Holding Companies in Mexico

A holding company in Mexico is a business without any commercial activities, which, instead, owns assets. These can be shares in other companies, units in limited partnerships, private equity funds, publicly traded stocks, bonds, property, patents, trademarks, copyrights or any other asset that has value.

In this article, our Mexico company formation consultants explain different aspects related to holding companies in Mexico. With the help of our assistants, investors can easily set up a holding in Mexico and can comply with all the tax and accounting obligations applicable to this structure.

Description of holding companies in Mexico

In Mexico, there can be two types of holding companies: local holding companies and non-resident intermediate holding companies. A local holding company is generally utilized when the buyer intends to effectuate an asset deal. Our team can help you open such a company in Mexico.

Quick Facts
Legal entities used	Limited liability company and the joint stock company.
Incorporation method	Holding companies in Mexico are incorporated in accordance with the domestic laws of incorporation.
Incorporation time	Around 4 to 6 weeks.
Types of assets owned by the holding	The holding can own a variety of assets (such as bonds, shares, real estate, intellectual property, etc.).
Requirement for local bank account (Yes/No)	Yes
Residency requirements for the founder(s)	The founders of holding companies in Mexico do not have to meet any residency requirements.
Advantages	The holding is generally incorporated for asset protection and tax minimization strategies. It has a centralized control, which can be beneficial to the overall management of all companies.
Precautions	Considering its size, it can have high operating costs and, due to its size, very complex compliance requirements.
Shareholding structure	It can vary. However, for tax advantages and tax consolidation regime, the holding must own more than 80% of another company’s shares.
Minimum capital	MXN 3,000 for the limited liability company.
Taxation	The Mexican holding can benefit from the tax consolidation regime if it holds more than 80% of the shares of its subsidiaries.  The payment of dividends are exempt from tax.
Control	The holding controls the subsidiaries (it doesn’t interfere in any of their commercial operations).
Registered agent requirements	It is necessary to appoint a registered agent.
Accounting and reporting	Holding companies in Mexico must abide by the Mexican laws on accounting and tax reporting.
Number of double taxation treaties	60

As for non-resident intermediate holding companies in Mexico, in case the foreign country taxes the capital gains and dividends derived from abroad, such business vehicle could be utilized to defer this taxation and maybe profit from a more advantageous tax treaty with Mexico.

Can a holding own more subsidiaries in Mexico?

Yes, a holding company can own more subsidiaries in Mexico which can carry out a variety of business operations. There are several advantages of organizing the subsidiaries under the umbrella of one holding, especially on taxation matters.

One of the main taxation advantages is that the dividends paid by the Mexican subsidiaries to its holding will not be taxed. Organized under a holding, these companies can also transfer various types of assets without the need to repatriate the profits in the country where the parent is located.

What company types are available for a Mexican holding?

The Mexican holding can take the form of a joint stock company (Sociedad Anonima de Capital Variable) or investors can complete the process of company formation in Mexico through a limited liability company (Sociedad de Resposabilidad Limitada de Capital Variable).

In the list below, we will present some of the characteristics of the joint stock company, as this company type is more suitable for investors who want to open a company in Mexico as a holding (because it is ideal for large companies):

• the company can have 100% foreign ownership;
• it needs at least 2 shareholders;
• it needs a suitable company name, which can be obtained from the Ministry of Foreign Relations, where investors can provide up to 5 company names options;
• it is also necessary to appoint 1 administrator (or legal representative).

The video below offers a short presentation on the Mexican holding companies:

What are the obligations of foreign investors?

Foreign investors who want to set up a company in Mexico may need to comply with different immigration procedures, which can vary based on their nationality. Additionally, the legislation in Mexico requires that foreign companies (by which we mean businesses with foreign participation) to register with the National Registry of Foreign Investments.

There are other post-incorporation obligations to comply with when it comes to the connection with this institution, outside of a simple registration. For instance, in the case of large companies – such as holdings (which have a large capital as well), it is necessary to submit annual financial reports to this institution.

The procedure can be completed with the assistance of a CPA in Mexico, who is a qualified accountant that has the necessary expertise to analyze the financial documents of large businesses. The accountant will prepare the documentation and will also submit it to the relevant authorities.

Disclosure requirements for holding companies of Mexican financial institutions

Under the Financial Group Law in Mexico, shareholders who buy 2% or more of the capital stock of a holding company of a financial institution in this country must notify the Secretariat of Finance and Public Credit (SHCP). This notice has to be in Spanish and it must contain information such as:

• the legal name of the shares beneficial owner;
• the legal representative of the beneficiary;
• the address for the SHCP to send correspondence;
• other information – our Mexico company registration agents can offer more details on what this other information consists of.

If you have more questions about the benefits of holding companies in Mexico, or for assistance in setting up a company in Mexico, we kindly invite you to address us, and you can contact us for information on the accounting procedures available for holding companies. Our accountants in Mexico can provide in-depth information on the obligations a holding company can have here.

Investors can find out details concerning the tax forms that must be submitted, the types of financial documents a holding must prepare and other basic information. For any other details concerning the registration of a holding, as well as for tailored incorporation assistance, our consultants in company incorporation in Mexico remain at your service.