Set Up a Subsidiary in Mexico: Key Details and Steps

In this article, our Mexico company formation consultants provide a few key details related to opening a subsidiary in this country. Please mind that our team offers tailored corporate services to investors who want to set up subsidiary in Mexico, therefore businessmen can rely on us if they want to establish a business here.

Quick Facts
Best used for	The subsidiary is a suitable vehicle for expanding on a foreign market, while the parent company enjoys limited liability for local debts and other associated business risks. In Mexico, foreign investors can establish their desired level of independence for the subsidiary (the entity can have 51% to 100% parent shareholding).
Registration obligations for taxation	In order to set up a subsidiary in Mexico it is required to apply for a tax identification number (Federal Tax Identification Number – Registro Federal de Contribuyentes – RFC) issued by the Tax Administration Service (Servicio de Administración Tributaria – SAT). The subsidiary is liable to corporate taxes charged in Mexico, therefore it must make all the necessary tax registration steps.
Minimum share capital	No minimum capital requirements.
Institution in charge with the incorporation	The Public Registry of Commerce handles the registration of all legal entities.
Penalties	The Mexican tax institutions charge penalties for late tax returns and late tax payments.
Management (Local/Foreign)	Investors can set up a subsidiary in Mexico with 100% foreign management, as per the rules of Article 4 of the Mexican Foreign Investment Law.
Legal representative requirements	It is necessary to have a person who is a Mexican resident to represent the company in the relation with the state authorities.
Local bank account setup procedure	– present information on all the persons representing the company (shareholders, directors, legal representative); – submit the incorporation documents of the company; – present details on its corporate name, business address, tax identification number; – appoint a person who can use the account that will be set up at the commercial bank of choice; – complete bank forms, etc.
Independence from the parent company	Yes, the company is a separate legal entity from the parent company.
Liability of the parent company	Limited to the amount of shares owned (minimum 51% and maximum 100%, for wholly owned subsidiaries).
Corporate tax rate	30%
Annual accounts filing requirements	If you will set up a subsidiary in Mexico, you will need to: – file a corporate income tax return on a monthly and yearly basis (by 31 March of the next financial year); – file information returns on loans, transactions, withholding taxes, donations, dividend payments (by 15 February of the next year); – comply with audit procedures (for companies required to complete audit formalities); – submit audit reports, etc.
Possibility of hiring local staff (YES/NO)	Yes
Travel requirements for incorporating branch/subsidiary (YES/NO)	No (legal representation is possible through the power of attorney).
Number of double tax treaties signed by Mexico (approx.)	60 double tax treaties.

What is a subsidiary in Mexico?

A subsidiary is a company which is owned or controlled by another company, named the parent or holding company. An important aspect that should be clarified for foreign investors who want to open a company in Mexico as a subsidiary is that this entity is an independent structure from its parent company.

What are the advantages of a subsidiary in Mexico?

Our consultants in company incorporation in Mexico have highlighted some of the main advantages in the list below:

it helps with the company’s brand identity in Mexico;
operating through a subsidiary helps the parent company limit any liabilities that it can have when developing a business abroad;
it provides bookkeeping advantages (simpler rules);
it offers simpler accounting formalities, which can be presented by our accountants in Mexico;
there are also tax compliance advantages (lower costs compared to operating through a branch).

What are the main legal entities available for a subsidiary?

The subsidiary must be incorporated as a separate legal entity in accordance with the Mexican corporate laws. For this, the investors should decide on a suitable business form. In general, 2 options are commonly associated with the incorporation of a subsidiary: 1) the public limited company and 2) the limited liability company.

What are the shareholding requirements?

In practice (Mexican law has no 'Foreign Income Law' defining it), a company is considered a subsidiary as long as 51% of the capital of the company is subscribed by the parent company, which has to be the subsidiary’s major shareholder.

Is it possible to fully own a subsidiary as a foreign investor?

Please mind that the law for company formation in Mexico allows foreign investors to own 100% of the company’s shares. Some limitations can appear depending on the business field in which the company operates. In this case, a letter addressed to the local government has to be made, which will be comprised of:

a written declaration which states that the parent company is incorporated in compliance with the legislation in its country of origin and that its by-laws are not against the public order;
an explanatory statement of the activities which the subsidiary will be undertaking;
the physical address for the commercial subsidiary activities.

Can I be the sole shareholder of the subsidiary?

No. As per the rules of the Mexican law, corporate entities, such as the limited liability company or the public one, can be incorporated by minimum 2 shareholders.

If you want to register a Mexican subsidiary in 2026, we invite you to read our infographic below, which offers a short presentation on the main aspects regarding the registration of this entity:

Do I need to have a registered address in Mexico?

Yes, if you will incorporate a Mexican subsidiary, you must have a registered address located in this country.

What is a suitable registered address?

Investors who will open a subsidiary in Mexico must know that a registered address in this case can only mean a rented office space (brick and mortar) or a purchased commercial unit. Unlike other businesses that can be set up here, the Mexican authorities do not allow businessmen to assign a virtual office as a registered address for a subsidiary.

Do I need to appoint a legal representative?

Yes, under the Mexican laws, subsidiaries must have a legal representative, who can be a local or a foreigner.

What rules must I abide by if I want to appoint a foreign legal representative?

If the subsidiary’s legal representative is a foreign individual, the person must provide evidence on having proper immigration documents – a visa that allows residency in Mexico, along with a valid tax identification number. Please mind that if you do not want to go to through this procedure, you can assign the role to a local specialist or lawyer (our team can provide this service).

Is it required to set up a corporate bank account?

Yes. Once you have registered the legal entity with the Mexican authorities, you must address a local bank unit to set up a corporate bank account (banks will require proof of address, incorporation documents, information on the shareholders, legal representative, etc.). In this article, you can learn more about the bank account setup procedure.

How long does it take to open a subsidiary in Mexico?

The process on company formation in Mexico takes about 1 month, but overall, the registration could take around 2 months.

What is the tax system applicable to a subsidiary in Mexico?

In the list below, our consultants in company registration in Mexico have prepared a short presentation on basic taxes and tax laws:

a foreign controlled entity that qualifies as opaque is subject to the anti-deferral (controlled foreign company) rules of the Mexican Income Tax Law(Articles 176 and 177, which tax Mexican residents on income earned through entities subject to preferential (low-tax) regimes);
the corporate tax is charged at a rate of 30%;
withholding taxes on dividends are charged at a rate of 10%;
social security contributions are paid by the employer, and it is capped at 25 times UMA (Unidad de Medida y Actualization) per year per 1 employment contract (the value varies based on the salary of the employee).

What are the compliance obligations in Mexico?

The subsidiary is required to comply with the same types of accounting regulations that are imposed to a regular company operating in this country.

To what institution must I address when paying social contributions?

Taxes collected as social security contributions must be submitted with the Mexican Social Security Institute.

We also invite you to watch a video presenting how to open a Mexican subsidiary:

We invite you to contact our specialists in company formation in Mexico for assistance on the registration of a subsidiary.