Annual tax return 2025: key considerations for individuals with income in Mexico and abroad

This process is particularly relevant for individuals who receive income from various sources, including those from abroad, as they may face more complex tax scenarios when complying with their obligations. 

In accordance with the Mexican Income Tax Law (LISR), individuals who are tax residents in Mexico are required to declare all of their income, regardless of the location of the source of wealth, including income generated abroad. 

Exception rule (no obligation to file a tax return)

Individuals may choose not to file the annual tax return if they: 

• Receive exclusively income from salaries (Chapter I) and interest (Chapter VI). 
• Have total income not exceeding MXN $400,000. 
• Earn real interest not exceeding MXN $100,000. 
• Have had the corresponding withholding applied to such income. 

Cases in which the exception does not apply

The above exception ceases to apply when the taxpayer: 

• Obtains additional income (professional fees, rental income, business activities, among others). 
• Receives income without withholding tax or subject to special tax treatments. 
• Maintains bank accounts or investments abroad. 
• Generates income from exchange gains. 
• Earns interest accrued outside Mexico. 
• Participates in international structures or foreign financial investments. 

In these cases, the taxpayer will be required to file the annual tax return, even if income from salaries does not exceed MXN $400,000.

Income disclosure rule (MXN $500,000) 

When the total income for the tax year — including those exempt or subject to final tax — exceeds MXN $500,000, the taxpayer must declare all income, including: 

• Exempt income (for example, gifts or inheritances). 
• Income for which a final tax has already been paid. 
• Other informational items required under tax legislation. 

Foreign income and tax implications 

In practice, it is common for taxpayers with an executive profile to hold financial assets outside Mexico, which may create significant tax implications: 

• Interest on foreign accounts: taxable on an accrual basis, regardless of whether funds are repatriated. 
• Exchange gains: may generate taxable income even without cash flow. 
• Dividends from foreign entities: subject to taxation in Mexico. 
• Loans or credits granted to foreign residents: taxable on an accrual basis. 

These elements are often underestimated, creating significant risks of non-compliance. 

Non-compliance risks 

Failure to comply with these obligations may result in: 

• Fines for failure to file. 
• Surcharges and inflation adjustments on tax liabilities. 
• Audits or verification procedures by the Mexican Tax Authority (SAT). 
• Determination of tax assessments. 
• Exposure to contingencies in tax audits.

How can we assist you? 

Our Global mobility services team can support you with: 

• Assessment of tax obligations. 
• Comprehensive review of domestic and foreign income. 
• Preparation and filing of the annual tax return. 
• Tax planning to optimise your tax burden.