Banking, Money and Taxes in Mexico
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Banking in Mexico is fairly easy and straightforward as there are many modern financial institutions throughout the country. Still, large stacks of paperwork often need to be completed to satisfy the increasingly complex Mexican bureaucracy.
While being able to speak Spanish will make things considerably easier, even new arrivals who aren't fluent should find it is possible to effectively manage their finances in Mexico.
Money in Mexico
The official currency in Mexico is the Mexican Peso (MXN), referred to simply as the peso, which is divided into 100 centavos. There are also MXN 5, 50 and 100 coins which are rarely used.
Notes: MXN 20, 50, 100, 200, 500 and 1,000
Coins: MXN 1, 2, 10, and 20, and 5, 10, 20 and 50 centavos
Some tourist areas accept US dollars, but expats will have to use Mexican pesos. Money can be exchanged at the airport, large hotels, banks and ATMs or exchange kiosks. Traveller's cheques are not so commonly used anymore and may be difficult to exchange.
Banking in Mexico
Expats have a variety of options when it comes to banking in Mexico, with both local and international banks to choose from. Some international banks, such as HSBC, have branches in Mexico and are popular, but do not necessarily provide better service than Mexican banks. Other top banks include BBVA, Santander, Banamex and Banorte.
Opening a bank account
For those staying only short term, opening a local bank account may not be necessary, and if expats already bank with one of the main international firms, they can dodge a bullet. These expats can avoid the bureaucracy and queues at local Mexican branches. Their banks can be contacted before arriving in Mexico to make necessary arrangements and alert them of travel plans.
To open a local bank account, new arrivals must usually visit a local branch office in person. Expats will likely need to present their visa, identification and proof of a Mexican address, along with an initial deposit.
Expats can open a basic, checking or deposit account in Mexico. A basic account, or cuenta de nómina, is useful for those earning a wage, and they can be opened easily at any Mexican bank. Retail banks offer checking accounts which normally require a monthly deposit. Those needing an account for daily transactions will want a checking account that uses only MXN as levies from ATM withdrawal fees can add up if used frequently over an extended period.
Often, bank accounts such as deposit accounts need a minimum balance, though the amount varies across banks. Specialised student accounts may also be available for those who are studying and have unique needs.
Citizens of the US or Canada generally open an account using US dollars. Other nationalities cannot, although overseas accounts can be accessed via Mexican ATMs. Expats who are likely to make international transfers should look up the fees involved as exchange rates may not be in their favour.
Many bank tellers in Mexico can speak English, but expats should nevertheless make sure to have any Spanish paperwork translated.
To avoid wasting time queuing in long bank lines, internet banking is a useful tool. Most banks offer comprehensive services online and via apps.
There is a universal ATM network spread out across Mexico and expats will rarely have to search far to find one, but there may be additional withdrawal fees when using an ATM owned by a different bank. It's also important to be mindful of safety issues such as ATM fraud and robbery in the large cities.
Major international credit cards are accepted at large stores in Mexico. Small grocery stores (tiendas) usually only accept cash.
Interest on Mexican credit cards tends to be high but are useful when making large purchases. To apply for a Mexican credit card, expats will need to have already set up a Mexican bank account. They generally will also need to provide proof of good credit history. If this is not possible, then a deposit can sometimes be paid to secure credit card payments. The requirements and benefits of bank accounts and credit cards vary across different banks, so research should be done to find the most suitable option.
Taxes in Mexico
Taxes for expats in Mexico depend largely on whether they qualify as residents or non-residents. For tax purposes, expats are considered residents if they have their primary home in Mexico. This does not exclude them from filing taxes in their home countries, although many countries have double-taxation agreements so income tax doesn't need to be paid in both countries.
Residents are taxed on their worldwide income, whereas non-residents are only taxed on income earned in Mexico. The tax rate for non-residents ranges from 15 to 30 percent.
Taxes, including tax rules for retired expats and homeowners, can be confusing, and expats are advised to hire professional help from experienced tax advisers.
Deduction for healthcare
Expats working in Mexico can receive free public healthcare through the Instituto Mexicano de Seguro Social (IMSS). A deduction is taken from their account and matched by their employer and the federal government.
*Tax regulations are subject to change at short notice and expats are advised to seek the assistance and advice of a professional tax consultant.