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Mexico withholding tax on payments abroad: dividends, interest, royalties, services, rent and share sales

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Last verified: 2026-10-26 · Status: Stable

Mexico taxes most payments to foreign residents without a permanent establishment by final withholding on the gross amount: 10 percent on dividends, 4.9 to 21 percent on most interest (35 percent on most related party interest), 25 percent on royalties and technical assistance (35 percent on trademarks and patents) and 25 percent on services performed in Mexico and on rent. The Mexican payer withholds and pays the tax to the SAT; a deduction for the payment generally depends on the withholding having been made. Tax treaties can cut these rates when the recipient proves treaty residence and meets the procedural conditions of LISR art. 4; the US treaty, for example, lowers dividend withholding to 5 percent or 0 percent for qualifying parents.

USD conversions use MXN 18.5026 per US dollar, the US Federal Reserve H.10 noon buying rate in New York for 16 October 2026 (FRED series DEXMXUS), the latest observation available when this page was verified. Mexican tax law uses the Banxico FIX for foreign currency amounts, which differs slightly. Conversions are for orientation only.

Key facts

Withholding tax on dividends paid to foreign residents (domestic rate, before treaties)	10 %LISR art. 164, section I, as of 2026-10-26 · in force
Withholding tax on interest paid to foreign residents (domestic rates, before treaties)	4.9, 10, 15, 21 or 35 by type %LISR art. 166, as of 2026-10-26 · in force
Withholding on interest paid to related lenders abroad not covered by a lower rate (top individual rate)	35 %LISR arts. 152 and 166, section V, as of 2026-10-26 · in force
Withholding tax on royalties and technical assistance paid to foreign residents (general domestic rate)	25 %LISR art. 167, section II, as of 2026-10-26 · in force
Withholding on patent and trademark royalties and advertising paid abroad	35 %LISR arts. 152 and 167, as of 2026-10-26 · in force
Withholding on fees for services rendered in Mexico by foreign residents	25 %LISR art. 156, as of 2026-10-26 · in force
Withholding on rent from Mexican real estate paid to foreign residents	25 %LISR art. 158, as of 2026-10-26 · in force
Tax on sale of Mexican shares by foreign residents (gross basis; 35 percent of the gain under the net option)	25 %LISR art. 161, as of 2026-10-26 · in force
Annual withholding on interest paid by Mexican financial institutions to residents (2026)	0.90 % of capitalLIF 2026 art. 24, as of 2026-10-26 · in force
US and Mexico treaty dividend withholding limits	0 (qualifying 80 percent parents), 5 (10 percent voting stock), 10 (other) %US and Mexico income tax convention art. 10 as amended by the protocol signed 26 November 2002, as of 2026-10-26 · in force

The rule

1. Dividends: 10 percent final withholding. A Mexican company paying dividends to foreign resident shareholders withholds 10 percent of the dividend as a final tax and issues a statement showing the dividend and tax withheld; the tax is paid with the provisional payment for the month. If the dividend exceeds the net tax profit account (CUFIN), the company also pays 30 percent corporate tax on the grossed up excess (factor 1.4286). Remittances of profits by a Mexican branch to its head office that do not come from the branch's CUFIN or capital remittance account bear the same corporate level tax.
Cost to do it: 10 percent of the gross dividend before treaty relief, plus company level tax only on distributions above CUFIN.
Example: A subsidiary pays its foreign parent a dividend of MXN 1,850,260 out of CUFIN. It withholds MXN 185,026 and wires MXN 1,665,234. / A dividend of USD 100,000 at 18.5026 loses USD 10,000 to Mexican withholding; the parent receives USD 90,000 before any treaty reduction (USD 95,000 at the 5 percent US treaty rate, or USD 100,000 where the US treaty 0 percent rate applies).Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Arts. 10, 140 and 164, section I, 2013-12-11 official text · verified 2026-10-26

2. Interest: rate depends on lender and instrument. Interest paid to foreign residents bears withholding on the gross amount at 4.9 percent for publicly placed debt securities and credits owed by Mexican banks (10 percent if information requirements are not met); 10 percent for foreign banks, including investment banks, and foreign state financing entities that are beneficial owners and meet SAT information rules; 15 percent for reinsurers; 21 percent for other interest paid by Mexican banks, supplier credit on machinery and equipment and related purchase financing; and the top individual rate of art. 152 (35 percent) for all other interest. The 4.9 and 10 percent rates do not apply, and 35 percent applies instead, where beneficial owners receiving more than 5 percent of the interest hold more than 10 percent of the debtor's voting shares or are companies more than 20 percent owned by the debtor.
Cost to do it: The rate times gross interest, withheld by the Mexican payer before any treaty relief.
Example: A Mexican subsidiary pays MXN 1,000,000 of interest on a loan from its foreign parent. Without a treaty the residual 35 percent rate applies: MXN 350,000 withheld. / Interest of about USD 54,046; withholding of about USD 18,916 at 18.5026 (15 percent, about USD 8,107, under the US treaty's general interest rate).Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Art. 166, 2013-12-11 official text · verified 2026-10-26

3. Royalties and technical assistance: 25 percent, or 35 percent for patents and trademarks. Royalties and technical assistance paid to foreign residents bear withholding on the gross payment at 25 percent in general, 5 percent for the use of railway cars, certain temporarily imported containers and trailers and licensed vessels, and 1 percent for licensed commercial aircraft. Royalties for patents, certificates of invention or improvement, trademarks and trade names, and payments for advertising, bear the top individual rate of art. 152, which is 35 percent.
Cost to do it: 25 or 35 percent of the gross payment before treaty relief.
Example: A Mexican company pays MXN 2,000,000 a year to its parent for use of a trademark: MXN 700,000 is withheld at 35 percent. Fees for know how classed as technical assistance would bear MXN 500,000 at 25 percent. / Royalty of about USD 108,093; withholding of about USD 37,833 on the trademark royalty and about USD 27,023 on technical assistance at 18.5026.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Art. 167, 2013-12-11 official text · verified 2026-10-26

4. Services performed in Mexico and rent of Mexican property: 25 percent. Fees for independent personal services are Mexican source when the service is rendered in Mexico, and payments to a related party abroad are presumed to be for services rendered in Mexico unless proven otherwise; the payer withholds 25 percent of the total fee with no deductions (the foreign provider may prove the part performed abroad). Rent from real estate located in Mexico paid to foreign residents bears 25 percent withholding on the gross rent. If the payer is not resident in Mexico, the foreign recipient files a return within 15 days.
Cost to do it: 25 percent of the gross amount.
Example: A foreign consultant works two weeks in Mexico for a Mexican client for a fee of MXN 300,000: MXN 75,000 is withheld. A foreign owner of a Monterrey warehouse receiving MXN 600,000 of rent suffers MXN 150,000 of withholding. / Fee of about USD 16,214 and withholding of about USD 4,053; rent of about USD 32,428 and withholding of about USD 8,107 at 18.5026.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Arts. 156 and 158, 2013-12-11 official text · verified 2026-10-26

5. Sale of shares in Mexican companies: 25 percent of the price, or 35 percent of the gain. Gains on shares issued by a Mexican resident, or by a company whose book value comes more than 50 percent from Mexican real estate, are Mexican source. Tax is 25 percent of the gross sale price with no deductions, withheld by a Mexican buyer or paid by the seller within 15 days. A seller that appoints a Mexican representative under art. 174, is not in a preferential tax regime or territorial system, and files a report by a registered public accountant may instead pay the top individual rate (35 percent) on the gain.
Cost to do it: 25 percent of the price, or 35 percent of the gain plus the cost of the accountant's report. The net basis is usually cheaper unless the gain exceeds about 71 percent of the price.
Example: A foreign parent sells shares of a Mexican company for MXN 100,000,000 with a tax cost of MXN 60,000,000. Gross basis tax is MXN 25,000,000; net basis tax is MXN 14,000,000 (35 percent of MXN 40,000,000). / Price of about USD 5,404,646; gross basis tax about USD 1,351,161 versus net basis tax about USD 756,650 at 18.5026.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Art. 161, 2013-12-11 official text · verified 2026-10-26

6. Using a treaty rate. Treaty benefits apply only to recipients who prove residence in the treaty country and comply with the treaty and with Mexican procedural rules, including filing the tax situation report (ISSIF) or audited tax report where applicable and appointing a legal representative where required. The Mexican payer may apply the lower treaty rate directly; if it withholds more, the foreign resident may claim a refund of the difference. Foreign residence certificates need no legalization, and a translation is needed only if the authorities ask. In related party transactions the SAT may ask the foreign recipient for a sworn statement, signed by its legal representative, that the income is also taxed in its country of residence, citing the provisions.
Cost to do it: Obtaining a residence certificate from the foreign tax authority; a refund claim if overwithheld.
Example: A Mexican subsidiary pays its US parent MXN 1,000,000 of royalties for a patent. Domestic withholding would be MXN 350,000; with a current US residence certificate on file it applies the 10 percent US treaty limit and withholds MXN 100,000. / Royalty of about USD 54,046; withholding falls from about USD 18,916 to about USD 5,405 at 18.5026.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Art. 4, 2013-12-11 official text · verified 2026-10-26

7. Domestic interest withholding for 2026. Separately from payments abroad, Mexican financial institutions withhold income tax on interest paid to Mexican residents at an annual rate of 0.90 percent of the capital that generates the interest for 2026, as a provisional payment.
Cost to do it: 0.90 percent of capital a year, creditable by the recipient.
Example: A Mexican company holds MXN 10,000,000 in bank deposits for all of 2026. The bank withholds about MXN 90,000 as an advance on the company's income tax. / Deposits of about USD 540,465; annual withholding of about USD 4,864 at 18.5026.Ley de Ingresos de la Federación para el Ejercicio Fiscal de 2026 (LIF 2026), DOF 7 November 2025, in force 1 January 2026, Art. 24, 2025-11-07 official text · verified 2026-10-26 · changed: The 2026 Federal Revenue Law, published in the DOF on 7 November 2025, set the annual rate at 0.90 percent for 2026; the rate is fixed each year in that year's revenue law.

Payment	Rate on gross amount	Rule
Dividends	10 percent	LISR art. 164
Interest on publicly placed debt and owed by Mexican banks	4.9 percent	LISR art. 166, section II
Interest to foreign banks and foreign state lenders (beneficial owners)	10 percent	LISR art. 166, section I
Interest to reinsurers	15 percent	LISR art. 166, section III
Interest on supplier credit for machinery and other bank interest	21 percent	LISR art. 166, section IV
Other interest, including most related party loans	35 percent	LISR art. 166, section V
Royalties and technical assistance	25 percent	LISR art. 167
Patent and trademark royalties, advertising	35 percent	LISR art. 167
Fees for services rendered in Mexico	25 percent	LISR art. 156
Rent of Mexican real estate	25 percent	LISR art. 158
Sale of Mexican shares	25 percent of price or 35 percent of gain	LISR art. 161

Mexican withholding on payments to foreign residents without a permanent establishment, domestic rates before treaty relief, verified 26 October 2026

Worked example

Withholding calculator, USD 100 dividend from a Mexican subsidiary to its parent, paid out of CUFIN: domestic withholding 10 percent leaves USD 90.
If the parent is a US company holding at least 10 percent of the voting stock, the US treaty caps withholding at 5 percent, leaving USD 95; if it has held 80 percent or more for 12 months and meets the limitation on benefits tests, the rate is 0 percent and it receives USD 100.
If the parent is resident in a country without a treaty, it receives USD 90 and Mexico keeps USD 10 as a final tax.
The parent's home country then decides whether it credits or exempts the Mexican tax; for an Argentine parent, see The Argentine Thread guide.

Step by step

1. Classify each outbound payment (dividend, interest, royalty, technical assistance, service, rent) because the rate follows the classification.
2. Check whether the recipient is a related party; most related party interest and trademark royalties fall into the 35 percent rate unless a treaty applies.
3. Collect a current residence certificate from the recipient before payment if a treaty rate will be applied (LISR art. 4).
4. Withhold at payment, give the recipient a statement of the payment and tax withheld, and pay the tax to the SAT by the 17th of the month following the withholding (CFF art. 6o.).
5. If too much was withheld, the foreign recipient files a refund claim for the difference.

Common traps

Calling a royalty a service fee. Trademark and patent royalties carry 35 percent, not 25 percent (LISR art. 167); the SAT looks at substance.
Assuming 10 percent on an intercompany loan. Interest to a lender holding more than 10 percent of the debtor's voting shares falls into the 35 percent rate (LISR art. 166).
Paying a foreign affiliate for services. Payments to related parties abroad are presumed to be for services rendered in Mexico, with 25 percent withholding, unless the payer proves otherwise (LISR art. 156).
Applying a treaty without the paperwork. Missing residence proof or required filings can deny the treaty rate (LISR art. 4).
Selling Mexican shares without a representative. Without the art. 174 representative and accountant's report, tax is 25 percent of the full price, even at a loss (LISR art. 161).

Sources

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