Restricted Zone and Mexican Corporations: When Buying Through a Company Makes Sense

Buying a property in Playa del Carmen, Tulum or Cancún as a foreign national turns on one structural decision that is best made before you sign any offer: whether the asset will be held through a fideicomiso (a Mexican bank trust) or through a sociedad mexicana (a Mexican company). Both structures exist because the entire Riviera Maya sits inside what Mexican law calls the restricted zone — the strip running 50 kilometres inland from the coast and 100 kilometres from the national borders, in which the Constitution forbids foreigners from holding direct title over land and water.

This guide works through the Foreign Investment Law (Ley de Inversión Extranjera, LIE) and its Regulations to explain what a Mexican company with foreign shareholders can and cannot do in Quintana Roo, when the company is genuinely the right tool — short-term rentals run as a real business, commercial units, land held for development, several units under one umbrella — and when it is an expensive mistake that exposes the buyer to penalties for simulation and to a tax burden they never needed to carry.

Unlike most of the material circulating in this market, nothing here presents the company as a shortcut “to avoid the fideicomiso”. It presents it as what the statute actually makes it: a legitimate route for property with non-residential purposes, carrying notices to the Ministry of Foreign Affairs, registration with the National Registry of Foreign Investment, and monthly filings with the Mexican tax authority that an owner has to be willing to keep up with, month after month, in good years and empty ones.

If you have not yet read the wider picture of how foreign buyers acquire in Mexico, the complete guide to buying property in Mexico as a foreigner is the right starting point. This article goes deeper into the comparison between the two structures and into the practical mechanics of running the company.

The short version for busy readers

• The restricted zone is defined in article 27, section I of the Constitution and in article 2, section VI of the Foreign Investment Law (LIE): 100 km along the borders and 50 km along the beaches. Every coastal municipality in Quintana Roo — among them Benito Juárez (Cancún), Solidaridad (Playa del Carmen), Tulum, Puerto Morelos, Cozumel and Isla Mujeres — falls inside it; so does the south of the state, including Bacalar and Chetumal, because of the border with Belize.
• A foreigner, whether an individual or a foreign company, cannot acquire direct title to real estate inside that strip. Neither can someone who holds permanent residency in Mexico: the LIE (art. 3) expressly excludes the acquisition of real estate in the restricted zone from the rule that treats permanent residents’ investment as Mexican investment.
• A Mexican company whose bylaws contain the foreigners-admission clause can be the direct registered owner inside the restricted zone, but only of property intended for non-residential activities (LIE, art. 10, section I), and it must file a notice with the Ministry of Foreign Affairs (Secretaría de Relaciones Exteriores, SRE) within sixty business days of the acquisition.
• For residential purposes — including a dwelling rented out to third parties as a home — the route is the fideicomiso, the bank trust regulated by the LIE (arts. 10 section II, 11 and 13).
• The company is taxed as a persona moral, a legal entity: 30 % corporate income tax on the taxable result (Income Tax Law, art. 9), monthly provisional payments, an annual return, electronic accounting, digital invoicing, an additional 10 % withholding on dividends, and 16 % VAT on furnished or commercial rents.
• Using a Mexican partner as a nominee owner, or declaring a commercial use for what is in reality the shareholders’ own holiday home, is simulation: the LIE provides for fines of up to the full value of the transaction (art. 38, section V) and the Constitution provides for loss of the asset.

What the restricted zone is, and why all of the Riviera Maya sits inside it

The restriction was born in article 27 of the 1917 Constitution. Its first section reserves to Mexicans by birth or naturalisation, and to Mexican companies, the right to acquire ownership of land and water; it allows the State to grant that same right to foreigners who agree before the Ministry of Foreign Affairs to consider themselves Mexican nationals with respect to those assets and not to invoke the protection of their governments (the so-called Calvo clause or covenant); and it closes with an absolute prohibition: within a strip of one hundred kilometres along the borders and fifty along the beaches, foreigners may “under no circumstances” acquire direct ownership of land and water.

The Foreign Investment Law picks up that geography in article 2, section VI, and names it the zona restringida, the restricted zone. It is not an administrative district or a polygon you can look up on a municipal zoning map: it is a distance measured from the coastline and from the border. The LIE Regulations (art. 6) provide that when there is doubt about whether a particular parcel falls inside or outside, the SRE resolves the question after consulting INEGI, the national statistics and geography institute; the law itself tasks INEGI with publishing the list of municipalities wholly or partly included (LIE, art. 10 A).

In Quintana Roo there is almost never any doubt. The state is a long, narrow coastal ribbon. Cancún and its hotel zone, Puerto Morelos, Playa del Carmen from the Centro and Quinta Avenida out to Playacar, Colosio and Zazil-Ha, Puerto Aventuras, Akumal, Tulum with Aldea Zamá, La Veleta, Región 15 and the beach road, Cozumel and Isla Mujeres all fall within 50 kilometres of the shoreline. Bacalar and the municipality of Othón P. Blanco, including Chetumal, fall inside because of the 100-kilometre border strip with Belize as well as their proximity to the coast. Only pockets of inland jungle sit outside — and that is not where anyone buys a home or invests in short-term rentals.

The practical consequence is worth stating plainly: any property a foreign buyer might realistically consider on the Riviera Maya — a condo in Playa del Carmen, a lot in Tulum, a retail unit in Cancún — is inside the restricted zone. The question is never whether the restriction applies. The question is which legal vehicle you use to comply with it.

What the restriction forbids, and what it does not

The constitutional text bans “direct ownership” — full title registered in the foreigner’s name. It does not ban using, enjoying, renting out or earning income from real estate. That distinction is the foundation of the two vehicles the LIE regulates in its Title Two: the fideicomiso, which lets a foreigner use and benefit from property in the restricted zone without creating real rights in their favour (arts. 11 and 12), and the Mexican company, which as a Mexican legal person can hold title outright, subject to the non-residential limitation when it admits foreign shareholders (art. 10).

Nor does the restriction apply to Mexicans by naturalisation. Someone who completes the naturalisation process buys in Playa del Carmen exactly as any other national does, with no trust and no company. That matters for readers who have already spent years living in the country and intend to stay — a British retiree in Puerto Aventuras or a Canadian who has been in Playa since before the pandemic may find that the cleanest long-run answer is a passport rather than a structure.

Why the rule exists and how it is read today

The prohibition has a historical root: the territorial losses of the nineteenth century and the 1917 constituent assembly’s determination to keep the border and coastal strips out of foreign hands. A century later the rule still stands, but the legislature has surrounded it with mechanisms that allow investment without touching the constitutional text. The 1993 Foreign Investment Law and its 1996 amendment created the modern scheme of bank trusts of up to fifty years, renewable, and opened the door for companies with foreign investment to hold direct title to non-residential property inside the restricted zone.

Three ideas organise how the rule is read today.

1. The restricted subject is the foreigner, not the capital. A company incorporated under Mexican law is Mexican even if 100 % of its shares belong to foreigners. That is why it can hold title. What the law regulates is what it may buy, depending on whether its bylaws admit foreign shareholders.
2. The property’s intended use decides the route. Residential means fideicomiso; non-residential allows the company to hold direct title, with a notice filed afterwards with the SRE. The Regulations define both concepts, and we analyse them below, because in practice the boundary between “a home that gets rented out” and “a tourism business” is exactly where mistakes are made.
3. Immigration status does not change the real-estate rule. Article 3 of the LIE treats permanent residents’ investment as Mexican investment, but it excludes what is provided in Titles One and Two of the law — and Title Two is precisely the one on acquiring real estate. A Canadian or British permanent resident is still a foreigner for the purposes of article 27.

Within that framework, the Mexican company is not a universal “alternative” to the fideicomiso. It is the right tool for one specific kind of investment, and the wrong tool, with consequences, for another.

The three legal routes open to a foreign buyer in Quintana Roo

Before going into the detail of the company, it helps to see the full map of options, because the decision is made by comparison.

Route	Legal basis	What it allows inside the restricted zone	Authority and procedure	Who it usually suits
Fideicomiso (bank trust)	LIE arts. 10 s. II, 11, 12, 13 and 14	Use, enjoyment and benefit of property for residential purposes (and non-residential too); the trustee bank holds title, the foreigner is the beneficiary	Prior permit from the SRE; maximum term of 50 years, renewable	A primary or second home, a condo rented out occasionally, orderly succession planning
Mexican company with a foreigners-admission clause	LIE arts. 10 s. I, 15 and 16; Regulations arts. 5 and 7	Direct title to property intended for non-residential activities	Notice to the SRE within 60 business days for each property; registration with the RNIE	Short-term rentals run as a business, retail units, offices, land for development, boutique hotels, a portfolio of several units
Naturalisation	Constitution art. 27 s. I	Direct title with no restriction, like any Mexican national	Immigration and nationality process before the SRE	Long-term residents who meet the nationality requirements

There is a fourth mechanism — the permit to acquire outside the restricted zone with a prior covenant before the SRE (LIE, art. 10 A), which the law resolves in five business days when the municipality lies entirely outside the zone and thirty when it lies partly inside. It is mentioned for completeness: on the Quintana Roo coast it does not apply.

For the trust route, see our complete guide to the fideicomiso bank trust for foreign buyers, which sets out the parties, the costs and the succession mechanics. The rest of this article concentrates on the second row of the table.

Residential or non-residential: the line that defines the structure

Article 10 of the LIE separates the two worlds with a single word, but it is the Regulations that define it. Article 5 states that, for the purposes of Title Two of the law, real estate with residential purposes is property “intended exclusively as a dwelling for the use of the owner or of third parties”. It then lists, illustratively and not exhaustively, what counts as intended for non-residential activities:

• property intended for timeshare use;
• property intended for an industrial, commercial or tourism activity that is simultaneously used for a residential purpose;
• property acquired by credit institutions and other financial intermediaries in order to recover debts;
• property used by legal entities to carry out a corporate purpose consisting of transfer, urbanisation, construction, subdivision and other real-estate development activities, up to its marketing or sale to third parties;
• and, generally, property intended for commercial, industrial, agricultural, livestock, fishing, forestry and service-provision activities.

The same article includes a safety valve: where there is doubt as to whether a property is considered to be intended for residential activities, the SRE resolves the query within a period not exceeding ten business days and, if it does not respond, the property is deemed to host non-residential activities. That consultation is a real and underused tool. In a borderline case it is the document a prudent lawyer wants in the file before signing the deed in the company’s name.

How this applies to the typical Riviera Maya case

Here is the heart of the problem, because most foreign buyers do not want a warehouse or a factory. They want condos that rent.

A condo for the owner’s own use, even if it is rented for a few weeks. This is a dwelling for the owner’s use. Residential purpose. The company is not the route; the fideicomiso is.

A condo let long term to a tenant who lives in it. The Regulations speak of a dwelling “of the owner or of third parties”. A twelve-month residential lease in Playacar or in Supermanzana 17 in Cancún is still residential use of the property. The fact that the owner is a company does not turn it into a commercial activity. The conservative reading — and the one a careful notario público (the Mexican civil-law notary, a public official who authorises property transfers) in Solidaridad or Benito Juárez will normally insist on before deeding to a company — is that this asset belongs in a fideicomiso; the company can be the trust beneficiary if you want to concentrate the operation in one place (LIE, art. 11, section I).

Units operated as nightly tourist lodging, with services, inside a real business. Here the property is devoted to a tourism activity and to the provision of accommodation services, with tax registration, invoicing, the state lodging tax and, where applicable, a municipal licence. It fits section V of article 5 and the tourism-activity concept in section II. This is the scenario in which a Mexican company with foreign shareholders can reasonably acquire direct title, provided the declared use is the real and sustained use. Where the project has several units, staff, a manager and proper accounting, the argument is solid; where it is a single condo the owner occupies three months a year and lists on platforms the rest, the argument weakens and starts to look like simulation.

A retail unit on Quinta Avenida, an office, a warehouse, a restaurant. Commercial or service activity. Non-residential beyond argument.

Land in Región 15 in Tulum or along the federal highway, bought to develop and sell. Section IV: property used by the legal entity to fulfil its corporate purpose of real-estate development, up to marketing. The company is the developer’s natural structure. If the lot is bought to build the family’s own house, it reverts to residential. For soil analysis, ejido (communally held agrarian land) origins and land-use changes, our legal guide to land for sale in Tulum and the Riviera Maya sets out the due diligence specific to this asset class.

A boutique hotel, a condo-hotel, a timeshare. Section I and tourism activity. Non-residential.

Mixed use: retail on the ground floor, apartments above. Section II of article 5, where the commercial or tourism activity coexists simultaneously with residential use. This is one of the few doors through which a property with a housing component can enter the company’s direct ownership — and precisely for that reason the project should be documented with care.

The operating conclusion is simple to state and demanding to honour: the company is for property that works. If the property is going to be, in reality, the shareholders’ holiday home, the correct structure is the fideicomiso. Full stop.

How a Mexican company with a foreigners-admission clause actually works

A sociedad mexicana is a legal entity incorporated under the General Law of Commercial Companies (Ley General de Sociedades Mercantiles, LGSM) before a Mexican notario público or a public commercial broker, with its domicile in Mexico. Its shareholders may be foreign in any proportion, except in the reserved or capped activities the LIE itself lists — and real estate is not among them.

The bylaw clause that defines what the company may buy

Article 15 of the LIE requires the bylaws of every company to include, in the alternative, either the foreigners-exclusion clause or the covenant provided for in section I of article 27 of the Constitution. The exclusion clause (LIE, art. 2, section VII) is an express undertaking that the company will not admit, directly or indirectly, foreign investors or companies carrying the admission clause as shareholders. The covenant, by contrast, is the Calvo clause written into the deed of incorporation: present and future foreign shareholders are deemed nationals with respect to the company’s assets and waive the right to invoke their government’s protection, on pain of forfeiting those assets to the Nation.

A company with an exclusion clause may buy any property anywhere in the country, residential or not. A company with the foreigners-admission covenant may buy any property outside the restricted zone and, inside it, only non-residential property (LIE, art. 10). If a company swaps its exclusion clause for the admission clause, it must notify the SRE within the following thirty business days (LIE, art. 16, final paragraph), and that amendment has immediate consequences for what it may continue to hold inside the restricted zone.

Which company type suits the purpose

The LGSM recognises several species (art. 1). Three are used in Quintana Roo real-estate practice.

Type	Features that matter to a foreign investor	Legal basis
Sociedad anónima de capital variable (S.A. de C.V.)	Minimum two shareholders; capital represented by shares that are freely transferable unless otherwise agreed; governed by a shareholders’ meeting and a sole administrator or a board; the most flexible for admitting and releasing shareholders and for selling the business by selling shares	LGSM arts. 87 and 89
Sociedad de responsabilidad limitada de capital variable (S. de R.L. de C.V.)	Members liable only up to their contributions; membership interests are not represented by negotiable instruments and are transferred subject to statutory requirements; maximum fifty members; widely used by US investors for tax reasons in their home country	LGSM arts. 58 and 61
Sociedad por acciones simplificada (S.A.S.)	One or more shareholders, who may only be individuals; incorporated online using the Ministry of Economy’s model bylaws; requires every shareholder to hold a valid e.firma (the Mexican tax authority’s advanced electronic signature); annual revenue cap updated each year	LGSM arts. 260 and 262

The S.A.S. rarely serves a newly arrived foreign buyer: requiring each shareholder to hold the tax authority’s advanced electronic signature presupposes an RFC (Mexican tax ID) and, in practice, regular immigration status, and the revenue cap makes it unsuitable for a portfolio of any size. The choice between an S.A. and an S. de R.L. usually depends on the shareholders’ country of tax residence and on whether new investors are expected; it is a conversation for the corporate lawyer and for the tax adviser in the home country, not a standard decision. US investors in particular tend to raise it early, because the way each vehicle is characterised for US federal tax purposes — and the elections available — can change the entire after-tax arithmetic of the project. Canadian and British readers face their own set of foreign-entity reporting rules and should ask the same question before, not after, incorporation.

Step by step: incorporation and the first purchase

1. Name authorisation. The Ministry of Economy authorises the use of the corporate name (LIE, art. 15) through its electronic platform; the notario or the lawyer normally handles this.
2. Draft bylaws. A corporate purpose that expressly includes the activities that will justify the non-residential use (provision of lodging services, leasing of commercial premises, real-estate development, as the case may be), the foreigners-admission covenant, management rules and powers of attorney.
3. Signing the deed of incorporation before a notario público or public commercial broker. Shareholders appear in person or through an attorney-in-fact. A foreign corporate shareholder must evidence its existence and the signatory’s authority with apostilled or legalised documents, translated by a court-authorised translator.
4. Registration with the Public Registry of Property and Commerce of Quintana Roo. This gives the company public standing; in this state the registry sits under the Secretaría de Gobierno and offers online file searches.
5. RFC registration. The tax authority’s filing sheet for newly formed legal entities calls for the deed of incorporation, proof of the tax domicile, the legal representative’s power of attorney and identification, and the RFC of the shareholders (Federal Tax Code, art. 27). Shareholders resident abroad with no Mexican tax obligations are identified under the rules of the Resolución Miscelánea Fiscal; the accountant must plan for this before the appointment. The company’s own e.firma is obtained at the same time.
6. Registration with the National Registry of Foreign Investment (RNIE). Every Mexican company with foreign investment in its capital must register (LIE, art. 32) within the following forty business days, under modality B administered by the Ministry of Economy. Failure or delay is penalised (LIE, art. 38, section IV).
7. Bank account and proof of funds. Banks apply their own know-your-customer policy to companies with foreign shareholders; open the account before committing to closing dates.
8. Purchase of the property in the company’s name. Promissory agreement, due diligence, escritura (the public deed of sale) before a notario in Solidaridad, Tulum or Benito Juárez, payment of the municipal acquisition tax (ISAI, impuesto sobre adquisición de inmuebles) and registration with the Public Registry. The notary process and closing in Quintana Roo is the same as for any buyer, with the added step that the notario must verify the bylaw clause and record the non-residential purpose.
9. Notice to the SRE. Within sixty business days of the acquisition (LIE, art. 10, section I), for each property, on form FF-SRE-010, stating the location and description of the asset, a clear and precise description of the uses to which it will be put, a copy of the public instrument, and payment of the duties set by the Federal Duties Law — higher if the notice is late. The content of the notice is governed by article 7 of the Regulations, and the SRE may verify the truth of what was declared at any time (LIE, art. 13).

Every one of these steps leaves a document in the file. When the time comes to sell the property or the shares, that complete file is what a diligent buyer will ask to see.

Ongoing obligations and running costs of the company

Buying through a company means you have not only acquired a property: you have acquired a business that has to be fed every month. This is the most underestimated difference against the fideicomiso, whose annual cost is a fixed trustee fee and whose tax obligations, when there is rental income, are those of an individual.

Federal tax obligations

• Monthly provisional income-tax payments, due no later than the 17th of the following month (Income Tax Law, art. 14), calculated using a profit coefficient.
• Annual return within the three months following the end of the fiscal year (Income Tax Law, art. 76, section V), determining the taxable result and the net after-tax profit account.
• Monthly VAT returns where the company carries out taxable acts (furnished rentals, commercial leases, lodging services), together with the informative return of transactions with third parties.
• Electronic accounting and issuance of CFDI (the Mexican digital tax invoice) for every item of income, including rents collected through digital platforms, which require the entity’s RFC and tax-status certificate in order to pay it without applying the withholdings that apply to individuals.
• Withholdings on payments to individual suppliers (professional fees, leases) and, where applicable, to employees.
• Controlling-beneficiary information. Since 2022 legal entities must obtain, keep as part of their accounting records and deliver to the tax authority on request reliable, up-to-date information on their controlling beneficiaries (Federal Tax Code, art. 32-B Ter); failing to do so, or failing to keep it current, is a penalised infringement (Federal Tax Code, art. 84-M). For a company with foreign shareholders, that file identifies the individuals who ultimately control it.
• Shareholder notices to the RFC each time the capital structure changes.

RNIE obligations

Beyond the initial registration, the LIE Regulations (arts. 38 and 43) impose an annual economic report within the first five months following the close of the fiscal year, plus quarterly updates of certain information — the latter only where the thresholds set by the National Foreign Investment Commission through general resolution are exceeded. A small portfolio will normally file only the annual report; a development funded by a foreign parent company may well fall into the quarterly filings.

Employment and local obligations

If the lodging operation hires staff — cleaning, front desk, maintenance — the company becomes an employer: registration with IMSS (the social security institute), contributions, stamped payroll, and employee profit sharing when there is taxable profit. Many investors solve this by contracting a rental-management company that assumes the employment relationship, which carries a cost that has to enter the model.

At state and municipal level you meet the Quintana Roo lodging tax on tourist stays, the operating licence and compatible land use when the property runs as a business, plus the predial (the annual municipal property tax) that every owner pays.

The cost lines to budget for

We do not publish figures, because professional fees vary between notarial offices, firms and cities, and because official duties are updated every year. What does belong in the spreadsheet of anyone comparing structures is the following list of line items.

Item	Fideicomiso	Mexican company
Setting up the vehicle	SRE permit and the trustee’s set-up fee	Notario or broker fees, name authorisation, Public Registry filing
Fixed annual cost	Annual fee to the trustee bank	Monthly accountant’s fees, RNIE report, e.firma renewal, tax domicile
Tax compliance	Individual returns only where there is rental income	Monthly and annual returns always, even if the company is dormant
On each property purchase	Amendment to the trust or a new trust, with permit	SRE notice per property, with duties
On sale	Cancellation or assignment of beneficiary rights	Sale of the property by the company, or sale of shares, each with its tax consequences
On the death of a holder	Substitute beneficiaries named in the trust deed	Transfer of shares or membership interests under the bylaws and applicable succession law

The detail of acquisition taxes and duties that any buyer pays, whether an individual or a company, is in our guide to closing costs: ISAI, notary fees and predial in Quintana Roo. The property acquisition tax is municipal and its rate is set in the state statute and in each municipality’s revenue law; Solidaridad, Tulum and Benito Juárez do not necessarily match.

Taxation of the company: income tax, VAT, dividends and the eventual sale

The choice between fideicomiso and company is, to a large extent, a tax decision — and this is where an accountant experienced with foreign investors, plus an adviser in the shareholders’ country of residence, earns their fee.

Corporate income tax

Legal entities calculate income tax by applying a 30 % rate to the taxable result for the year (Income Tax Law, art. 9) — that is, to accruable income less authorised deductions and profit sharing paid. For a lodging or leasing business, the typical deductions are depreciation of the built area, financing interest, condominium maintenance fees, the predial, insurance, platform and management commissions, advertising, salaries and professional fees, always supported by a CFDI and paid through the banking system. Well managed, a company with real costs can be taxed on a base appreciably lower than gross income; badly managed, it pays 30 % on very nearly everything it collects.

That gap is not a rounding error. It is the difference between a structure that makes sense and one that quietly destroys the return, and it is decided by unglamorous discipline: every supplier invoicing properly, every payment traceable, every fixed asset on the depreciation schedule from day one.

Dividends to the shareholders

Profit the company distributes to individual shareholders is subject to an additional 10 % rate that the company itself withholds (Income Tax Law, art. 140, second paragraph). Where shareholders are resident abroad, the source of wealth is located in Mexico because the distributing company is resident here (Income Tax Law, art. 164) and the same withholding applies, which may be reduced or credited under the double-taxation treaty between Mexico and the shareholder’s country, if one exists and its residence and beneficial-ownership requirements are met. Mexico has treaties in force with the United States, Canada and the United Kingdom, among many others, so this is usually a question of documentation rather than of principle — but the documentation has to exist before the distribution, not after. This second layer of tax does not exist in the fideicomiso, where income reaches the individual directly.

VAT in the operation

The general VAT rate is 16 % (Value Added Tax Law, art. 1). The temporary use or enjoyment of property intended exclusively as a dwelling is exempt, but the exemption does not apply to property supplied furnished, nor to property intended for or used as hotels or lodging houses (Value Added Tax Law, art. 20, section II). Translated to the Riviera Maya: the vacation rental of a furnished condo in Aldea Zamá or Puerto Cancún is subject to 16 % VAT, with the right to credit the VAT on expenses; leasing a retail unit is likewise subject to VAT; only an unfurnished residential lease is exempt. This is the same for individuals and for companies — the difference is that the company must administer it month after month as a matter of obligation.

On sale, no VAT is payable on the transfer of land or of construction intended as a dwelling, and hotels are expressly carved out of that exemption (Value Added Tax Law, art. 9, sections I and II). A company selling a property operated as lodging, or a commercial unit, must work through the VAT on the built portion with its accountant.

When the company sells

The company’s disposal of the property generates an accruable gain taxed at the corporate rate, with a deduction for the indexed acquisition cost and for capital investments. The company has no access to the principal-residence exemption that the law reserves to individuals, and that is a decisive point for anyone comparing structures with a resale horizon in mind. The alternative of selling the company’s shares instead of the property avoids the municipal acquisition tax for the buyer, but it does not eliminate income tax: the sale of shares in a Mexican company by non-residents is also taxable in Mexico, and the buyer of the shares inherits the company’s entire history. Our guide to capital gains tax when selling property in Mexico develops the regime applicable to individuals and to trust beneficiaries, which is useful as a contrast.

The shareholders’ country of residence

A Mexican company is a foreign entity in the eyes of the shareholder’s own tax authority. The United States, Canada, the United Kingdom, Spain, Italy and France each have their own rules on interests in foreign companies, fiscal transparency, informational reporting and crediting of Mexican tax. The choice between an S.A. and an S. de R.L., the wisdom of distributing dividends versus reinvesting, and even the decision to use a company at all rather than a trust, depend on that home-country analysis. No Mexican adviser can make that part of the decision alone, and any adviser who tells you otherwise is telling you what you want to hear.

Head-to-head: fideicomiso or Mexican company

Both structures comply with the Constitution. What separates them is what they are for, what they cost to maintain, and how they are taxed. The table summarises the criteria that weigh most in Quintana Roo practice.

Criterion	Fideicomiso (bank trust)	Mexican company with foreign shareholders
Permitted use in the restricted zone	Residential and non-residential	Non-residential only (LIE, art. 10, s. I)
Personal use of the property	Yes — that is its natural function	No; use as the shareholders’ home contradicts the declared purpose
Registered titleholder	The trustee bank	The company
Procedure before the SRE	Prior permit; resolution in 5 or 30 business days; positive silence (LIE, art. 14)	Subsequent notice within 60 business days per property
Duration	Up to 50 years, renewable (LIE, art. 13)	Indefinite, as long as the company exists and complies
Other registrations	The trustee handles the RNIE side	RNIE, RFC, Public Registry of Commerce, controlling beneficiary
Administrative burden	Low; one annual fee	High; monthly accountant, returns, reports
Income tax on rents	Individual, progressive rates with leasing deductions	30 % corporate on the taxable result
Second layer of tax	None	Additional 10 % on dividends
Income tax on sale	Individual; possible principal-residence exemption if requirements are met	Corporate; no principal-residence exemption
Several properties	One trust per property, or an amendment with permit	A single vehicle can hold many
Succession	Substitute beneficiaries; avoids probate in Mexico	Transfer of shares under the bylaws and applicable law
Financing and partners	Limited; a trust does not easily accommodate investors	Natural; new shareholders, loans, partial sale
Regulatory risk	Low if renewed and fees are paid	High if the declared use does not match the real one

Read honestly, the table says that for the overwhelming majority of foreign buyers of a condo or a house in Playa del Carmen, Tulum or Cancún, the correct structure is the fideicomiso. The company wins when there is a business behind it: several units operated as lodging, a commercial property, land for development, or a project with multiple investors.

Worked scenarios in Playa del Carmen, Tulum and Cancún

The scenarios below are illustrative, built from situations that recur in this market; they do not describe specific transactions and they promise no outcomes. They are here to show how the rule applies.

A condo in Playacar for family holidays and occasional rental

A Canadian couple buys a two-bedroom condo in Playacar Fase II, use it themselves eight weeks a year and list it on platforms the rest of the time. Even if the rental income is meaningful, the property is a dwelling for the owner’s use and the tourist use is not an organised business activity. Residential purpose. Fideicomiso, with the couple as beneficiaries and the children as substitutes. Rental income is declared as an individual and, on sale, the principal-residence exemption is analysed if its requirements are met. The fact that they earn in Canadian dollars and file a Canadian return changes nothing about the Mexican structure — but it does mean the Canadian reporting of the trust interest should be checked with their accountant at home before closing.

Four studios in La Veleta operated as lodging

An investor from the UK buys four studios in the same building in La Veleta, Tulum, hires a management company, registers the lodging activity with the tax authority, collects the state lodging tax, invoices, shares a reception desk and never uses the units personally. This is the provision of tourist accommodation services, with accounting and staff through the manager. It fits the non-residential purpose in the Regulations (art. 5, sections II and V). An S. de R.L. de C.V. with the foreigners-admission covenant can acquire direct title, filing a notice with the SRE for each of the four deeds. Before signing, the lawyer obtains the SRE consultation on non-residential character to armour the file. To size the business itself, our comparison of vacation versus long-term rental in the Riviera Maya sets out the analytical method without inventing numbers.

A retail unit on Quinta Avenida

A company with US shareholders buys a commercial unit on Quinta Avenida in Playa del Carmen to lease to a restaurant. Commercial activity. Direct title held by the company, notice to the SRE, 16 % VAT on the rent, corporate income tax on the result. A fideicomiso would be legally possible but would add an annual fee while contributing nothing.

Land in Región 15 to build and sell

Three European investors buy a lot in Región 15 in Tulum to develop six villas and sell them. The property is devoted to the corporate purpose of real-estate development up to marketing (Regulations, art. 5, section IV). An S.A. de C.V. with the admission covenant, notice to the SRE, construction permits from the Tulum municipality, a condominium regime on completion, and sale of each villa by the company. If one investor later wanted to keep a villa for personal use, that unit would have to move into a fideicomiso in their favour; it cannot stay in the company as their home.

A condo in Puerto Cancún on a long-term lease

An investor from London buys a condo in Puerto Cancún to lease for twelve months to a family. That is a dwelling for third parties: residential use. The company is not the route. Fideicomiso — with the added advantage that an unfurnished residential lease is VAT-exempt and that the individual can file using the optional leasing deduction.

Several units in different Playa del Carmen buildings

An Argentine family with temporary residency wants to buy three condos in different buildings between the Centro and Colosio, use them part of the year and rent them out. The honest answer here is that a mix of personal use and scattered renting is not an organised lodging business; three trusts, or one extended with a permit, are the route. If the family later professionalises the operation, stops using the units and folds them into a company with genuine management, the structure can be revisited, transferring the properties to the company with the tax and notarial cost that transfer carries. Our listings of condos for sale in Playa del Carmen let you compare buildings and house rules before deciding.

Risks, common mistakes and compliance

The Mexican company works well when it is used for what it is for and kept current. The problems we see in practice repeat themselves with depressing regularity.

Simulating the non-residential purpose

This is the biggest risk. Buying the beach house in a company’s name, declaring “leasing” and using it as the shareholders’ home is a simulated act designed to let foreigners enjoy property in the restricted zone in breach of the LIE. The penalty is a fine of up to the full value of the transaction (LIE, art. 38, section V), and the Constitution adds forfeiture of the asset to the Nation for anyone who breaches the article 27 covenant. The SRE may verify the truthfulness of the notices at any time (LIE, art. 13). On top of that sits the tax risk that the authority recharacterises as non-deductible the expenses of a “business” with no real activity.

The straw-man Mexican shareholder

Using a friend, an employee or a local partner as majority shareholder so that the company carries a foreigners-exclusion clause and can therefore buy residential property is the gravest version of the same problem. Beyond the simulation, the foreigner is exposed to the nominal holder disposing of the asset, encumbering it, or leaving it to their family on death. No private side agreement repairs that exposure. It is worth being blunt about this because the arrangement is still occasionally proposed to foreign buyers as clever local practice. It is neither clever nor safe.

Forgetting the notices and registrations

Notice to the SRE within sixty business days for each property; RNIE registration within forty business days; the annual economic report; notice of a change of bylaw clause within thirty business days; shareholder notices to the RFC; the controlling-beneficiary file. Each omission carries its own penalty and — what weighs most in practice — surfaces at exactly the moment the company wants to sell and the buyer asks for the complete file.

Letting the company go dormant

A company with no income is still obliged to file returns. Failing to do so leads to demands, fines and restriction of the digital seal certificate, without which the company cannot invoice the first rent when the business finally starts. The monthly accountant’s fee is not optional.

Cash payments and anti-money-laundering rules

Mexican anti-money-laundering law prohibits settling in cash the creation or transfer of rights in rem over real estate where the value equals or exceeds the equivalent of eight thousand and twenty-five times the daily value of the UMA (LFPIORPI, art. 32, section I). Developers, real-estate intermediaries and notarios carry out vulnerable activities and must identify the client and, where applicable, file reports (LFPIORPI, art. 17, sections V and XII). For a company with foreign shareholders that means evidencing the source of funds and the identity of the controlling beneficiaries from the promissory agreement onwards. Structuring the flow of funds through an escrow account with documented transfers makes these obligations far easier to meet from the very first payment.

Condominium rules and land use

The fact that the LIE lets the company own property destined for lodging does not mean the condominium allows it. Many condominium regulations in Playa del Carmen and Cancún restrict nightly rentals or require registration; tourist operation additionally requires compatible land use and a municipal licence. A “commercial” use the building prohibits leaves the company with a purpose declared to the SRE that it cannot lawfully carry out.

Beachfront and ejido land

Oceanfront properties normally include a ZOFEMAT concession — the federal maritime-terrestrial zone, the strip of public land measured landward from the high-tide line, held under federal concession in the owner’s name — which must be transferred and kept current. Land of ejido origin cannot be sold until it has been converted to private property and titled under the Agrarian Law; the company does not solve that problem, it only changes who suffers it. In both cases, title due diligence comes before any decision about structure.

Decision checklist before you incorporate

Answer these questions in writing with your adviser. If most of the answers point to the fideicomiso, do not set up the company.

1. Will any shareholder sleep in the property for more than a few weeks a year? If yes: fideicomiso.
2. Will the property be let as a dwelling on a long-term basis? If yes: fideicomiso.
3. Is there a genuine lodging, commercial or development operation, with management, invoicing and staff either employed or subcontracted? If yes: the company is viable.
4. Do you expect to buy several units, bring in investors or seek financing? If yes: the company adds flexibility.
5. Do the shareholders accept the cost of a monthly accountant, permanent filings and the annual RNIE report, even in years with no income? If not: fideicomiso.
6. Has the tax adviser in the country of residence analysed the consequences of holding an interest in a Mexican company and the withholding on dividends? If not: do not sign yet.
7. Will you obtain the SRE consultation on non-residential character in borderline cases? You should.
8. Has the notario reviewed that the corporate purpose and the foreigners-admission covenant are correctly drafted, and that the non-residential use is recorded in the purchase deed?
9. Is the SRE notice within sixty business days and the RNIE registration within forty diarised, with a named person responsible?
10. Do the condominium rules, the land use and the licences permit the declared activity?

Who to talk to, and in what order

• A real-estate and corporate lawyer practising in Quintana Roo, for the residential-versus-non-residential analysis, the drafting of the bylaws and the coordination of the notices.
• A notario público in Solidaridad, Tulum or Benito Juárez, who incorporates the company and formalises the purchase; it is worth using the same office for both.
• An accountant experienced with legal entities that have foreign shareholders, to register the company with the RFC, assemble the controlling-beneficiary file and keep the monthly books.
• A tax adviser in the shareholders’ country of residence, before deciding on the company type.
• A trustee bank, if the conclusion is that at least part of the portfolio belongs in a fideicomiso.

If you would like us to review with you which structure fits a specific property from our catalogue of properties in Quintana Roo, or to coordinate the conversation with a notario and an accountant, you can get in touch. We do not replace those professionals; we sequence the process so that the structural decision is taken before the offer, not after it.

Frequently asked questions

Is the whole Riviera Maya inside the restricted zone?

Yes, for all practical purposes. The restricted zone covers 50 kilometres from the beaches and 100 from the borders (Constitution, art. 27, s. I; LIE, art. 2, s. VI). Cancún, Puerto Morelos, Playa del Carmen, Puerto Aventuras, Akumal, Tulum, Cozumel and Isla Mujeres sit inside the coastal strip; Bacalar, Chetumal and the rest of the south of the state fall inside because of the border strip with Belize. Only inland pockets of jungle lie outside, and real-estate investment does not concentrate there.

Can a Mexican company with foreign shareholders buy a condo to live in?

Not as direct owner. Article 10, section I of the LIE lets companies with the foreigners-admission clause acquire title to property in the restricted zone only where it is devoted to non-residential activities, and the Regulations define as residential any property intended exclusively as a dwelling for the owner or for third parties. For housing, including a long-term let, the route is the fideicomiso — of which the company can be the beneficiary if that suits the wider structure.

What notice must the company file after buying in the restricted zone?

The acquisition notice required by article 10, section I of the LIE, filed with the Ministry of Foreign Affairs within sixty business days of the acquisition, for each property. It is submitted on form FF-SRE-010 with the location and description of the asset, a precise description of the use to which it will be put, a copy of the public instrument authorised by the notario, and payment of the corresponding duties, which are higher if the notice is filed late.

How much income tax does a Mexican company pay on rental income?

Companies under the general regime apply a 30 % rate to the taxable result for the year (Income Tax Law, art. 9) — that is, after deducting authorised expenses supported by valid tax invoices. When they distribute dividends to individuals or to non-residents they additionally withhold 10 % (Income Tax Law, arts. 140 and 164), which may be reduced under the applicable tax treaty. On top of that come the monthly provisional payments and the annual return.

Does vacation rental income carry VAT if the property is owned by a company?

Yes. The VAT exemption for residential leasing does not apply to property supplied furnished, nor to property devoted to hotels or lodging houses (Value Added Tax Law, art. 20, s. II). The typical furnished, nightly vacation rental in Playa del Carmen or Tulum is subject to VAT at 16 %, with the right to credit the VAT paid on business expenses. The rule is the same for individuals; the difference is that the company must administer it month after month as an obligation.

Can a permanent resident of Mexico buy directly in Playa del Carmen?

No. Article 3 of the LIE treats permanent residents’ investment as Mexican investment, but excludes from that treatment what is provided in Titles One and Two of the law — and Title Two governs precisely the acquisition of real estate and trusts in the restricted zone. A permanent resident still needs a fideicomiso for housing, or a Mexican company for non-residential purposes. Only naturalisation removes the restriction.

What happens if I use a Mexican national as a nominee owner to get around the rule?

That is simulation. The LIE penalises simulated acts intended to let foreigners enjoy or dispose of property in the restricted zone with a fine of up to the value of the transaction (art. 38, s. V), and the Constitution provides for forfeiture of the asset to the Nation for anyone who breaches the article 27 covenant. Add to that an obvious civil risk: the nominal owner can sell, mortgage or bequeath a property that is legally theirs.

Is it a good idea to buy the shares of a company that already owns the property?

This is sometimes offered as a way to save the municipal acquisition tax. It is a legitimate transaction, but the buyer acquires the whole company along with its tax, employment and filing history, and the sale of shares by non-residents is also taxable in Mexico. It requires corporate and tax due diligence far deeper than that of a property purchase, and it does not remove the obligation that the use remain non-residential.