Mexican Tax Resident with Online Agency - Looking for a structure that works.

[Tango2015]

Hi all - Canadian citizen looking at a move to Mexico with 2 dependents. I have a small digital-only business selling into Canada & US. Looking for a structure that will minimize Mexican tax. Here's what I've come up with so far - any feedback and suggestions appreciated...

• Operating company in Malta - bills clients in US & Canada and accepts payments
• Foreign parent for Maltese operating company to claim 6/7 rebate on corp tax paid to Malta
• Self-employed in Mexico - bill Maltese Co for enough services to pay some living expense bills in Mexico

Some of my questions so far:

1. Does this structure make sense - is there a way to set this up with reasonable expectation of success?
2. Should the foreign parent be a company...or perhaps a trust or foundation?
3. What country would best home for the foreign parent?
4. Banking - where would be best to set up (bank & jurisdiction) and will I have trouble setting that up for Maltese Co or foreign parent?
5. Would it make sense to use an EMI?
6. Where along the way will I run into UBO problems?

Hoping I've provided enough background and questions to allow for suggestions.

Thanks in advance.

 

[Martin Everson]

Firstly Mexico has CFC rules and anti-avoidance rules also. The structure you propose is to derive a tax benefit which goes against anti-avoidance rules.

Tango2015 said:
Does this structure make sense - is there a way to set this up with reasonable expectation of success?
Click to expand...

Makes sense but slim chance of success

Tango2015 said:
Should the foreign parent be a company...or perhaps a trust or foundation?
Click to expand...

Company as a trust would make it unbankable for small time business.

Tango2015 said:
What country would best home for the foreign parent?
Click to expand...

I take it parent company is just for Malta 6/7 rebate purposes. So any country where its cheap to setup and manage one.

Tango2015 said:
Banking - where would be best to set up (bank & jurisdiction) and will I have trouble setting that up for Maltese Co or foreign parent?
Click to expand...

You got Canadian, living in Mexico with Malta trading company with maybe a UK parent company. Basically unbankable sadly.

Tango2015 said:
Would it make sense to use an EMI?
Click to expand...

If you can find one to support this structure.

Tango2015 said:
Where along the way will I run into UBO problems?
Click to expand...

What type of problems you thinking about?

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[Tango2015]

Thanks Martin - I appreciate the feedback. To recap, the structure makes sense in theory, but in reality I would likely not be able to get banking to go along with it. And, you're saying I would be on the wrong side of CFC and anti-avoidance rules. Is there a structure and jurisdiction(s) I could look at that would allow me to get banking and maintain anonymity?

 

[Tango2015]

Martin Everson said:
Firstly Mexico has CFC rules and anti-avoidance rules also. The structure you propose is to derive a tax benefit which goes against anti-avoidance rules.



Makes sense but slim chance of success



Company as a trust would make it unbankable for small time business.



I take it parent company is just for Malta 6/7 rebate purposes. So any country where its cheap to setup and manage one.



You got Canadian, living in Mexico with Malta trading company with maybe a UK parent company. Basically unbankable sadly.



If you can find one to support this structure.



What type of problems you thinking about?
Click to expand...

I had originally replied at bottom of thread but perhaps I should have replied here (directly to you). Let me know if this notifies you.

 

[Martin Everson]

I get notified either way actually 😀.

The solution that most are using is Puerto Rico Bank and traditional zero tax offshore company to avoid CRS and any tax obligations. Unfortunately I don't recommend this at all.....because well its clear tax avoidance.

You may well best to stick with a Canadian or US company reputation wise and look at the terms of any double tax treaty between those states and Mexico. Remember you can always look at lowering your effective tax rate via claiming as many expenses as legally possible. So buying work laptops, corporate pension etc via company all help to reduce overall tax your would pay. I would consult a tax advisor to see what is possible. I don't speak Spanish so a lot of what is possible tax wise in Mexico I would not know.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[Tango2015]

Thanks Martin - I appreciate the opinion and the advice. I believe I noticed that you 'liked' an interview with New Era Offshore. Any thoughts on their approach?

 

[Martin Everson]

I don't know them but they offer an interesting approach. Someone willing to take the time to explain what it is they do it always welcome in my books.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[Tango2015]

Martin Everson said:
I don't know them but they offer an interesting approach. Someone willing to take the time to explain what it is they do it always welcome in my books.
Click to expand...

I hear you - he does seem to have a unique way of exploiting that hole in the system and it's great to have someone go on the record.
Will report back anything I can learn from him.
Cheers!