DianaT
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Owning and living with a corporation in Baja
I know this has been discussed many times, but I hope someone will be able to accurately sum it up---if that is possible considering the ambiguity in
many laws. 
We currently have a fideicomiso (sp??) for our home in Baja. However, there may be changes in the near future that involve business.
My understanding is that if one owns property in a corporation that one can not use that property as a second home or even a vacation home, but solely
for a business. ?????
What if they are running a home based business???
I have searched the web and seem to find information that is not very clear---maybe it is my muddy old mind.
One more question to add. How expensive and how difficult is it to get one's FM3 changed to allow the running of a business?
[Edited on 3-4-2010 by DianaT]
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Dave
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Changes in Mexican law now allow a foreigner to own/operate a small business without the necessity of forming a corporation.
My question is this:
Why would you wish to dissolve the trust in favor of a corporation? What benefits do you perceive?
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DianaT
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| Quote: | Originally posted by Dave
Changes in Mexican law now allow a foreigner to own/operate a small business without the necessity of forming a corporation.
My question is this:
Why would you wish to dissolve the trust in favor of a corporation? What benefits do you perceive? |
It would be different property.
Do you know how they define "small business"?
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Dave
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| Quote: | Originally posted by DianaT
Do you know how they define "small business"? |
Defined as maximum net revenue and is flat tax based.
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bajajudy
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With an FM3 or FM2 you can become a persona fisica(not sure on the spelling) and you dont need a corporation. Your FM3/2 will state exactly what you
can do. If the activity is not listed on your FM3/2, you cannot do it.
Find a good accountant(you will have to have one unless you understand Spanish REALLY well) and let him guide you.
Edit to add
You can live on your property if you are a persona fisica.
[Edited on 3-4-2010 by bajajudy]
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MitchMan
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Beware, beware, beware.
If you have a Mx Corp, you must pay an accountant to file your revenues and expenses electronically to the Hacenda (Mx IRS) every month and then do an
annual filing. That can be expensive. You will need to get an electronic signature (for the monthly internet Hacienda filings) personally and for
the corp (that will cost you to have someone knowledgeable help you accomplish that) and those signatures require renewal every two years. Each and
every bonafied tax deductible expense that you incur must be evidenced by a formal expense receipt known as a "factura" or it will not be recognized
by the Hacienda. Not all vendors that provide services or goods are formalized enough to be able to give you a factura. Getting a factura for each
and every deductible expense is a pain in the neck and an additional time delay, especially for the small expenditures.
You must have a corp checking account as any expense that is equal to or greater than $2,000 pesos must be paid with a corp check or it won't be
allowed as a deduction. The corp checking account must maintain a peso balance of over $5,000 pesos at any one time. (maintaining a corp checking
account has its own problems, and there are many "gotcha's"). Also, you need to do an annual filing with the Secretaria de Economia". You will
probably need professional help ($) with that the first few times you file and probably after that.
There are other considerations (in my opinion, problems) with a Mex Corp. Make sure that you diligently do your research on all the pros and cons and
complete information is nearly impossible to get. Mexican accountants and attorneys are not open and forthcoming with the info, they will not
volunteer ALL the information that you will need. You have to go to many different sources and Mexican so called professionals are a little confused
themselves on the current facts as you will get different and inconsistant info from them all.
If you want to incorporate for business reasons that have nothing to do with where you operate your business, that's one thing. But, if you want to
convert your personal residence to corporate real estate in order to get depreciation and other real estate related business operating and maintenance
expenses as business tax deductions, then you must do just that, i.e., convert your personal residence to corporate property.
If you are transfering ownership of your residencial real estate to your Mex corp, you then will not be able to avoid the tax upon the sale when you
sell the property because you will have converted your personal residence to business owned property (while they are physically the same property,
they are not the same tax wise. That means you will be sujbect to the higher of the IETU or regular corp income tax on the taxable income from the
sale.
The cost of changing the FM3 will be the least of your problems.
Do your research.
[Edited on 3-4-2010 by MitchMan]
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DianaT
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| Quote: | Originally posted by bajajudy
With an FM3 or FM2 you can become a persona fisica(not sure on the spelling) and you dont need a corporation. Your FM3/2 will state exactly what you
can do. If the activity is not listed on your FM3/2, you cannot do it.
Find a good accountant(you will have to have one unless you understand Spanish REALLY well) and let him guide you.
Edit to add
You can live on your property if you are a persona fisica.
[Edited on 3-4-2010 by bajajudy] |
Thanks Mitchman for all the good information about Mex corporations. Our possible plans do not include our current home, however, so it would not be
put in the corporation.
We are thinking more in the near future and a different place. So Judy, are you saying that you can live on your property if it is owned by your
corporation?
Thanks
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Bob and Susan
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a house that you live in CANNOT be held by your corp unless its part of the "money-making" machine
i think judy is saying...
you can live in your fido house and "work" with permission
mitch is right...there are LOTS of things you need to do monthly
and it DOES cost $$$$
why do you want to WORK???
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MitchMan
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The intent of Mexican law is to NOT have anyone "live" in their own corporate owned residence. Corporations are intended to have ownership of only
business property. But to blythely say "you can live in your corporate owned house" because you have the proper FM3 and your are the persona fiscal
and completely treat and use the property as only a personal residence is not at all correct or even a legal practice.
On the other hand, what you can succesfully get away with and never be discovered is quite another thing. Just be clear on what is law and what your
chances are for getting away with stuff. They are not the same.
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Don Alley
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I'd also look into the procedures for shutting down a corporation, should you wish to at some point. I've been told it's not easy, that it's
expensive, and that it's time consuming, and of course in the meantime all the monthly requirements of a corporation must still be met.
But whatever, good luck with your venture.
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Dave
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| Quote: | Originally posted by Don Alley
I'd also look into the procedures for shutting down a corporation, should you wish to at some point. I've been told it's not easy, that it's
expensive, and that it's time consuming, and of course in the meantime all the monthly requirements of a corporation must still be met.
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You can easily place your corporation in hibernation. Simple yearly filing showing no taxes due.
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