Investing from Mexico

When you sell shares or ETFs listed on the Mexican exchanges, BMV and BIVA, you pay a final tax of 10 percent on your net gain for the year. This includes foreign shares and ETFs listed in the SIC, the Sistema Internacional de Cotizaciones. Your broker sends you a yearly statement, called a constancia, and you pay the tax with your annual return in April. Losses can only be offset against these gains, for up to 10 years. With a foreign broker the same 10 percent applies, but you calculate the gain yourself.

Dividends from Mexican companies carry a final tax of 10 percent, which the company withholds. The dividend is also added to your yearly income, with a credit for the tax the company already paid. Dividends from foreign companies also carry the 10 percent Mexican tax and are added to your income. For US shares and funds, the US keeps 10 percent of the dividend under its tax treaty with Mexico, if you signed the W-8BEN form with your broker. For interest from CETES and bank accounts, 0.90 percent of the invested amount is withheld in 2026. Only the interest above inflation, called real interest, is taxed.

Most employees save for retirement in an AFORE, an account in their own name. Since 2023 the employer's contribution has been rising step by step until 2030. You can also save voluntarily. Contributions to a PPR, a personal retirement plan, or deductible voluntary contributions to your AFORE lower your taxable income. The limit is 10 percent of your yearly income or 5 yearly UMA, whichever is lower. The UMA is a reference value the government sets each year. The money must stay invested until you are 65, and an earlier withdrawal is taxed as income.

You can buy CETES and other Mexican government securities directly on cetesdirecto, from 100 pesos and without fees. Bank deposits are protected by the IPAB up to 400,000 UDIs per person per bank. UDIs are a unit that rises with inflation. Money in a brokerage account or an investment fund is not a bank deposit, so the IPAB does not cover it. Brokers in Mexico are supervised by the CNBV. The peso has floated freely since 1994, and the Banco de México targets 3 percent inflation.

Many savers in Mexico keep their money in bank accounts and never use the rules made for long-term saving, such as the PPR deduction. Knowing the 10 percent rule also helps you plan sales, because losses in the same year lower the tax on your gains. US shares and US-listed funds can also count for US estate tax above 60,000 dollars, so ask a tax adviser before your US holdings reach that size.

Four pages go deeper. Government bonds in Latin America explains CETES and similar bonds. Currency risk explains what the exchange rate does to savings in dollars. The expense ratio shows what a yearly fund fee costs over time. Dollar-cost averaging explains how to invest a fixed amount every month.