Cross Border in Mexico

Source-cited draft. Built from the Cámara de Diputados consolidated text of the Ley del Impuesto Sobre la Renta (LISR, last reform DOF 01-04-2024), Title V, read on 2026-10-28. No accountant has reviewed it. Do not file from it without review by a qualified Mexican professional.

Tax year: the calendar year. Currency: Mexican peso (MXN). The Servicio de Administración Tributaria (SAT) administers ISR.

See also: mx-corporate-income-tax, mx-payroll-withholding, mexico-transfer-pricing.

Who this applies to

Foreign residents (individuals or corporations) earning Mexican-source income without a Mexican permanent establishment (PE) are taxed under Title V (LISR Art. 153). With a PE, they pay the ordinary regimes on income attributable to it. Art. 153 also imposes arm's-length pricing on related-party operations even for Title V taxpayers (paragraph added DOF 12-11-2021). Payments that merely benefit a foreign resident, including avoided expenses, are swept into the same net (Art. 153).

Rates, bands and thresholds

Income type	Rate on gross	Tax year	Source
Independent services performed in Mexico	25%	2026	LISR Art. 156
Mexican real-property rent / land-use rights	25%	2026	LISR Art. 158
Sale of Mexican real property	25% on gross proceeds (a seller with an Art. 174 representative in Mexico and a public deed may opt to pay the top Art. 152 tariff rate, 35%, on the gain instead)	2026	LISR Art. 160
Shares in Mexican companies (50%+ real-estate value test)	25%	2026	LISR Art. 161
Derivatives on Mexican shares	25% on gain	2026	LISR Art. 163
Dividends	Corporate-level 30% via the Art. 10 gross-up when not paid out of CUFIN, plus 10% withheld on the dividend paid to the non-resident	2026	LISR Arts. 10, 164 fr. I

The Mexican payer is the withholding agent; if the payer is also non-resident, the foreign recipient self-pays by declaration within 15 days of receiving the income (Arts. 158, 160).

The taxable base

Title V flat categories are on gross with no deductions ("sin deducción alguna", Arts. 156, 158, 160). Source rules are location-based for real property (Arts. 158, 160) and place-of-performance for services, with a presumption that services are wholly performed in Mexico once part is performed there, rebuttable by proving the foreign portion (Art. 156). A related-party payment presumption also applies (Art. 156).

Deadlines and filing

Obligation	Deadline	Source
Self-assessment by the non-resident when the payer is also non-resident	Declaration within 15 days of the income	LISR Arts. 158, 160
Transfer-pricing informative returns	Master and country-by-country (Art. 76-A fr. I, III): 31 December of the following year; local (fr. II): 15 May of the following year	LISR Art. 76-A

Penalties and interest

Underpaid contributions discovered by the authorities draw a fine of 55% to 75% of the omitted contributions (CFF Art. 76); CFF Art. 64 (the old 45%-85% fine) is repealed in the consolidated text read 2026-10-31. Omitted amounts plus accessories are due within 30 days of the assessment notice, with inflation updating under CFF Art. 65; recargos run at the annual variable rate of CFF Art. 22.

Cross-border points

• Permanent establishment. Domestic definition in LISR Art. 2 plus treaty definitions. A construction site creates one when it lasts more than 183 days, consecutive or not, in a 12-month period, and so can a dependent agent; a person acting exclusively or almost exclusively for related foreign residents is presumed not to be an independent agent (Art. 2).
• Treaty relief requires a residence certificate; the Art. 156 presumption survives unless treaty residence and a PE analysis are documented.
• Holding structures. Art. 161's 50% real-estate look-through defeats share structures for Mexican property.

Worked examples

Worked example 1: non-resident rent, grossed up

A US company leases MXN 50,000/month of Mexico City warehouse space to a Mexican tenant and wants to receive 50,000 net. Art. 158 taxes 25% of gross and the tenant withholds, so the rent is grossed up: 50,000 / 0.75 = MXN 66,666.67, of which MXN 16,666.67 is withheld.

name: gross-up of non-resident rent 25 percent rate
inputs:
  renta_neta: 50000
  tasa: 0.25
steps:
  - renta_bruta: renta_neta / (1 - tasa)
  - retencion: renta_bruta * tasa
expected:
  renta_bruta: 66666.67
  retencion: 16666.67

Worked example 2: non-resident services, grossed up

A German consultant invoices a Mexican group company MXN 80,000 net for services delivered in Mexico City (Art. 156, 25% on gross, grossed up): gross fee MXN 106,666.67, withholding MXN 26,666.67.

name: gross-up of non-resident services 25 percent rate
inputs:
  fee_neta: 80000
  tasa: 0.25
steps:
  - fee_bruta: fee_neta / (1 - tasa)
  - retencion: fee_bruta * tasa
expected:
  fee_bruta: 106666.67
  retencion: 26666.67

Ask the client first

1. Does the foreign party have a PE (site, agent, dependent contractor)?
2. Is the payer grossing up flat-rate income, or did the contract quote net?
3. Is the 50% real-estate share test (Art. 161) hit in any share sale?
4. Are treaty residence certificates on file before payment?
5. Are related-party cross-border flows mapped to the Art. 76-A informative returns?

Sources

Source	URL	Read on
Ley del Impuesto Sobre la Renta, consolidated (Cámara de Diputados, last reform DOF 01-04-2024), Arts. 2, 10, 76-A, 153, 156, 158, 160, 161, 163, 164, 166, 167, 174 (still last reformed DOF 01-04-2024 in the October 2026 copy)	https://www.diputados.gob.mx/LeyesBiblio/pdf/LISR.pdf	2026-10-29
Código Fiscal de la Federación, consolidated (Cámara de Diputados, last reform DOF 09-04-2026), Arts. 22, 64, 65, 76	https://www.diputados.gob.mx/LeyesBiblio/pdf/CFF.pdf	2026-10-31

Confirmed from the consolidated LISR read: interest rates sit in Art. 166 (4.9% for the cases in fr. II, including qualifying securities and financial-system credits; the rate becomes 10% when those requirements are not met; 15% for reinsurance companies, fr. III; 21% for the cases in fr. IV; other interest is taxed at the top marginal rate of the Art. 97 tariff, fr. V); royalty, technical assistance and advertising source rules and rates are in Art. 167 (rates by category, including 5% for railway cars and containers, 25% for technical assistance, 1% for some goods; no 35% royalty rate appears in the text read); Art. 174 governs the non-resident's representative; Art. 165 covers Title III non-profit conduit income; Art. 155 covers pensions and retirement income; the 10% dividend withholding for non-residents is Art. 164 fr. I.

Not yet confirmed: the remittance date for tax withheld from non-residents (earlier drafts said with the monthly return by the 17th of the following month); a targeted exemption for foreign pension funds on Mexican real-property gains (earlier drafts cited "the Art. 155 area"; Art. 155 in the text read covers pensions and retirement income); the domestic PE rules earlier drafts cited as Arts. 8-8A, including business carried on through a Mexican related party; the payer's joint liability for tax not withheld (no such clause found in the LISR or CFF copies read); treaty-by-treaty rates and PE thresholds (DOF/SAT); the SAT residence-certificate procedure.