# Thoughts on Zacatecas



## tftimm

I posted on here about 3 months ago. Well, I will be traveling to Fresnillo, Zacatecas this Sunday for an informal discussion with the CEO and COO of the company. I interviewed about 3 months ago for a distribution opportunity here in Texas, but my strengh is in manufacturing and at the time they asked if I had interest in moving to Zacatecas.

I met the CEO during a prior visit to Texas where he quickly interviewed me. Well, I got a call and they wanted to see if I was still interested. I said, absolutely.
My wife is a Mexican national and I would welcome the opportunity to work as an Expat in Mexico. So, they are paying for airfare, hotel, etc. to send me down for a brief tour of their operation in Mexico. There are no positions open at the moment, but it would be great if one opened up.

I travel to Nuevo Leon quite frequently to visit my wife's family and am aware of the situation.

How are things in Zacatecas?
What is the cost of living in Zacatecas?
How is life in Zacatecas?

Any additional advice and thoughts would be welcomed.


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## RVGRINGO

We've only visited, but Zacatecas is a wonderful city with friendly residents. There are lots of university and cultural opportunities. It is, however, at high elevation and can be quite cold in winter. It will take a while to accommodate to the thinner air.


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## tftimm

One questions I should have added, is there an American school in Zacatecas? My daughter is 3 mos. old and I would look at this move as long term, so where is the closest US/English/American school?

It seems like a very scenic, cultural, and fairly inexpensive place to live compared to other parts of Mexico.

Thanks for your comments and I look forward to more.


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## conklinwh

We also have been visitors to Zacatecas and thought was great. Museums, restaurants, lots of little parks, we especially like the Alameda. It does have reputation of being the coldest of the large cities of the bajio. I did a quick search and saw that there is a Del Bosque Preschool in Zacatecas. Also, the woman that started Montessori Eagles International in Mexico was a kindergarten teacher in Zacatecas but not sure that means that they have a presence. 
Every time that we have been there we have run into business people from the US that spend at least half time there and they all seemed very pleased.


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## tftimm

Well that is good to hear. I do speak Spanish and my wife is a Mexican national from the Monterrey area. I'm glad to hear there are plenty of things to do. I've also heard from someone who visited plants in that area, that the Country Club there is very nice, so I hope that is the case.

Hopefully the trip goes well and sometime soon I have an opportunity with this company in Zacatecas.


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## tftimm

Well, I am back from my trip and I felt like things went well. I hope things work out and there I presented some sort of offer.

As for now, I am looking at the compensation and trying to get my arms around what is fair/normal for this type of work. I will be paid in US dollars and in talking to an expat friend who lives in Jamaica, there are US tax advantages to working outside the US, but there are serious local Jamaica taxes he has to pay.

What is the Mexico tax situation for expats who are paid in US dollars that live/work in Mexico? Would I be susceptible to paying any taxes to the Mexican government?

Any advice/thoughts on compensation and/or tax information would be greatly appreciated.

I liked the area, the altitude had a little affect on me, and I'm sure that would take some getting use to. I was only there for about 6 hours and didn't get to see much of Fresnillo and didn't get to see any of Zacatecas.

I will use the search button and see what I can learn.


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## RVGRINGO

You will have to pay Mexican taxes on income earned in Mexico & use the foreign tax credit on your US Incom Tax Return. You'll also need INM permission to work in Mexico approved on your visa; your employer must support you in that application.
An 'American School'? Your toddler will quickly become fully bilingual in a Spanish speaking environment; probably a private school setting.


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## tftimm

Well, as a follow up, I received a call and they are planning to present me an offer sometime before the end of next week.

I've got a hand full of questions, and I'm sure I'll have to talk to an expat face-to-face before I accept, but things look good.

I'm ready for a change, back to the private sector, and they have talked about future potential opportunities with the company.

We'll see, and look out for my questions.

My first question is the whole notion of the Mexican income taxes. Lets say I have no problems with the INM, etc., how are my Mexico income taxes calculated? Also, who do you pay and when? I spoke with a friend who works in Mexico, paid in Pesos and he says you get taxes on your "profits", so he shows expense reciepts, etc. so he ends up paying almost nothing in taxes. Sounds like a big headache, but I'm not sure.

I believe the offer will be less than the $85K or $91K (I forget) limit, so I assume I will not pay any federal income tax. How about if I own a house? I will keep my house (rent it to my in-laws for cash) for tax and investment purposes, but I will do the cash deal so I do not show any revenue generated. Is that a decent idea, does it make sense? What are your thoughts?

I'll ask 1 final question in regards to temporarily importing the vehicle I have. Keep in mind, I currently have a "permiso" as I drive close to Monterrey in it already, but taking it down to Zacatecas is a little different because I will need to get it maintained, etc. there.

What would be a good vehicle in the $10,000 range to get in advance of moving to Mexico, considering the following factors:

1) Must be reliable, preferably Nissan, Honda, or Toyota
2) Must be able to fit 4 people very comfortably
3) Must be an SUV or pick-up (small or mid-size in fine) due to roads, drainage, maybe a Honda Odyssey

Thoughts?


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## TundraGreen

tftimm said:


> My first question is the whole notion of the Mexican income taxes. Lets say I have no problems with the INM, etc., how are my Mexico income taxes calculated? Also, who do you pay and when? I spoke with a friend who works in Mexico, paid in Pesos and he says you get taxes on your "profits", so he shows expense reciepts, etc. so he ends up paying almost nothing in taxes. Sounds like a big headache, but I'm not sure.


I will just address the tax question. You will have to get an RFC number from SAT, the Mexican equivalent of an SSN number for the IRS. Then whenever you purchase anything ask for a "factura". This is different from a standard receipt. It will include your RFC and that of the seller. Often things are sold off the books, but whenever possible ask for a factura. You will need to pay taxes EVERY MONTH. You can claim a credit for all the IVA paid on your facturas. Essentially, you or someone calculates what you owe or don't owe and you go to a bank and pay it. There are a bunch of taxes: IVA, IETU, ISR. I had to hire someone to prepare my taxes. I do my own in the US and generally try to handle all that kind of stuff myself, but I couldn't figure out the tax system. Maybe your spanish is better than mine and someone can explain it to you. I found it worthwhile to pay someone.

RFC = Registro Federal de Contribuyentes (like an Social Security Number in the US)
SAT = Servicio Administración Tributaria (Also known as Hacienda, like IRS in US)
IVA = Impuesto al Valor Agregado (value added tax)
ISR= Impuesto sobre la renta
IETU = Impuesto Empresarial de Tasa Única


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## Guest

tftimm said:


> Well, I am back from my trip and I felt like things went well. I hope things work out and there I presented some sort of offer.
> 
> As for now, I am looking at the compensation and trying to get my arms around what is fair/normal for this type of work. I will be paid in US dollars and in talking to an expat friend who lives in Jamaica, there are US tax advantages to working outside the US, but there are serious local Jamaica taxes he has to pay.
> 
> What is the Mexico tax situation for expats who are paid in US dollars that live/work in Mexico? Would I be susceptible to paying any taxes to the Mexican government?
> 
> Any advice/thoughts on compensation and/or tax information would be greatly appreciated.
> 
> I liked the area, the altitude had a little affect on me, and I'm sure that would take some getting use to. I was only there for about 6 hours and didn't get to see much of Fresnillo and didn't get to see any of Zacatecas.
> 
> I will use the search button and see what I can learn.


It depends. If you work for a foreign company at a MX location, and have a "no imigrante" visa (used to be called an FM-3), have the US company sponsor you for the MX plant, and get paid outside of MX (into your US account), you do NOT pay MX income taxes. You must still file your annual US tax return but can use the Foreign Earned Income exclusion up to the limit (for 2011 it is $92,900) to also not pay income taxes in the US.

If the company you are going to work for here is a MX company, but they also have a separate sister US company for their business there, get them to structure the agreement so that you work for/get paid by the US sister company, and are on assignment to the MX company. You will be working as a specialist/consultant to the MX company.

That will work for the first 5 years in order to not be liable for the MX income taxes. There may be a twist to this by having a MX national for your spouse. If you get (what used to be) an FM-2 visa (inmigrante) you will be liable for MX taxes from day 1, but will receive credit against your US taxes for the MX income taxes paid.

There is quite a bit of paperwork to file with INM, but the company here can easily find an abogado to do this for you. The US company writes a sponsoring letter, the MX company writes a sponsoring letter, your college transcripts or proof of many years of experience in your field, etc.

(I didn't come to MX as a retiree, I came here to work, and went through this process. The tax savings are a great benefit to being a working expat.) Suerte.


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## tftimm

GringoCArlos said:


> It depends. If you work for a foreign company at a MX location, and have a "no imigrante" visa (used to be called an FM-3), have the US company sponsor you for the MX plant, and get paid outside of MX (into your US account), you do NOT pay MX income taxes. You must still file your annual US tax return but can use the Foreign Earned Income exclusion up to the limit (for 2011 it is $92,900) to also not pay income taxes in the US.
> 
> If the company you are going to work for here is a MX company, but they also have a separate sister US company for their business there, get them to structure the agreement so that you work for/get paid by the US sister company, and are on assignment to the MX company. You will be working as a specialist/consultant to the MX company.
> 
> That will work for the first 5 years in order to not be liable for the MX income taxes. There may be a twist to this by having a MX national for your spouse. If you get (what used to be) an FM-2 visa (inmigrante) you will be liable for MX taxes from day 1, but will receive credit against your US taxes for the MX income taxes paid.
> 
> There is quite a bit of paperwork to file with INM, but the company here can easily find an abogado to do this for you. The US company writes a sponsoring letter, the MX company writes a sponsoring letter, your college transcripts or proof of many years of experience in your field, etc.
> 
> (I didn't come to MX as a retiree, I came here to work, and went through this process. The tax savings are a great benefit to being a working expat.) Suerte.


I would be working and be paid by the US company direct deposited into my US bank account and would get an FM3, or no inmigrate visa. That is what I have been told, therefore, it sounds like I would not be responsible for US income tax or Mexico income tax and would be sure to claim the Foreign Tax Credit when I prepared my taxes.
My wife is a housewife and so she doesn't plan on working in Mexico. From the sounds of it, as long as I am paid from a US company into my US bank account and have an FM-3 visa, I should be clear of any taxes should I make less than $92,900.

Thank you so much and hopefully I understood your details correctly!


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## RVGRINGO

The USA taxes you on worldwide income. There is no way out. You will still need permission from INM to work in Mexico, even as a 'visiting specialist', regardless of where, if, or how, you are paid.
On renting without paperwork; it sounds like you are already thinking 'tax evasion', a great way to get deported without your 'goodies'.
On the vehicle; Nissan and VW are the most popular here. Honda & Toyota are newer in Mexico. If you are going to live in Mexico, consider buying your next vehicle in Mexico. It will be more convenient if you drive back and forth to the USA and you can avoid the heavy luxury tax on newer vehicles (tenencia) if you buy a four door pick-up.
On your taxes; you'll need to hire a local accountant if you make any money in Mexico.


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## tftimm

*Update: February 7, 2011*

I will be getting a formal offer on Wednesday of this week. I'm still not 100% sure about the whole Tax situation, but I will want to see a tax attorney to be sure before I sign on the dotted line.

I'm excited, I just hope they make it worth my while.


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