Foreigners can open a trust in Mexico. There are various types of trusts that can be set up here, but they all have the same basic characteristics, the main difference being the purpose for which the trust is registered.
Although the trust is a different structure than a commercial company, it still needs to go through specific registration steps, similar to the ones applicable for the process of company formation in Mexico. Our consultants can offer advice on the types of trusts available here and the incorporation procedure you must follow, so please, address us if you need assistance.
Table of Contents
What are the parties involved in the setup of a trust in Mexico?
The basic features of a Mexican trust are:
- the settlor – it represents the party who decides to open a trust in Mexico and who provides the assets that will be protected through the trust;
- the trustee – it is the party that receives the responsibility to handle the assets in accordance with the purpose for which the trust was registered;
- the beneficiary – it is the entity (natural person or a business) who is entitled to receive the benefits of the trust.
It must be noted that the Mexican law allows, just like in other countries, the right of the settlor to be beneficiary as well (or one of the beneficiaries). Our consultants in company incorporation in Mexico can offer more information on the rights of beneficiaries, based on the type of trust incorporated.
Types of trusts in Mexico
There are a variety of trusts that can be incorporated in Mexico, but generally speaking, they fall under 4 basic categories, as follows:
- public trust (incorporated by an official authority for the purpose of developing specific projects);
- investment trust (the assets are used for investment purposes and in this case, the settlor is the same as the beneficiary);
- management trust (in this type of trust, the assets are given to the trustee, who must manage them, represent the settlor, provide social assistance or testamentary representation);
- guarantee trust (it is incorporated for the purpose of guaranteeing a financial obligation).
Below, our consultants will present the characteristics of the investment trust, as this is a type of trust specific to Mexico, also known as a bank trust, or a fideicomiso.
What is a fideicomiso?
The fideicomiso is a Mexican trust that can be used by foreigners for investment purposes. More specifically, it is the structure that allows foreigners the right to purchase property in the Mexican restricted land zones.
The Mexican law prohibits foreigners from having direct ownership rights over a given territory on the border of the country and the coastal area and, by incorporating a fideicomiso, foreigners can obtain the ownership rights in this region, but this can be achieved solely with the participation of a trustee that is a Mexican bank.
It must be noted that the foreigner does not have full, direct, ownership rights, as the trustee holds, from a legal point of view, the title to the respective property, but the settlor/beneficiary, obtains ownership rights, such as the right to lease among many others. In the list below, we present some of the coordinates of this type of Mexican trust:
- the fideicomiso can be set up for properties located within 50 km of the Mexican coast and 100 km of the country’s international boarders;
- it takes a little longer to complete its registration formalities, compared to incorporating a commercial company (the procedure can be completed in 2-3 months, while investors can open a company in Mexico in only several weeks);
- the duration of the trust is 50 years, however, it is possible to renew it for another 50 years.
We also mention that there are various tax implications for this type of trust (such as the payment or property taxes) and for this, we recommend you the services of our accountants in Mexico. We remain at your disposal for any other inquiry you may have concerning the registration of a Mexican trust. You can also refer to us if you want to set up a company in Mexico.