By Thorvald Pazos Casas
Law degree from the Universidad Regional del Sureste,
postulant attorney in criminal, civil, agrarian, and tax matters,
and currently a research attorney and part of the Research Center of SILMEXICO.
The acquisition of a property in Mexico represents a choice of great importance, either for personal or investment purposes. However, have you ever considered the option of making this purchase through a company? In the following article, we will explain some of the benefits of this alternative, as well as the reason why an increasing number of people choose to purchase property in Mexico through a business entity.Undoubtedly, architecture and construction will be focused on the welfare of people and low environmental impact for the care of the environment, following this line some of the trends are as follows:
Types of companies in Mexico:
According to the Mexican Mexican law, corporations may be Civil and Mercantile. The former are organizations created for a common purpose that does not constitute commercial speculation and are based on the civil legislation of each state and the federation. While, the second ones are characterized for having a commercial purpose, so they are based on the General Law of Mercantile Corporations, each one having its own rules and a special treatment.
In the GLMC we find different rules for corporations so that according to the specific interests of the partners and the capacity of their capital, they can choose between one of the following: Limited Company (Ltd.), Limited Liability Company (LLC.), Joint-Stock Company (JSCo.), Limited Partnership (L.P.), Limited Joint-Stock Partnership (S.K.A.), General Partnership (G.P.) and, Cooperative Society (C. S.).
Requirements and processes to establish a legal entity in Mexico.
To establish a legal entity in Mexico the following principles must be followed:
To have the idea of the type of object that the company will have.
To look for the company that best fits the purpose and the capital stock.
To have the number of partners required by the company.
To make the articles of incorporation (clause of acceptance of foreigners).
E. To request authorization for the use of the corporate name before the Ministry of Economy.
F. To execute the articles of incorporation before a notary public or public broker (foreigners’ acceptance clause).
G. Register the company before the Public Registry of Property and Commerce.
H. To process the Federal Taxpayers Registry (R.F.C for its Spanish initials.) and generation of electronic signature (known in Spanish as e.firma) before the Secretariat of Tributary Administration (SAT for its initials in Spanish).
Knowing the different options of corporations that can be formed in Mexico, as well as the procedure to formalize them, we will answer the following question:
Buying in my own name or in the name of a corporation?
In Mexico, it is possible to acquire a property being a Mexican or foreign individual (with limitation in a “restricted zone”) or through a Mexican corporation with foreign investment, as long as in the bylaws of the corporation there is a bald clause, and the foreign partners waive the protection of their country in relation to such property.
Regulations and Alternatives.
Within the restricted zone, the acquisition of real estate properties by foreigners is prohibited, but there are alternatives for them to enjoy certain rights over the referred assets.
Outside the “restricted zone”, foreigners are allowed to acquire property, as long as they comply with the requirements:
Before the Ministry of Foreign Affairs, agree to consider themselves as nationals with respect to the goods they acquire and not to invoke, therefore, the protection of their governments in relation to them.
Obtain the corresponding permit from the Ministry of Foreign Affairs (SRE for its initials in Spanis). In the case of foreigners who are nationals of countries with which the Mexican State has diplomatic relations, comply with the previous point.
Within the “restricted zone”, there are two alternatives for foreigners to enjoy rights over real estate in such area: the incorporation of a Mexican legal entity and a trust.
Benefits of buying property in Mexico.
By purchasing real estate in Mexico, a foreigner has the possibility of obtaining a residency in the country through a temporary resident visa for real estate acquisition. This visa authorizes a temporary stay in Mexico that goes beyond 180 days and does not exceed 4 years, according to the provisions of Article 107, section V of the Regulations of the Immigration Law, mentioned below:
Article 107. The temporary residence visa referred to in section IV of article 40 of the Law, shall be issued to the foreigner who expresses his intention to remain in the national territory for a period of more than one hundred and eighty days and up to four years. The applicant must demonstrate one of the following circumstances:
V. That he/she has real estate in the national territory with a value equivalent to the amounts established in the general administrative provisions issued jointly by the Ministry and the Ministry of Foreign Affairs, which will be published in the Official Gazette of the Federation.
Companies can obtain tax benefits that are not available to individuals. For example, companies can deduct business and operating expenses from their income, which reduces their taxable income and tax burden.
Businesses have access to a wide range of financing options, such as bank loans, bond issuance, and the sale of stock. In addition, companies can raise capital from investors and shareholders, allowing them to expand and grow faster than individuals.
Unlike individuals, a business is not extinguished when one of its owners or partners dies or leaves the business. A company can continue to exist and operate regardless of changes in its ownership.
In summary, buying property in Mexico through a company provides a solid legal structure, flexibility, and advantages in both tax and operational terms, making it an attractive option for those seeking to maximize the benefits of their real estate investment in the country.