Benefits Of Proving Tax Residence

The importance of verifying tax residence abroad.

Tax residence essentially determines the country or countries that have the right to tax the income of a natural or legal person. In a globalized environment where individuals may reside in one country while earning income in others, and businesses may operate in multiple jurisdictions, establishing tax residence can become complicated.

To benefit from reduced rates in double taxation avoidance agreements, tax residence must be proven (Article 4, Mexican Income Tax Law).

How tax residence is recognized
Article 6 of the Mexican Income Tax Law stipulates that taxpayers wishing to prove their tax residence in another country with which Mexico has a double taxation avoidance agreement can do so through a residence certificate or through the tax return of the expired assessment period.

Residence certificates and documents are valid during the calendar year in which they are issued.

Certification of the annual tax return in the USA
Rule 3.1.3 of the Tax Reform 2024 stipulates that in the case of the United States of America, the document issued by the IRS (Internal Revenue Service) for this purpose serves as certification of the submission of the tax return for the last fiscal year.


 
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