The Mexico subsidiary setup process is one option for developing and growing your company abroad. Setting up a Mexico subsidiary requires a significant amount of time, money, emails, and travel to and from Mexico.
A subsidiary allows you to operate as a branch of a parent company while meeting the needs of local customers in Mexico. It is known as an S.A. de R.L. (Anonymous Society of Limited Responsibility) or S.A. de C.V. (Anonymous Society of Variable Capital) in Mexico and runs similarly to an LLC in the US. The subsidiary gets limited independence from the parent company, and the parent company stays liable for anything that goes wrong.
The Mexico subsidiary setup process begins by choosing a corporate name and registering with the Ministry of External Affairs (SRE). If there are no duplicates, your name should get approved. You’ll then enter into a proforma agreement where any non-Mexican shareholder is bound by Mexican laws.
Hire a local attorney that can prepare documents for you, such as corporate governance, duration of existence, and more. They can explain many employment, compensation, and benefits laws in Mexico. You should get every document notarized and establish a power of attorney for your subsidiary.
As soon as you establish a subsidiary, you must comply with all Mexico subsidiary laws — including zoning, environmental regulations, health and sanitary issues, and immigration.
Taxes are one of the most significant aspects of Mexico’s subsidiary law. Typically, the home company in the US will receive a tax credit for any income, dividends, and withholding taxes paid to the Mexican government. However, it is important to stay compliant with all tax laws in Mexico to avoid costly fines. You must enroll as an employer with Mexican Social Security and register for taxes.
Subsidiaries in Mexico are required to pay employees through an in-country bank account in pesos. You’ll also pay social security and other taxation agencies this way.