Quick Answer
Before paying a foreign resident, classify the concept, identify source of income, residence, and beneficiary, review ISR, VAT, and applicable treaty, and document the exchange rate. Licenses, services, interest, and royalties do not automatically follow the same path.
Before paying a foreign party, classify the concept, residence, source, possible withholding, VAT, treaty, and file documentation.
Specialized Review
International payments combine laws, treaties, and facts. Validate the case before authorizing the transfer.
First, classify the payment
A payment to a foreign party may correspond to a service, royalty, license, interest, technical assistance, or another concept. The classification defines whether there is a source of income, withholding, and VAT treatment.
Treaties do not apply just because the country is stated on the invoice. You must prove residence, beneficiary, and requirements, as well as keep the contract and evidence of what was received.
Initial Classification
| Payment | Key Question | Evidence |
|---|---|---|
| Service | Where is it provided and utilized? | Contract and deliverable |
| License | What right is granted? | License and usage |
| Interest | What is the debt? | Contract and schedule |
| Reimbursement | On whose behalf is it? |
Authorization Sequence
- Classify the concept.
- Identify country, residence, and beneficiary.
- Determine source and rules.
- Calculate withholding, VAT, and exchange rate.
- Pay, remit, and file.
File before transferring
- Contract and description of the service or right.
- Country, residence, and beneficiary of the payment.
- Tax certificate when invoking a treaty.
- Calculation of withholding, VAT, and exchange rate.
- Transfer, receipt, declaration, and file.
Case: license and support in a single invoice
A Mexican company receives a foreign invoice combining software license and support. Before transferring, separate scope, residence, beneficiary, period, and consideration. Document the analysis of each concept and confirm receipt, withholding, VAT, and exchange rate.
Separating concepts before paying allows analyzing source, withholding, VAT, and treaty without forcing a single rule.
— Fintax
International Payment Errors
- Paying before reviewing the contract.
- Applying a treaty solely based on the supplier's address.
- Mixing license and service.
- Omitting proof or remittance of withholding.
Frequently Asked Questions
Does every transfer abroad require withholding?
No. It depends on the concept, source, residence, and applicable rules.
Does an invoice prove residence?
Not necessarily. When using a treaty, gather the corresponding certificate and requirements.
Which exchange rate should I use?
Apply the current criterion and document the date, source, and conversion used in calculation and record.
Sources and further reading
Consult official sources: obligations for payments to foreigners, ISR Law, VAT Law.
To complete the process within Fintax, review: annual corporate tax return, invoice control, cash flow planning.
What to do now
Turn this review into a file with responsible person, date, source, and evidence. If there is a material difference, an overdue obligation, or a decision that changes the calculation, validate the case with your accounting responsible before filing, canceling, or paying.
