for an answer, you won't be able to qualify for a loan nor get a credit card, among many other things. Also, if you want to get your house utilities at your name, as water and electricity, an RFC is a must. Plus, you won't be able to buy a new car, or any vehicle for that matter; Nor purchase any real estate/property, and you won't be able to claim any capital gain if you choose to sell it. Among other things.
So as you can see the RFC is really important and useful, so you might want to know how to get yours.
How to get your RFC.
The process can be really annoying for one simple reason, the waiting time. In order to get your RFC you must first make an appointment at one of the SAT offices through their web page. Now, that should be rather simple, the troublesome part is that they usually are so full that you probably won't find any appointment available; instead they will put you at the end of a long waiting list and then will tell you that very shortly they will send you an email with all the details of your appointment once you get one. This can take weeks, and in some cases even months, plus you have to be on the look for the email, for once they send it, you shall confirm the appointment within the next day or so, otherwise you'll lose it and you'll have to go to the end of the line once again. So good luck with that.
The next step would be to go to the SAT Office the day and hour of your appointment. This part of the process should be quicker, taking 2 to 3 hours of your time, more or less. You'll need the following documents at hand:
A printed copy of your CURP (Which you can get online)
Your residency card, temporary or permanent.
Some proof of address (electricity or water bill)
Printed appointment confirmation
The documents and your appointment should be enough to get your RFC, although have in mind that, as happens with practically all government offices, finding someone there that speaks English is pretty rare, so unless you speak fluent Spanish or at least you are able to make yourself understood, take the necessary precautions and have someone with you that can translate everything back and forth.
Now that you have the information about how you’re going to deal with taxes, and the benefits of having your RFC, we encourage you to get ahead on any problem that could come in your relocation. Remember that our team of experts will be glad to help you throughout the whole process of becoming an Expat in Mexico!
SAT, RFC & Taxes for expats in Mexico, a quick guide for you.
“In this world, nothing is certain except death and taxes” said Franklin referring to the US Constitution, and to be honest, the same could be said about Mexico. If you want to live in Mexico you’re going to have to deal with matters of taxes at some point, and with that comes dealing with the SAT and the RFC. Even if you’ve just retired and you’re not planning on working here, or even if your source of income comes from somewhere outside the country, sooner or later, in some way or another, you’re going to have to deal with them.
Before anything else, it should be clear that if you don’t have any sort of fiscal obligation in the country, in no way you’ll need to make any sort of tax return to the Mexican government, however, you’ll still have to arrange and set some things in order with the SAT; as well as getting your RFC, which it really is a must, and not just for paying taxes.
What is the SAT and what does it do?
The SAT stands for Servicio de Administración Tributaria, which could roughly be translated as Service tax administration; you could think of it like the mexican version of the IRS in the United States if that helps. Its job is to collect taxes as well as making sure that everyone fulfills their fiscal obligations. And the way in which they achieve this is through the RFC.
What is the RFC?
The RFC or Federal taxpayer registration (Registro Federal de Contribuyentes) is a registration number, unique to every single person, used to identify those who are taking part in any economic activity, like a job for example, and/or those who must contribute with the public expense.
This type of RFC is known as Persona física (Physical persona), meaning that there is a single human individual we’re dealing with. There is another type called Persona Moral (Moral persona) which makes reference to a bunch of individuals who have decided to come together as a group with a common end, to form a society or company; however, each individual from that group must have their own RFC in the first place.
The RFC is used to handle everything tax related, although one could say its main goal has to do with the payment of taxes, but that would be an oversimplification.
Do you, as an Expat, need a RFC?(And what happens if you don’t have one):
Well, the short answer is yes but that doesn't necessarily mean that you must pay taxes. Whether or not you should pay taxes to the Mexican government really depends entirely on your situation, but independently from that you do need an RFC. To explain a bit further…
Expats and taxes: If you are a resident and you don’t know if you are going to pay taxes in Mexico, everything will depend on where your income comes from.
The thing is, being a tax resident in Mexico does not exempt you from being subject to tax rules and fiscal obligations somewhere else. When you generate any sort of income from outside Mexico’s jurisdiction, you do not owe any of it to the SAT, but you could still be required to pay taxes there. So if you work remotely, or you’ve retired, or just simply do not receive a salary from Mexico, you have no fiscal obligations with the Mexican government.
However, if you receive any income coming from Mexico, because you got a job here or you decided to start your own business here, you will have to pay taxes, regardless of any fiscal obligation that you could have somewhere else.
Whatever your case may be, we do advise you to seek an expert’s help like a tax consultant to help you figure out your tax affairs.
Why you need a RFC: If you’re gonna pay taxes it's quite obvious why would you need your RFC, but even if you’re not, sorry to break it to you, but you’ll still have to go to all the trouble to get yours. You may be wondering why though, well… it is because it's the law actually. In 2022 the SAT made it mandatory that any resident older than 18 must have their RFC, it doesn’t matter if they are fiscally active or not.
For you to qualify as a tax resident you must be at least 18 years old and you must have either a permanent or temporary residence card; so tourists and visitors are exempt.
So what would happen if you don't get your RFC?: Although mandatory, there really isn’t a sanction for not having one, so do with that what you will. However, if you're planning to get a job, you’re gonna have a hard time finding one, given that, if you happen to find one, it’d be pretty illegal to work and receive a salary or any income without you being able to report it to the SAT and thus pay taxes. So unless you wanna have problems with this institution, we highly advise you to get yours.
Why you want a RFC
Aside from not wanting to get in trouble for tax evasion, it may also be in your interest to know that you will be denied many services if you don’t count with the RFC.
You´re going to have quite a hassle dealing with anything money-related; most Banks won't let you open accounts with them, any credit that you’ll ask for will have a no for an answer, you won't be able to qualify for a loan nor get a credit card, among many other things. Also, if you want to get your house utilities at your name, as water and electricity, an RFC is a must. Plus, you won't be able to buy a new car, or any vehicle for that matter; Nor purchase any real estate/property, and you won't be able to claim any capital gain if you choose to sell it. Among other things.
So as you can see the RFC is really important and useful, so you might want to know how to get yours.
How to get your RFC.
The process can be really annoying for one simple reason, the waiting time. In order to get your RFC you must first make an appointment at one of the SAT offices through their web page. Now, that should be rather simple, the troublesome part is that they usually are so full that you probably won't find any appointment available; instead they will put you at the end of a long waiting list and then will tell you that very shortly they will send you an email with all the details of your appointment once you get one. This can take weeks, and in some cases even months, plus you have to be on the look for the email, for once they send it, you shall confirm the appointment within the next day or so, otherwise you'll lose it and you'll have to go to the end of the line once again. So good luck with that.
The next step would be to go to the SAT Office the day and hour of your appointment. This part of the process should be quicker, taking 2 to 3 hours of your time, more or less. You'll need the following documents at hand:
A printed copy of your CURP (Which you can get online)
Your residency card, temporary or permanent.
Some proof of address (electricity or water bill)
Printed appointment confirmation
The documents and your appointment should be enough to get your RFC, although have in mind that, as happens with practically all government offices, finding someone there that speaks English is pretty rare, so unless you speak fluent Spanish or at least you are able to make yourself understood, take the necessary precautions and have someone with you that can translate everything back and forth.
Now that you have the information about how you’re going to deal with taxes, and the benefits of having your RFC, we encourage you to get ahead on any problem that could come in your relocation. Remember that our team of experts will be glad to help you throughout the whole process of becoming an Expat in Mexico!
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