Private Wealth 2026 Comparisons

Individual Residents

The Mexican tax system provides separate specific tax regimes applicable to individuals, estates, trusts and foundations. Mexican resident individuals are subject to income taxation on a worldwide basis at a tax rate ranging from 1.92% to 35%, and potentially VAT at a rate of 16%, depending on the type of income derived in the calendar year. Domestic and foreign dividends are additionally subject to a 10% income tax exclusively on individual residents. Salary compensation, including stock options, interest, profits, dividends, capital gains and foreign income, is regulated in separate chapters of the Income Tax Law, providing specific recognition and deduction rules.

Estates, Inheritance and Gifts

General tax regime

The legal representative of the estate, commonly the executor (albacea), is responsible to quantify and pay on an annual basis the applicable income tax on behalf of heirs and legatees at the tax brackets mentioned under “Individual Residents” above, based on the revenue produced by the estate from the date of death to the final estate liquidation, pursuant to the applicable civil law provisions. The income tax paid is a final tax unless heirs and legatees opt to individually recognise the estate´s income. The legal representative is also required to make advanced income tax payments against the annual income tax liability.

Taxation of estate, inheritance and gifts

The transfer and receipt by inheritance of Mexican and/or foreign assets are generally not subject to federal taxation in Mexico. However, Mexican heirs and legatees must report the estate income in the applicable annual income tax return. Otherwise, the tax-free regime may be lost at the levels of heirs and legatees.

Individuals are not subject to income tax with respect to gifts (donaciones), provided the gifts are between spouses or from ascendants to descendants, in any amount, or from descendants to ascendants under the condition that the received assets are not further transferred by the ascendant to other descendant. Any other gifts may become subject to income taxation at the level of transferee under the Income Tax Law.

Despite Mexico having not adopted taxes on inheritances or gifts, note that foreign residents may become subject to withholding of income tax in Mexico when they receive as transferee Mexican real estate or shares for free, including transfers by inheritance or gifts (other than gifts between spouses or from ascendants to descendants which qualify for tax-free treatment). Careful planning is required regarding foreign life insurance, which benefits may also become subject to taxation in Mexico for Mexican heirs and legatees given that it is a non-Mexican insurance premium.

Trusts

Mexican trusts

The taxation of trusts depends mostly on their activities, income and place of formation. Mexican trusts are generally treated as fiscally transparent vehicles to conduct management, holding, guarantee, custodial and investment actions. The trustee, which is generally a Mexican bank, is seen as the legal owner of the contributed assets, whereas the settlor and trust beneficiaries are attributed with the tax ownership of the trusts’ assets whether principal or income.

Where the Mexican trust is engaged in business activities (business trust – fideicomiso empresarial), the trustee is required to compute the annual taxable profit or loss under the Income Tax Law on behalf of the trust beneficiaries, including the monthly income tax payments. In this case, the trustee must issue digital tax invoices (CFDIs) on the income and withholding relating to the business activities of the trust.

Foreign trusts

The taxation of foreign trusts is regulated by the Mexican Income Tax Law when they involve Mexican residents either as settlor or beneficiaries or, alternatively, when they involve Mexican assets, which transfer is classified as Mexican source income in the hands of foreign tax residents. Foreign trusts must be carefully analysed to understand whether they are fiscally transparent vehicles or subject to direct taxation as for any other taxpayers in their country of formation.

Depending on the nature of the foreign trusts, Mexican residents, whether entities or individuals, may become subject to taxation in Mexico at a rate of 30% or up to 35%, respectively, in connection with the transfer, activities and income generated by such vehicles, pursuant to Article 4-B of the Income Tax Law. Similarly, foreign trusts may become subject to income taxation pursuant to Article 4-A of the Income Tax Law when they derive an item of Mexican source income unless their beneficiaries are able to claim the benefits of the Double Taxation Treaties entered by Mexico and other jurisdictions providing fiscal transparency, exemptions or preferred withholding tax rates on Mexican source income.

Foundations

Foundations, pension funds, purpose trusts, professional chambers, associations, and other not-for-profit entities are excluded from income tax, provided they comply with statutory thresholds dealing with authorised activities, use of funds, distribution restrictions and liquidation destiny. The tax-free treatment is generally conserved to the extent that the funds are used in authorised activities, and the compliance regime is observed with respect to revenue, expenses, fees and investments. The distribution of any profits or surplus of these non-for-profit vehicles may become subject to income taxation.

The Mexican Federal Congress has not yet formally discussed for approval any draft bill regarding the taxation of estate and gifts. The current draft bill provides exemptions for estate, inheritances and gifts lower than MXN15 million. Different economic studies have suggested the inclusion of estate and gift taxes in Mexico, nevertheless, the expected tax collection is not representative considering the spectrum of taxpayers that would be subject to these controversial taxes.

Mexican Transparent Vehicles

Mexican individuals may contribute, manage and operate assets through Mexican trusts without the transfer of such assets being classified as a taxable transfer, provided the Mexican transferor retains the power to recover ownership of the contributed assets. The trust vehicle (fideicomiso) allows for segregation or concentration of investment projects, bank accounts, private equity and lending transactions, while conserving the pass-through treatment, unless it qualifies as a business trust (fideicomiso empresarial) as described in 1.1 Tax Regimes.

Foreign Transparent Vehicles

Mexican individuals may use business conduits including foreign limited partnerships (Canadian LPs), limited liability companies (US LLCs), foreign trusts (revocable or irrevocable) for multiple investments, succession planning and estate tax purposes. The Mexican tax system allows pass-through treatment on these vehicles; however, their resident participants must recognise the applicable income tax effects in Mexico on a yearly basis at the applicable tax rates ranging from 10% to 35%, depending on the type of income generated in other countries.

Foreign Investment Structures

Mexican individuals may also conduct investment and business activities through foreign corporations based in preferred tax regimes, which are generally jurisdictions where the effective tax rate is lower than 75% of the income tax that would be payable under the Income Tax Law. One of the main advantages of using foreign investment structures is the deferral of Mexican income tax on foreign profits until such profits are effectively repatriated to Mexico. Mexican individuals may take this deferral opportunity to the extent that they have no “effective control” over the foreign investment structures under Mexico’s Controlled Foreign Corporation (CFC) rules.

Investment Portfolio

The Mexican Income Tax Law provides a preferred income tax rate of 10% on capital gains arising from the sale of Mexican shares on the Mexican stock exchange or foreign recognised exchanges, subject to compliance with statutory conditions:

• the shares must previously have been acquired via a recognised exchange;
• the transaction may not be carried out by a “control group”; and
• the transaction may not occur outside recognised exchanges (over-the-counter transactions).

In the absence of these conditions, the general rate is 35% as occurs with Mexican private shares. The 10% capital gains rate is also extended for resident individuals upon the sale of “SIC shares”, ie foreign shares which are listed on the Mexican stock exchange.

Investment Insurance

Mexican financial institutions offer investment insurance options with tax-free treatment on the income generated by the investment premium, to the extent that the resident individual holds the insurance contract active for more than five years and reaches the age of 60 upon the exercise date, though the contract may be extended at the will of the contractor.

RESICO Regime

Individual taxpayers that conduct exclusively business, professional and lease activities, may choose the payment of income tax at preferred rates ranging from 1.00% to 2.5%, provided the totality of their income does not exceed the amount of MXN3.5 million. Some restrictions apply to shareholders, foreign residents with permanent establishment, and residents with CFC income or other activities.

Pre-Immigration Planning

Pre-immigration planning is allowed in Mexico with respect to assets, whether principal or income, held outside Mexico prior to the tax migration event. Specifically, foreign residents must observe the level of taxation they may have in Mexico on deferred profits, investment, interest and capital gains. The comparison between the maximum Mexican rate of 35% and the still applicable tax residence rate, will give the answer. If the foreign tax resident achieves a better taxation rate under their own country of residence, they will be in a better tax position receiving non-Mexican dividends, interest, capital gains or services prior to becoming Mexican tax resident in any calendar year.

Exit Planning

Exit planning must be considered under the new tax residence country’s tax regime and the double taxation treaties existing with Mexico. The individual leaving Mexico as country of residency is not subject to any exit tax; however, they must appoint a Mexican legal representative to attend to any tax notices from the tax administration authorities after the migration event, and report the effective date of the new tax residency along with the new foreign tax identification number assigned by the foreign tax authority. Depending on the exit country of residence, the Mexican resident may analyse the convenience of recognising taxable income once they have left the Mexican tax residency. It occurs given the tax holidays, flat tax regimes, or tax-free treatment offered by some countries’ tax regimes along with the Mexican double taxation treaties.

Foreign entities or private investors are free to invest in Mexican real estate other than any property located in the federal restricted zone. Foreign residents generally structure their ownership of Mexican real estate either directly, or, alternatively, by a trust, a Mexican subsidiary or a foreign entity. The income arising from Mexican real estate is typically categorised either as lease income or capital gains as follows.

Capital Gains

For capital gains derived from the transfer of real estate, a withholding tax rate of 25% is generally imposed on the gross transfer price. However, if the foreign resident appoints a Mexican legal representative and the title is passed by notary public, the withholding tax is computed at a rate of 35% based on the net capital gain determined by reducing the transfer price by the applicable cost basis and allowable deductions. Foreign residents are generally subject to the same capital gains treatment following the sale of Mexican real estate companies, unless the gains arise from the sale of “publicly traded shares”, in which case the withholding tax rate may be reduced to 10% or the transfer may qualify as a tax-free reorganisation under one of Mexico’s existing double taxation treaties.

Indirect Transfers

When at least 50% of the value of a foreign company is represented by real estate located in Mexico, the transfer of shares or interests in that foreign company may also be subject to withholding tax at the above-mentioned rate of 25%. In this case, double taxation treaties entered into by Mexico need to be carefully analysed to evaluate potential relief provisions for indirect transfers of shares by foreign resident transferors.

Lease Income

Foreign residents are subject to withholding of income tax at a rate of 25% on the lease of Mexican real estate, including time shares or properties leased by digital platforms. Under specific Mexican double taxation treaties, lease income may be reduced by operating expenses and allowances, providing a net income taxation to the benefit of foreign residents. Foreign residents may also set up a Mexican company to conduct real estate leasing activities, which will result in a net income taxation rate of 30% for the operating entity, after taking into account a broad range of authorised deductions.

Mexican REITs

Mexican real investment trusts (Mexican REITs) are fiscally transparent vehicles formed exclusively to conduct real estate activities in Mexico. The REITs certificates are acquired in the public market by residents and non-resident investors who enjoy the fiscal transparency of the vehicle and become subject to direct taxation in Mexico at a rate of 30% with respect to the income derived by the Mexican REIT’s operations unless they are excluded from income taxation as occurs with Mexican and foreign pension funds or when the foreign resident qualifies for a reduced tax treaty rate, if any.

Under its policy of financial and fiscal discipline, the Mexican federal government has announced no new taxes or increase of tax rates for the upcoming years. There are no immediate actions from the federal congress for any potential estate and gift tax or tax on global assets as adopted by other OECD countries. In contrast, the federal government relies heavily on the development of digital audits and artificial intelligence parameters to conduct tax audit programmes on taxpayers in Mexico. The wealth planning segment is also subject to tax scrutiny given the information that is reportable by the Mexican financial system, the existing compliance and required records on UBOs, as well as the exchange of information with other countries. The Base Erosion and Profit Shifting Plan (the BEPS Plan) has resulted in the adoption of different measures to combat tax evasion and prevent abusive fiscal transactions by both Mexican and non-resident taxpayers.

General Framework

The Mexican tax system provides specific compliance and reporting obligations aiming to enhance the collection of taxes and information relating to domestic and international activities.

As an OECD member country, the Mexican tax provisions require that Mexican resident individuals report on an annual basis different types of information concerning:

• income arising from CFC entities subject to low effective taxation;
• income derived from blacklisted countries; and
• transactions carried out by transparent entities.

Additionally, the Federal Tax Code adopted the concept of “reportable schemes” inspired in the BEPS Plan and EU DAC 6, requiring that taxpayers and advisers (legal, tax, accounting and banking advisers), comply by reporting “listed transactions” involving tax advantages such as non-taxation, reduced or deferred taxation, tax treaty abuse, and asymmetry in accounting and tax recognition, among others.

FATCA and CRS

Mexico adopted FATCA, CRS and the OECD Exchange of Information standards, which make it possible to exchange financial and tax information of taxpayers with other tax authorities around the globe. The Mexican Supreme Court of Justice stated that the exchange of tax information does not infringe any constitutional rights against taxpayers or international treaties, including human rights. As a result, the tax administration is expected to conduct audits in the private wealth segment with more frequency in the near future.

UBO Register

The “effective beneficiary” register and records are another effective measure adopted by Mexico in recent years to avoid hidden structures, agency arrangements and nominee contracts. The effective beneficiary information helps identify the real person having “mind and management” behind any Mexican company, similar to the UBO reports required in Europe or the KYC questionnaires managed by major banks around the world. Much of this information will remain private; nevertheless, the tax administration may obtain it during the course of an audit.

Mexico is a Latam country where successive control, management preservation and confidentiality are the general rule. More than 90% of existing companies in Mexico are private, which implies that many of them continue to operate under a grandfathering culture that is passed on by generations without adopting real changes: for example, by (i) a shareholder’s agreement, (ii) the implementation of an independent board, or (iii) a real audit policy in the financial statements of the Mexican business unit. Sophisticated families are starting to form family offices whereby they receive professional guidance on multiple factors including:

• succession;
• compensation;
• liquidity events;
• buyouts;
• hostile take overs; and
• other similar events.

In a business context, the more professionally prepared the family members are, the more efficient the family-run company handed down to new generations in Mexico.

Multinational families increasingly require more technical tax, immigration and legal advice with respect to the management, administration and transfer of family-owned assets. Multiple factors are considered, such as dual citizenship and tax residency, golden visa programmes offered by other countries, the sex preference of family members, as well as non-profitable interests of new generations who see art and collections as the most effective way to transcend in life.

Family offices often rely on domestic or foreign estate taxes imposed on family assets, which may have an impact on the family members depending on the applicable jurisdiction. Secrecy concerning the estate value continues to be a cornerstone mainly for Latam families, given the perception of the rule of law and security in their country of residence. The possibility of isolating foreign currency risks or exchange controls constitutes another relevant factor driving families to conduct operations outside Mexico in US dollars, Euro or Libor investments.

Testators are free to provide the terms and conditions for the transfer of their own assets to any designated heirs and legatees regardless of whether or not they are family members. Nevertheless, the Federal Civil Code establishes that the testator must provide alimony and living expenses to the following persons:

• descendants who are younger than 18 years old;
• descendants with incapacity to work, despite any age;
• surviving spouse when she is unable to work and has no sufficient assets (this right is preserved by the surviving spouse while she is not married and lives honestly);
• ascendants;
• concubine (partner) who lived with the testator during the five years before the death event; and
• brothers and sisters and other collateral relatives in fourth grade, if they have any incapacity or until they reach the legal age of 18 years, if they have no assets to cover their basic living expenses.

Mexico recognises two legal regimes: (i) marital partnership; and (ii) separate assets. Under the marital partnership, the assets acquired during the marriage period are deemed to be common property regardless of the spouse who acquired such assets. As a result, both spouses must consent to any transfer or disposition of the assets and, in the event of divorce, the spouses are seen as co-owners of said property.

The terms and conditions around the marital partnership are generally specified in the marital provisions (capitulaciones matrimoniales), which are registered with the competent Civil Registry. These marital provisions are treated in practice as a limited pre or postnuptial agreement. When it comes to marital partnership, the agreement must be produced in writing in the presence of a notary public, including the following covenants:

• listing of assets of each spouse and existing collaterals, if any;
• listing of debts of each spouse and payment programme;
• revenue derived from labour activities of any spouse;
• management guidelines on the common property;
• express mention on whether the common property includes assets received by inheritance or gift; and
• liquidation process for the common property of assets.

In contrast, the separate assets regime allocates individual ownership of assets between the spouses without any requirements. Each spouse is exclusive owner of acquired assets by any means. In the event of divorce, the Mexican federal and state courts recognise that a portion of the assets may be claimed by the other spouse if she did not work in previous years due to household responsibilities. Different compensatory thresholds apply but the courts have ruled up to 50% of the assets to be allocated to the benefit of the plaintiff spouse.

Under the Income Tax Law, resident or non-resident individuals retain the cost basis of transferors’ assets in the case of tax-free gifts or inheritances. The cost basis of the received property may be further increased in the hands of the transferor depending on additional expenses incurred or investments made. There are no classification elections in Mexico (check-the-box elections) to have a step-up basis on these assets.

Gift (Donación)

The gift agreement is an effective way to dispose of and transfer any type of asset from one person to another on a tax-free basis under the relative conditions highlighted in 1.1 Tax Regimes. This agreement is generally formalised in the presence of a Mexican notary public and registered in the Public Registry, if applicable. The gift agreement may establish the full and free transfer of property or only a portion of it: for example, when the transferor transfers only the ownership of the assets, while retaining the use of them for their entire life or a restricted time period.

Inheritance Trust

The transfer of assets by an inheritance trust along with a written will constitutes another effective mechanism to dispose of and manage assets for the benefit of future beneficiaries. In Mexico, the role of the trustee relies on a Mexican banking institution, which provides a trust preserving the testator’s wishes relating to their own assets and family members’ duties. In the case of a foreign trust, a deep technical analysis must be conducted to confirm that the trust execution may qualify as a tax-free inheritance or legacy in Mexico, given that foreign trusts are not exactly similar to the concept of the Mexican fideicomiso.

Holding Company

The alternative of having a Mexican holding company with underlying assets and subsidiaries is another effective method to transfer assets after a death event. Holding companies simplify multiple transfers by unifying all the family interests underneath. In this way, the testator is not required to complete an extensive will or a multi-asset trust, but, in contrast, everything is managed by a single entity. This vehicle is always complemented by a shareholder’s agreement, updated by-laws and a notarised will to dispose of the holding company’s shares.

Life Insurance

Life insurance is another recognised instrument to secure the living, medical, school and professional expenses of family members. A Mexican or a foreign financial institution is responsible for managing and investing the premium payments in accordance with the selected plan of the insured family. In some instances, life insurances are complemented by a domestic or foreign trust to control the use of funds by young generations.

Purpose Trust

Multi-asset families have recently adopted the foreign purpose trust to act as a foreign family office for the supervision, administration, advice and compliance of foreign assets. The idea is to have an independent body that reduces the time spent and liability of family members in relation to the day-to-day operation of foreign assets, whether companies, funds, bank accounts or foundations. The duration of the purpose trust may exceed 100 years while conserving the philanthropy of the testator in different aspects such as:

• shareholding control;
• restrictive covenants;
• funding restrictions;
• emergency situations;
• strategic liquidity events; and
• corporate governance within the family.

The Federal Civil Code and the National Code of Civil and Family Procedures allow the transfer of digital assets such as cryptocurrency, token assets and similar intangibles. The Civil Code of Mexico City expressly regulates digital assets, email accounts, pictures and videos stored in computers, servers and cloud systems transferred by inheritance. In these cases, the premise is the appointment of an executor that manages the passwords and codes required to get access to the use, transfer and disposition of digital assets. In practice, the main difficulty with virtual assets transferred by inheritance is the assigned value for the estate’s inventory as well as the virtual possession of and ownership title to the intangibles.

Mexican Trusts

Mexican families may form a Mexican inheritance trust with Mexican banks acting as authorised trustees. The idea of the Mexican inheritance trust is to preserve the tax-free treatment of assets transferred by gift or inheritance. The trust agreement must recognise the legal transfer provisions of the Mexican will. Otherwise, the instruments may have contradictory terms and conditions, and result in adverse tax consequences arising from the operation of the inheritance trust.

Foreign Trusts

Similar to Mexican Trusts, Mexican families may choose a foreign trust to control, manage and transfer foreign assets, such as financial instruments, real estate properties, intangible assets, vessels, aircraft or art collections. The main advantage of using these vehicles is to achieve a tax efficient regime upon the transfer and receipt of assets. These vehicles generally help Mexican residents to be excluded from foreign estate taxes, as occurs in the US, France, Spain and other jurisdictions. In contrast with the Mexican fideicomiso, the role of “trustee” may rely on non-financial institutions when it comes to foreign trusts. The settlor or beneficiary could take the role of trustee, which provides different opportunities for succession planning.

Non-Profit Entities

If the philanthropy of the family is to continue to preserve personal assets such as collections of any kind, intellectual property and charitable funding, the best alternative is to choose a not-for-profit entity, typically a “Civil Association”, a “Charitable Trust” or a “Special Purpose Entity”. In some cases, these tax-exempt organisations may be recognised in other jurisdictions under the applicable double taxation treaties entered into by Mexico. Another option is the use of a Dynasty Trust in a foreign jurisdiction like the US, the Cayman Islands or the Bahamas, which allows for perpetuity in relation to the family’s philanthropic goals, including collections, intellectual property and charitable funding.

The Mexican legal system recognises domestic and foreign trusts for all legal and tax purposes. The main difference is found in the taxation effects. Whereas domestic trusts have a specific tax regime set forth in the Federal Fiscal Code and the Income Tax Law, when it comes to foreign trusts, different interpretations may arise regarding their tax effects. Article 4-A of the Income Tax Law must be analysed to verify if foreign trusts are fiscally transparent trusts or subject to taxation in their place of formation. Depending on the answer, the Mexican tax effects for Mexican and foreign beneficiaries would be unfolded regarding the foreign trust’s assets and income.

Mexican trusts do not accept the role of trustee for Mexican individuals. Only Mexican financial institutions, typically Mexican banks, may adopt the role of trustee. In other countries, the idea of taking the role of trustee is accepted; nevertheless, it needs to be carefully analysed from a Mexican tax perspective given the tax reporting obligations that Mexican residents have when they engage in transactions with transparent entities.

Another issue commonly arising is where the role of trustee gives rise to conducting the management of foreign companies from Mexico. In this case, foreign companies could be classified as Mexican tax resident entities. If Mexican residents are appointed only as beneficiaries of a trust, they would be required to report the income and activities arising from these vehicles, despite the trust not making actual cash flow distributions, pursuant to the Mexican fiscal transparency regime set forth in Article 4-B of the Income Tax Law.

If a Mexican beneficiary has a fiduciary role in a trust, foundation or similar entity, the resident individual would be considered as a “control person” for all tax and legal purposes, which may involve reporting obligations in relation to the tax administration in Mexico.

The most popular method for asset protection is the Mexican management and guaranty trust, since this vehicle allows the tax-free transfer of assets from the settlor (contributors) to the Mexican trust. After the contribution, the Mexican trustee becomes the legal owner of the contributed assets such that the settlor is no longer seen as owner of the contributed property other than for tax purposes. Under the trust mechanism, the trust assets escape from direct claims from third parties, authorities, creditors and employees, among other persons. In the event of disputes or waterfall provisions, the trustee may be required to release the contributed assets, whether principal and/or income, to lenders, beneficiaries or the original settlor.

Holding Company

The incorporation of a Mexican holding company achieves different succession planning strategies such as integrating, under a master vehicle, the ownership of underlying subsidiaries that may include operative companies, treasury entities, real estate divisions, and foreign corporations. Mexican holding companies allow tax-free reorganisations in many instances with respect to underlying subsidiaries. In other cases, they facilitate the implementation of mergers and spin-offs for family purposes. The financial consolidation of a parent company and subsidiaries represents another advantage when it comes to strategic decisions dealing with the valuation of the family group.

Of particular importance is that Mexican holding companies generally receive tax-free treatment upon the receipt of domestic dividends from Mexican subsidiaries. In the case of foreign profits, Mexican holding companies are able to claim indirect foreign tax credits against the income tax of 30% assessed on foreign profits.

Management Trust

The contribution of assets by the settlor to a Mexican trustee may be achieved tax-free, provided the settlor preserves the power to reacquire said assets or remain as beneficiary of the trust. Management trusts follow different objectives depending on family needs. However, they are an effective vehicle to concentrate assets on a tax-free basis as well as to delegate future wishes under a Mexican financial institution acting as trustee. The management trust may release assets, cash flow and collaterals, from time to time in accordance with the trust agreement. In other circumstances, it may be seen as a separate modern tool to transfer assets by inheritance. Voting arrangements on controversial topics like buyouts, drag-along, tag-along and liquidity events may also be regulated under a Mexican trust whereby settlors provide voting instructions in a unified manner for the execution of the trust during the life of the trust.

Shareholders’ Agreement

The shareholders’ agreement is more frequently adopted by Mexican families trying to regulate all the corporate governance, majority and minority rights, dividend distributions, on-site and virtual shareholders’ meetings, compliance and financial statements, and liquidation events, of Mexican holding companies and/or operating subsidiaries. They effectively regulate dispute resolution and mediation mechanisms in the event of family controversies, which avoids unnecessary litigation in federal or domestic courts that are excluded by the original intentions of the founding members of the family.

Shareholders’ agreements (SHAs) must be carefully prepared to include corporate covenants that may be upheld by the domestic or federal courts. SHAs may not result in outcomes going against the public order or human rights recognised in the Mexican Constitution and federal laws.

Family Protocol

The family protocol is a set of management, control and succession provisions suggested for the operation of a family office, a family-owned business or personal property. Mexican families have adopted the family protocol, mainly inspired by the European tradition surrounding this instrument. The legal nature of the family protocol is questionable in some circumstances given that it is neither a shareholders’ agreement nor an enforceable contract. The family protocol needs to be formalised as a valid agreement under Mexican or foreign law to preserve the intention of the parties in the case of any dispute.

The transfer of partial interest during lifetime or at death is generally found in usufruct transactions whereby the transferor transfers an interest in the ownership of assets. Other example are derivative transactions whereby the economic rights over financial assets are assigned to a different party. The adjusted fair market value of the asset in question is generally measured upon the transfer of the partial interest for income tax purposes whether the transaction may be implemented on an income tax-free basis or not. Further transfer of interest will receive a step-up basis on the fair market value only if this value was used as transfer price.

Disputes regarding estates, trusts, foundations or similar entities are subject to negotiation, mediation and arbitration mechanisms to solve out-of-court controversies on family assets, closely held businesses, management trusts, foundations and foreign assets. Mexico experimented a major judicial reform in 2025 that resulted in the removal of justices, magistrates and judges of federal and state courts. The new judicial power is fully integrated, and private clients prefer to discuss their controversies under private dispute mechanisms. In the case of international structures such as foreign holding companies, joint ventures or international trusts, private clients prefer the adoption of foreign law and courts for potential litigation and controversies.

Under Mexico’s legal system, the parties may adopt conventional penalty (pena convencional) as a valid indemnity for events of default or breach of covenants involving trusts, foundations, insurance programmes and similar instruments. Contractual damages may be claimed directly by the indemnified party without being required to go to the competent courts unless otherwise agreed by the written agreement. In the case of negligence, the damages suffered by the indemnified party may be also quantified by an independent expert whether in a private mediation, a judicial procedure or by arbitration.

The conventional penalty may not exceed the value or the amount of the principal obligation set forth in the applicable contract. The indemnified party needs to choose between the fulfilment of the original obligation or the payment of the conventional penalty. The conventional penalty is generally claimed in substitution of damages and losses (daños y perjuicios), since the Federal Civil Code does not allow the simultaneous claim of conventional penalty added to damages and losses.

In turn, damages and losses entitle the injured party to be restored to the economic position it would have occupied had the breach not occurred, or to receive monetary compensation therefor. Such compensation is generally quantified on the basis of the actual losses suffered and the profits or income that the aggrieved party failed to obtain as a consequence of the breaching party’s non-performance of its contractual obligations.

Corporate fiduciaries are recognised by the Mexican Corporations Law, the Securities Market Law, the Securities and Credit Operations Law, and the Federal Civil Code. Specifically, the directors of Mexican private and public companies must observe a “duty of care” and “duty of loyalty” in their administration activities. In the case of trusts, the Mexican trustee must conduct their role with high diligence in the administration and operation of the trust assets. Professionals rendering services to family-owned businesses including companies, trusts and foundations must also observe diligence in their advice in order to be excluded from potential liability or contractual negligence.

Fiduciaries may be directly liable in connection with their management actions in trusts, foundations and entities. Piercing of the corporate veil has been discussed by the Mexican Supreme Court with respect to Mexican entities rather than trusts or foundations. Specifically, the Supreme Court stated that the corporate veil may be pierced in the following situations: (i) when there is an abusive exercise of a recognised right (such as the freedom of association) in fraud of third parties, and (ii) in those circumstances where the principle of good faith is infringed by a simulated act (sham transactions).

There are analogous effects to piercing of the corporate veil under the joint liability concept attributed to directors and shareholders of companies in cases involving irregular entities, companies with tax deficiencies or labour claims from employees, among others.

Fiduciaries are required to invest assets prudently in the case of Mexican trusts. They must use a level of diligence like a “father of family”. For Mexican companies, shareholders and directors may not have interests opposed to the companies. The investment of assets must be always conducted in the best profitable interest of the companies, trusts and foundations, avoiding negligent practice, and limited to good faith principles. In many cases, fiduciaries prefer to stipulate the permissible level of risk in policies to be observed when making strategic investment decisions. In other circumstances, the shareholders’ meeting is required to approve qualified decisions and transactions, in order to prevent wrong investment decisions.

Mexico has a limited framework regarding fiduciary investment in trusts, foundations or similar entities. The general rule is that fiduciary persons must protect the economic interest of trusts, foundations or similar entities whether directly or by following the investment instructions of protectors (comités técnicos) or investment committees (comités de inversión). In practice, the appointment of protectors and investment committees prevents investment disputes and enables fiduciaries to continue to manage the trusts, foundations and similar entities by following investment guidelines previously defined for the benefit of beneficiaries.

The domicile of individuals is the place where they ordinarily reside or where their centre of vital interest is located. In the case of entities, domicile is established in the by-laws of Mexican companies.

Mexican citizens are:

• persons who were born in Mexican territory;
• persons who were born overseas and who are children of Mexican citizens; and
• persons who were born on Mexican vessels or aircraft.

Mexican citizenship may be also obtained by naturalisation, which requires:

• legal residency in Mexican territory for a five-year period;
• existing marriage with a Mexican spouse and marriage address in Mexico for a two-year period;
• adopted Mexican children and legal residency in Mexico for one year; and
• qualified services and projects under criteria set by the Ministry of Foreign Affairs.

There is no expeditious process to obtain Mexican citizenship. However, foreign citizens may qualify for temporary residency that allows them to stay in Mexico for more than 180 days and up to four years, whereas permanent residency allows them to live and work indefinitely in Mexico.

Mexico does not have an equivalent mechanism to the special-needs trust. However, three mechanisms may achieve similar objectives: parental authority (patria potestad), guardianship (tutela) and a management trust (fideicomiso de administración).

Parental Authority

Parental authority provides for specific duties from parents over minor children and their assets. It has a dual function: (i) personal care, decisions on health, education, and general welfare; and (ii) asset administration, with an accounting obligation until the minor reaches legal age (18 years old).

Guardianship

Guardianship is a protective measure involving the custody of persons not subject to parental authority who present disability or lack of capacity. It includes (i) minors who are not under parental authority; and (ii) adults with physical, psychological or sensory impairments, or addictions to toxic substances.

Management Trust

The management trustee must comply with distribution provisions for the benefit of minors or adults with disabilities for the time set forth in the trust agreement. Trust distributions are generally connected with the economic requirements of the disabled person, including personal care and custody, living expenses, medical support, education and therapy, and similar concepts.

Guardian (Tutor)

The appointment of a guardian (tutor) must be authorised by the Family Courts in Mexico, subject to compliance with the following statutory process:

• filing of appointment request describing facts and legal merits for the Family Court’s analysis;
• submission of medical expert reports on disabled persons;
• hearing with the guardian and the incapacitated person at the Family Court;
• judgment of interdiction and appointment of guardian by the Family Court; and
• registration of the guardian appointment with the competent Civil Registry.

Note that Mexico’s Supreme Court of Justice stated that Mexico’s traditional interdiction system was unconstitutional for violating the legal capacity of persons with disabilities. The Court ruled that disabled persons must have rights to take personal life decisions and access to the Mexican judicial justice without legal guardians. The Supreme Court expressly argued that Mexico’s interdiction system violated the UN Convention on the Rights of Persons with Disabilities. As a result, disabled persons are now recognised as independent individuals with full powers to decide on different personal life decisions such as place of residence, lifestyle, schedules, routines, and access to the Mexican judicial system to assert their own legal rights.

Conservator (Curador)

Mexican individuals under legal guardianship must have a conservator (curador) approved by the Family Court. The conservator does not manage personal assets. Their role is strictly to oversee the guardian’s actions and defend the incapacitated person’s interests against the guardian. The roles of guardian and conservator may not be held by the same person. The conservator must assert the legal rights of disabled persons when the guardian has opposite interests and request that the Family Court appoint a new guardian when applicable.

Individuals with mental incapacity are protected under mechanisms of family support depending on the specific needs of the disabled person. The mechanisms of family support secure that close family members help the disabled person to express their own wishes on daily life decisions, following the Supreme Court’s decision. The disabled person may directly appoint the persons providing “family assistance” before a notary public or the Family Court, depending on the level of disability. Otherwise, the “family assistance persons” must be appointed by the Family Court attending to the request made by the disabled person’s relatives.

Families and individuals use the following varying financial measures to prepare for longer lives, ensuring continued provision for housing, medical, personal and general living expenses, and preventing difficulties in getting access to funds for said expenses.

• Living trusts – Trust assets may be irrevocably contributed to a trust, identified and regulated in the trust agreement for the benefit of designated family beneficiaries, with rights and distributions structured according to specified age thresholds. The trust permits an independent trustee, whether in Mexico or overseas, to manage the assets required by the trust beneficiary during the beneficiary’s entire life regardless of age, physical or mental condition. The appointment of a protector secures the execution of protective measures set forth in the trust agreement for the benefit of family members.
• Pension funds – Mexican family members may also enjoy periodic payments under pension plans created by their closely held family-owned company, or, in some circumstances, by qualified federal or local government retirement plans. The level of periodic payments depends on the contributions made into the applicable plan by the family-owned company, or the individual.
• Co-ownership of bank accounts – The Mexican financial system allows two persons to make contributions to and have distribution powers over a single bank account. This measure facilitates the funding of a bank account by a family member, while family ascendants, for example, may get immediate access to funds for their ordinary living expenses or in the case of an emergency. The tax burden arising from co-ownership accounts may be separately agreed by the parties under a separate tax liability agreement.
• Investment portfolio – The level of risk in relation to financial assets owned by family members is decreased in many circumstances when considering the age of the respective client. The idea is that the investment portfolio is reduced to financial instruments that provide liquidity and value conservation to benefit the account holder. This is an effective measure that is offered and designed by the family and private bankers.
• Family committees – The integration of family investment committees is another instrument to avoid wrong investments, financial scams, and frauds on business decisions that may affect, reduce or terminate the estate of the family members due to lack of knowledge, physical and mental condition, or personal decisions (pressure, extortion, absence, etc).

Mexico eliminated the distinction between “legitimate” and “illegitimate” children. All children, regardless of whether they were born within or outside marriage, enjoy the same inheritance and filiation rights. There is no concept in the Mexican legal system analogous to the common law concept of “illegitimate child” with restrictive effects in succession matters.

Adopted Children

The adoptee acquires the civil status of child of the adoptive parent(s), legal ties with the family of origin are extinguished (except for matrimonial impediments), and the adopted child inherits on the same terms as any other descendant. Mexico does not recognise simple (partial) adoption; all adoptions granted under the current law produce full effects for all legal purposes.

Posthumous Children

A child born within 300 days following the dissolution of the marriage (by death, annulment or divorce) is presumed to be the child of the deceased spouse. This 300-day period, equivalent to the maximum legally recognised gestation period, establishes the presumption of paternity with respect to posthumous children. Accordingly, a child conceived before the decedent’s death but born thereafter has full capacity to inherit, both under a will and through intestate succession, provided the child is born alive.

Assisted Reproduction and Surrogacy

Mexico does not have a federal law on assisted reproduction. The legal framework is mostly adopted pursuant to the State Laws. For example: Tabasco and Sinaloa expressly regulate surrogacy in their civil legislation; Queretaro, Coahuila and San Luis Potosi expressly prohibit surrogacy; and other states have no specific regulation, which does not constitute a prohibition but creates significant legal uncertainty for the family.

Supreme Court

The Supreme Court of Justice (SCJN) ruled that Mexican individuals have a constitutional right to assisted reproduction because the Federal Constitution provides Mexican residents with the freedom to decide on the number of children they have and their personal family environment. Additionally, the Supreme Court stated that same-sex marriages are protected under Articles 1 and 4 of the Federal Constitution, and Articles 1 and 11 of the American Convention on Human Rights confer rights to have access to assisted reproduction.

The Supreme Court has recently decided another landmark case, stating that, given the lack of a legal framework regulating surrogacy in the City of Mexico, a voluntary jurisdiction proceeding is the appropriate mechanism for submission of the surrogacy agreement (previously ratified by all parties before a notary public) to the Family Court for approval and to request the civil registration of children conceived under this method.

Filiation

In accordance with the Supreme Court’s criteria, filiation is determined based on procreational intent (intended parents), not solely on the genetic link or the fact of childbirth. In practice, a voluntary jurisdiction proceeding or an amparo action is still required in order for the Civil Registry to issue the birth certificate with the intended parents’ names. Foreign parents must additionally consider their country’s requirements for recognition of filiation and travel documents for the child.

As of July 2026, same-sex marriage is legal in all 32 Mexican states. The process was completed on 4 December 2025, when the Congress of Guanajuato, the last state to join, approved the reform of its Civil Code. Recognition was achieved through three different mechanisms.

• Direct legislative reform to state Civil Codes (the majority of states).
• SCJN jurisprudence – Judicial Precedent 43/2015 declared unconstitutional any state laws restricting marriage to unions between a man and a woman. Any same-sex couple may obtain a valid marriage through an amparo proceeding even in states that have not formally amended their legislation.
• State executive decrees or local judicial decisions issued prior to the formal legislative reform.

The succession and tax implications of same-sex marriage are identical to those of opposite-sex marriages:

• the surviving spouse occupies the same position in the order of legal heirs;
• the same alimony rights apply between spouses and in favour of the surviving spouse;
• gifts between spouses are exempt from income tax; and
• the same liquidation consequences arise upon the termination of marriage.

Mexican law makes no distinction between same-sex and opposite-sex marriages in tax or succession treatment.

Cohabitation

Cohabitation is the legal concept that recognises legal unions between two persons who live in the same house without being married. The requirements for legal recognition are as follows:

• continuous cohabitation in the same house;
• common life for a five-year period (Mexico City Civil Code reduces it to two years); and
• no existing marriage during the cohabitation period.

Note that the minimum five-year period does not apply if the couple has children in common. Unlike marriage, cohabitation does not require registration with the Civil Registry; its existence must be proven in the event of a legal claim.

Rights Generated by Cohabitation

The surviving partner has the right to inherit reciprocally, applying the same rules as spousal succession, provided there is no surviving spouse and the cohabitation period is evidenced. In Mexico City, the surviving partner inherits on equal terms with the spouse. Moreover, there is a reciprocal obligation to provide alimony support between spouses. Applicable legislation recognises the cohabiting partner as a beneficiary of health benefits and, under certain conditions, of a survivor’s pension.

Differences Between Cohabitation and Marriage

Burden of proof

A spouse proves their status with the marriage certificate, while a cohabiting partner must prove the relationship through witnesses, shared domicile records, joint children’s birth certificates, or other means, which may give rise to litigation in Mexico.

Property and succession

Marriage automatically generates a common property or separate property regime, whereas cohabitation does not automatically generate any property regime – each partner retains exclusive ownership of their own assets unless otherwise agreed in writing. From a succession perspective, the cohabiting partner is not a forced heir; if the deceased executes a will without including the other partner, said partner will have no inheritance rights unless they are a creditor for alimony purposes. If multiple simultaneous concubinage relationships existed, none of the partners will have inheritance rights.

Jurisprudence

The Supreme Court of Justice has recognised the extension of certain rights, originally reserved for marriage, to cohabiting partners under the human rights principles of non-discrimination and equality, including gifts between partners. However, the constitutional protection is not an automatic measure. In the absence of a written will or any other estate planning instrument, the cohabiting partner’s protection remains considerably weak. Best practice for cohabiting couples is to formalise a will, gift agreements or trusts to protect the surviving partner.

Not-for-profit entities including associations, foundations, trusts, funds and other charitable vehicles are generally excluded from income tax by Chapter III of the Income Tax Law in Mexico. Not-for-profit entities are relieved from income taxation to promote non-profitable activities in the country in sectors such as education, culture, sports, literature, scientific, welfare and environment.

Some of these vehicles may qualify as Charitable Entities to Receive Tax Deductible Contributions subject to an authorisation process obtained from the Tax Administration. As a result, some Mexican family offices or companies choose to form their own charitable entity to conduct philanthropic activities relating to education, culture, sports and literature. Corporate donors, which may be related entities, may deduct donations of up to 7% of the previous annual taxable income. If donations are made exclusively to federal, state or municipal governments, the limit is 4%, with a combined limit of 7% in the case of other non-governmental donations.

The tax-free status of not-for-profit entities is not restricted to Mexican territory. Mexican double taxation treaties may include the “Exempt Organisations” article whereby not-for-profit entities are relieved from income taxation when conducting religious, scientific, literary or educational activities in other countries. In some cases, double taxation treaties recognise the Charitable Entity Status to Receive Donations in the other country, which implies that non-Mexican donors may contribute funds to Mexican charitable vehicles.

Civil Association (Asociación Civil)

The civil association is a civil law vehicle that provides flexibility for a wide array of non-profitable activities that may be conducted by members in Mexico and overseas. The legal framework is fully regulated in the Federal Civil Code, which provides for transparency in crucial elements such as management, administration, equity and liquidation. The acceptance and exit of members, distribution restriction on assets, and annual accounts reporting are effectively regulated, to continue with the envisioned non-profitable activities of the civil association.

The choice of a civil association is generally found in the following charitable organisations:

• literal, philanthropic, cultural and professional organisations;
• sports and environmental associations;
• collections and museums;
• scholarship and research institutions; and
• associations authorised to receive deductible gifts.

Foundations

The foundation concept is not an autonomous choice of legal entity under Mexican law. The term foundation is mostly used to refer to civil associations or private assistance institutions (IAP) which engage predominantly in specific philanthropic activities. As a distinction, IAPs are governed by state private assistance laws (the most relevant being the Private Assistance Institutions Law for Mexico City), subject to permanent supervision by the Private Assistance Board. Beneficiaries are not necessarily designated, which make IAPS functional for social projects in Mexico.

Charitable Trusts

The formation of Mexican charitable trusts are another tax-efficient vehicle for conducting not-for-profit activities, including sport, cultural, literal and environmental projects. The main difference with civil associations, civil partnerships and IAPs is reliance on the trustee, which must be a Mexican financial institution. The trustee is required to observe a high level of diligence in the management of the trust assets in accordance with the proposed charitable activities.

Chambers of Commerce and Professional Associations

Chambers of commerce are regulated in Mexico under the Law of Entrepreneurial Chambers. Their main purpose is to conduct public interest projects without pursuing lucrative activities. They represent, promote and defend the interests of the commerce, services and tourism sectors.

Pension Funds and Investment Funds

The non-income taxation regime is also extended to Mexican pension funds (SIEFOREs) organised to receive, manage and distribute the saving funds of Mexican employees. It is in alignment with the fiscal tax regime generally applicable to pension funds in other countries. Investment funds, including debt and mixed funds (other than equity funds), may also qualify for tax-free status, achieving fiscal transparency and taxable recognition by their investors or shareholders. Under specific circumstances, individuals may achieve a preferred income tax rate of 10% on the sale of the inventory of shares indirectly held by a mixed investment fund.