Opening a Bank Account & Managing Your Taxes in Mexico

Jump right in:

• How to Open a Bank Account in Mexico?
• Tops Banks in Mexico
• What is the Tax System in Mexico?

How to open a bank account in Mexico

If you’re planning to relocate to Mexico, it’s a good idea to look into how to open a bank account ahead of time. Doing some research before moving can help you prepare for unexpected complications.

You’ll also have a clear idea of the documents and transfer fees involved. Mexican banks can have quite high fees in comparison to your home bank, so you should make enquiries to find your best option.

Before you choose a bank, you should verify that:

• it will not be difficult to access, move, or manage your finances between accounts back home and in your new country • it adheres to international regulations • it has a solid capital base • it provides good customer service

Can a foreigner open a bank account in Mexico?

While a foreigner can open a bank account in Mexico, it could be a challenging experience, especially if you do not speak Spanish. The best place to start is to shop around online and see what banks have the best accounts for your needs.

There are several traditional banks and internet platforms in Mexico that allow you to open a bank account entirely online. Financial services are now more easily accessible to foreigners due to this trend, but if you want a more intimate, in-person encounter, you can still visit a branch. You may want to consider taking a translator with you, in case they do not have English-speaking staff. In a lot of Mexican banks, you will need to take a ticket and wait your turn, as many don’t allow you to make appointments.

Required documents for opening a bank account

What are the requirements and documents to open a bank account as an expat?

When opening a bank account in Mexico, you will have to provide documents to prove your identity and immigration status. Proof of income is usually not required, whether you’re applying through a traditional bank or an online platform.

Most banks will typically request:

• A valid passport • Proof of legal stay in Mexico (temporary or permanent residency; in some cases, the FMM may be accepted for basic accounts) • Proof of address in Mexico (such as a recent utility bill or rental agreement) • Sometimes an RFC (Federal Taxpayers Registry) • An initial deposit, usually between 500 and 1,000 MXN

Requirements may vary slightly from one bank to another, but this list gives you a clear overall idea of what to expect.

More flexibility is often provided by fintech platforms and digital banks. Many of them don't require a minimum deposit and merely require your passport to start an account. Depending on the supplier, biometric verification by selfie may be required, and a Mexican address or resident card may not always be needed. As usual, it's a good idea to verify the precise criteria on the bank's or fintech's website or app yourself.

Top banks in Mexico

Wondering which are the best banks in Mexico? With so many banks out there to choose from, here’s a small list of the top 5 Mexican banks most preferred by expats.

•BBVA Mexico is the largest bank in Mexico. It serves more than 32 million clients and has the largest amount of total assets, loans, deposits, number of branches and ATMs. It was also named the best digital bank in Mexico in 2019 by the World Finance online magazine. • Banorte is the largest Mexican-owned bank. It has a vast network of branches and ATMs all over Mexico. It is a great option for ensuring you always have access to the services you need. • Citibanamex is operated as part of the US-based Citigroup. It has government agencies and small and medium businesses as part of its clientele. • Banco Santander is part of a Spanish company. They offer a wide range of services from loans and mortgages to working capital and trade finance. They currently have more than 10,000 ATMs in their network to keep you connected. • HSBC México is a subsidiary of the global banking giant HSBC Holdings. It offers a wide range of services, including retail banking, corporate banking, and wealth Management and has a network of over 800 branches and over 5,000 ATMs.

International banks in Mexico

Another excellent option for expats is opening a bank account at an international bank in Mexico. Some of the top banks operating in the country are owned as part of foreign banking groups. If you have an account with one of these banks in your home country, it can make opening an account in the Mexican branch simpler. Some international banks operating in Mexico are: • Santander, which is part of a Spanish company • HSBC, a bank from the UK • Scotiabank, one of Canada’s largest banks

Online banks in Mexico

These days, many people are ditching the brick and mortar banks. One of the easiest ways to get banking started as an expat is to set up a bank account online. This makes managing your funds easier when you are on the go and cannot easily visit a branch.

Here are some online banks in Mexico:

• Hey Banco, from the Banregio Bank, is an easy app to set up. Within 5 to 10 days you will be sent a Visa debit card, usable anywhere Visa is accepted.

• Nu México, you may establish an account with Nu, a well-known fintech, just from your smartphone. It offers no monthly fees, a debit card, and a stylish, user-friendly interface. Because of its open banking practices and simple onboarding procedure, Nu is particularly attractive to foreigners.

• Klar, is a finance company based in Mexico that accepts passport identification and provides free accounts. You'll receive both a real and virtual debit card, and the app makes it simple for you to handle your money. If you're searching for a simple, app-based banking solution, Klar is a fantastic choice.

No-fee bank accounts in Mexico

When looking for no-fee bank accounts in Mexico, your best bet is to look for online-only accounts. Many banks will offer no-fee accounts if you have large initial deposits and/or make monthly deposits.

Bank fees & minimum deposit

When setting up a Mexican bank account, try to keep in mind that:

• many branches will require a minimum holding deposit, and, to avoid bank fees, this can be around 1000 MXN (50 USD) • you will need the required documents to open a bank account as a non-resident, including identification and your immigration documentation to prove your status

What is the tax system in Mexico?

The tax system in Mexico makes a distinction between people and businesses. Both are liable for income tax, or Impuesto Sobre la Renta (ISR), although the rates and regimes apply differently based on their income type and categorization.

Be aware that some countries, like the United States, tax citizens and permanent residents on their worldwide income. Canada also taxes citizens on worldwide income, unless they have officially moved their legal residence to another country. This means that US and Canadian expats who earn any income in Mexico will have to declare it in their US or Canadian tax return.

Types of taxes in Mexico

As an expat in Mexico, the taxes you pay will depend on your specific situation. For instance, if you buy property in the country, you will be liable for property taxes. If you rent out a property, own a business, or have a job, you will have to pay income tax. Moreover, every time you purchase goods or services, you will pay sales tax, known as IVA.

Below we explain the different types of taxes in Mexico:

Tax year: In Mexico, the tax year follows the calendar year.

Personal income tax: Known as Impuesto Sobre la Renta (ISR), income tax is deducted from your wages. It can range from 2% to over 35% depending on your earnings.

Corporate tax: All income obtained by Mexican companies is liable for tax, regardless of the nature of the business. The corporate tax rate is 30%. Foreign companies in the country are subjected to the same tax system as local ones. Nonetheless, there are some exemptions designed to attract foreign investors (e.g. some states offer tax incentives). Bear in mind, that unlike many Latin American countries, most taxes in Mexico are levied at the federal level. Additionally, employers must use a mandatory profit-sharing program called PTU (Participación de los Trabajadores en las Utilidades) to distribute 10% of their net earnings to workers. This is a legitimate employer requirement rather than a tax.

VAT: Locally referred to as Impuesto al Valor Agregado, or IVA, the standard rate is 16%. IVA is an indirect tax which is applicable to goods and services and paid by the consumer. Staple foods (e.g. eggs, beans, tortillas), water, agricultural supplies, books, and magazines are not taxed. There are also certain services and supplies that are exempt from VAT. These include immovable property, land, financial services, insurance, cultural exhibitions, and events. In some northern border regions, the VAT rate is reduced to 8% as part of a federal initiative to encourage investment. However, not all areas qualify, and specific conditions must be met.

Wage taxes: In some states, employers have to pay an average of 2% tax on employees’ wages per month. In other places, such as Mexico City, they have to pay 3%. Known as the payroll tax (Impuesto sobre Nómina), the precise rates differ depending on where you live because it is determined and collected at the state level.

Social security: Employers have the obligation to register all of their employees with the Mexican Institute of Social Security. This organization provides job-related unemployment and disability benefits. The tax you pay from your wages is called Impuesto Sobre la Renta (ISR).

Capital gains and real estate: In Mexico, property tax is divided into three different categories. People have to pay acquisition tax when they buy a property. It can be up to 5.9% in CDMX. There is the predial tax, which is an annual property tax paid to the municipality where it is located. Then, there is the capital gains tax, which also falls under the term Impuesto Sobre la Renta (ISR). This tax must be paid if you sell a property.

How much is income tax in Mexico?

So, how much will you be taxed on your salary in Mexico? Below are the annual brackets and corresponding tax rates for the year 2024:

Taxes for self-employed people in Mexico

If you intend on being self-employed when you relocate to Mexico, you will have to register with the Servico de Administacion Tributaria (SAT). This is the authority that deals with all matters of taxation in the country. There is an online service where you can apply with your Registro Federal de Contribuyentes (RFC) number, which is your Mexican tax identification number.

The amount of taxes you need to pay varies as legislation may change. The best advice is to have an accountant accompany you to an appointment at the local tax office. In these types of offices, staff rarely speaks English, so having a native speaker to gather all the information you need and help you set up your accounts is essential. With tax rates reaching up to 35%, it is best to make sure you are not overpaying.

US taxes for expats in Mexico

The US tax system is based on citizenship. In other words, every US citizen and green card holder with a worldwide income of more than 12,000 USD, or, in the case of self-employment, more than 400 USD, is obligated to file an annual US tax return. This includes expats.

Mexico requires residents to file local taxes. If you are a US American, you will be considered a Mexican tax resident if one of the following applies to you:

• you have a permanent home in the country • you generate over 50% of your worldwide annual income in Mexico • your main professional endeavors are in the country

This means that a lot of US expats who reside in Mexico have to file two tax returns, putting them at risk of double taxation.

Please note that expats get an automatic extension (until 15 June) to file their US taxes. If necessary, it’s also possible to ask for a further extension (until 15 October). This provides you with a good timeframe to file your Mexican taxes first.