US–Mexico Tax Treaty

US–Mexico Tax Treaty

If your company receives income from Mexico, or pays suppliers, partners or a parent company there, both governments may want to tax the same money: one because the income was earned there, the other because you are a resident. That is double taxation.

The tax treaty between Mexico and the United States defines which country taxes each type of income, reduces withholding on dividends, interest and royalties, and lets you credit in one country the tax already paid in the other. But it does not apply automatically: you must prove your tax residency and document each transaction.

When it affects you

  • US companies with a subsidiary or operations in Mexico.
  • Companies that receive dividends, interest or royalties from Mexico.
  • Mexican companies that sell or provide services to US customers.
  • Companies whose activity in the other country may create a permanent establishment.
  • Owners and executives who live in one country and earn income in the other.

What the treaty covers

  • Reduced withholding: on dividends, interest and royalties paid from one country to the other.
  • Business profits: which country taxes them and when an activity creates a permanent establishment.
  • Tax residency: how to prove it and which forms each country requires to apply the benefits.
  • Foreign tax credits: how to credit in one country the tax paid in the other.

Rates, forms and deadlines change depending on the type of income and your situation. In the first consultation we review which ones apply to you.

How we help

Tax residency

We obtain your residency certificate and the forms your customers or suppliers in the other country request.

Correct withholding

We make sure the treaty rate is applied, not the general rate, which is usually higher.

Foreign tax credits

We credit the tax paid in one country against the tax due in the other, so the same income is not taxed twice.

Permanent establishment

We review whether your activity in the other country creates a permanent establishment and what it implies.

Related parties

We document payments to your parent company or affiliates and align them with your transfer pricing.

Tax recovery

If too much was withheld, we review how to request a refund or credit the excess.

See all our binational services. If you are expanding into the United States, learn how we help with a US LLC for Mexican companies.

We serve companies from our offices in Tampico, Monterrey and Querétaro, and in the United States through our Houston office.

Frequently asked questions
It happens when two countries tax the same income. For example, when a Mexican company bills a US customer and both countries consider they have the right to tax that payment.
It is the agreement between both countries to avoid double taxation. It defines which country taxes each type of income, sets maximum withholding rates and allows crediting in one country the tax paid in the other.
With a tax residency certificate issued by your country’s tax authority, plus the forms your customer or payer in the other country requests. We tell you which ones you need and handle them for you.
The general withholding rate applies, which is usually higher than the treaty rate, and you may end up paying taxes in both countries on the same income.
In many cases, yes, either by requesting a refund in the country that withheld it or by crediting it on your tax return. It depends on the type of income and the deadlines, so it is best to review it early.
Yes. It applies to companies and individuals who are tax residents of Mexico or the United States, such as partners or executives with salary, dividends or rental income in the other country.
Binational Services
Services in Mexico
Our Offices
  • Tampico: +52 (833) 217.85.00
  • Monterrey: +52 (81) 2317.48.80
  • Querétaro: +52 (442) 225.55.10
Book a consultation

Your first consultation is free, at any of our offices or by video call, in English or Spanish.

Contact us

Are you paying taxes in Mexico and the United States on the same income?

We review your case and explain how to apply the treaty. Your first consultation is free, at any of our offices or by video call, in English or Spanish

Contact us