Technical article
Mexico: Does Mexico Tax Every Payment from a Trust Abroad?
The see-through treatment applies where a Mexican resident is a settlor or a beneficiary.
Picture a mother in Arizona with a family trust held by a US trustee. Her daughter moves to Mexico City for work and her son stays in Phoenix. The mother asks what the daughter will owe in Mexico on money that comes from the trust.
The sources give two answers, and they sit side by side. Inheritance is mostly free of Mexican tax. Income from a foreign trust is treated differently.
What counts as living in Mexico
Mexico does not use a day count. A person becomes resident by setting up a home in Mexico. The centre of a person's life is in Mexico when more than 50% of a person's income in a calendar year comes from Mexican sources, or when Mexico is the main place of professional activity (PwC, tier B, 2026). Residents are taxed on worldwide income whatever their nationality.
The daughter's own residence decides this. The settlor's does not.
Income from a foreign trust
Chambers Private Wealth 2026 (tier B) says residents who use foreign partnerships, US limited-liability companies or trusts must recognise the income each year, at 10% to 35%. The see-through treatment applies where a Mexican resident is a settlor or a beneficiary. In plain terms, Mexico looks through the trust to the person who lives in Mexico. The trust's income may count as hers in the year it arises, whether or not a payment reached her.
The top rate is 35% on taxable income above MXN 5,107,703.93 (about US$280,000) in 2026. Foreign interest is taxed as it accrues, and foreign dividends and exchange gains are taxable (Forvis Mazars, tier B, 2025).
Gifts and inheritance
Mexico has no inheritance, estate or gift tax as such. An inheritance received by a Mexican resident is exempt from income tax. Gifts from a spouse, parents or children are exempt. Other gifts are exempt up to three times a yearly index figure, which comes to MXN 128,384 (about US$7,000). A gift between siblings is not exempt, and anything over the cap is income (PwC, tier B, 2026).
Reporting
An annual return is due in April. Holding foreign bank accounts or investments removes the exemption from filing. Receipts over MXN 500,000 (about US$27,000), including inheritances, must be reported.
The three money types side by side
| What the heir receives | Mexican treatment | Source |
|---|---|---|
| Inheritance | Exempt from income tax; reported if receipts pass MXN 500,000 | PwC (B), Forvis Mazars (B) |
| Gift from a parent | Exempt | PwC (B) |
| Gift from a sibling or friend | Exempt up to MXN 128,384, income above that | PwC (B) |
| Income earned inside a foreign trust | Recognised each year at 10% to 35% | Chambers (B) |
Inheritance and lineal gifts are exempt. The trust's own yearly income is the piece Mexico looks at.
What this touches
The daughter carries the filing. The mother carries the choice of how the trust is written. A son who stays in the US is untouched by this rule. The trustee may need to supply a yearly statement of trust income.
You might say: "My daughter is only there part of the year." Mexico has no day test, so presence alone does not decide it. A home and where life is centred do. A daughter who keeps her main home in the US and rents in Mexico City could read the rule differently from one who moved her whole life.
You could ask a Mexican tax adviser and the trustee together how the trust's yearly statement maps to the daughter's April return.
How did your own family sort out which country taxes which payment? Share it here. Someone else may be at the start of the same conversation.
Figures are estimates for planning, based on public data. Date read: October 2026.
Sources
- PwC Worldwide Tax Summaries, Mexico individual taxes, 2026 (B)
- Chambers Private Wealth 2026, Mexico (B)
- Forvis Mazars Mexico, 2025 (B)
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