VAT tax in Mexico

[Peter-and-Wendy2]

I have 2 separate questions regarding the VAT taxes collected by Airbnb on the rentals of my Mexican property:

1) As I host, I must pay VAT tax on the hosting fee which I pay to Airbnb.  I understand and accept that. Airbnb sends me an invoice/receipt which shows the fee and the VAT tax which they charged me.  However, my Mexican accountant just told me that since my RFC number does not appear on this receipt, the receipt will not be accepted by the Mexican tax authorities.  How can I get a receipt with my RFC number on it?

2) As a guest, my guests are supposedly charged and pay to Airbnb a 16% VAT tax for Mexico.  My accountant advises me that I should get a print-out of all RFC taxes paid for my property or I will be liable to pay them again when the tax authorities see my income.  How do I get proof of VAT taxes paid on my property rentals?

[Sarah977]

@Kellie127  You have to file tax returns and pay tax on your Mexican earnings both in Mexico and the US.

[Blanca276]

I have a house in the USA and another in MX and I have already filled out the IRS & RFC form for AIRBNB and my accountant keeps saying that AIRBNB has to deduct VAT from my receipts and is not doing it, my accountant tells me that the reason is because I opened My airbnb account here in the USA and from what I understand AIRBNB takes care of deducting it in periods and I have to declare in both countries, correct?..... I am giving invoices to business travelers so, they can get paid from their employer.

[Michael6221]

Having the exact same problem.  I now have about 5k due to SAT because AirBNB isn't paying IVA.  Airbnb told me I need to turn off my listings, wait until the last checkout then wait another 90 days without bookings and then change my ID to a Mexican address.  If I do it now they will cancel all my bookings and apply all the penalties that come with cancellations.  

So essentially shut down and stop accepting bookings for months because of issues with their software.  When I put in the RFC they should have had me change the account location then.  Am so frustrated... I am probably just going to pay VAT directly and add a 16% management fee.

[Deborah1145]

I have same issue and they didńt collect any VAT on any of my rentals all year, so if I file taxes in Mexico I will need to pay all the VAT out of my pocket because they failed to collect.  Very confusing.

[Sarah977]

@Deborah1145  Did you not check the reservations at the time to see whether they were charging guests the IVA? How did this go on all year without you noticing?

[Deborah1145]

The payout says taxes and fees collected from the guests but amount is not VAT, which I learned on the Zoom call today with ABnB.  The people on the call said they are required by Mexican law to collect And remit VAT at 16% and when I reviewed the transaction history they are not doing it even though I provided my RFC.   Customer service said they don’t collect the VAT if the host country of residence is not Mexico.  

[Michael1812]

@Deborah1145  

Thanks for posting about this.  So was there any resolution?  How was this resolved? On reservations now are they charging VAT tax?  Are you manually adding extra on?  Was there any resolution to this? Thanks in advance.

[Sarah977]

@Karen3152  Your information about Mexican temporary residency is incorrect. There is no requirement to stay in Mexico for 6 months a year. You can come and go as you please. What it allows you to do is to remain in Mexico for more than the 180 day continuous limit you can stay on a tourist visa.

Nor does it have anything to do with citizenship, although you would first need to start with temporary, then permanent residency in order to apply for citizenship if you were interested in doing that. Obtaining residency staus is not "starting a citizenship process"- they are two completely separate things. And people can hold dual US and Mexican citizenships- you don't have to give up your US citizenship.

I have been living in Mexico for 20 years, first on a temporary residency, now with permanent reesidency status, as have tens of thousands of foreigners. I have no intention of pursuing citizenship.

I'm not sure where you got all this false understanding of Mexican residency. 

It is illegal for you to run an Airbnb business in Mexico without paying Mexican taxes on it. You can't simply choose to not pay taxes on your earnings generated here. Your home can be confiscated by the govt. for that. 

[Sarah977]

@Karen3152  Yes, I understand about the tax being 20% if you don't submit an RFC. But that withholding tax is not the only tax you need to pay in Mexico on your rental. There is also IVA.

I also understand from other posters here that Airbnb is making this all very confusing and difficult for hosts.

But your info on temporary residency is still incorrect, you are misinterpreting what you quoted. It doesn't mean you have to stay in Mexico for 180 days, it means you don't have to leave after 180 days. I know tons of people with temporary residency who may only spend a couple of months a  year in Mexico.

"As a Temporary resident in Mexico you may exit and enter the country as you please, there is no requirement on how many months per year you reside in Mexico".

That is from a Mexican law site. You can find this same information easily online on many sites as well as the govt. site.

And no, seguing to permanent residency from temporary after 4 years is not in the least bit "extremely painful and costly".  There is no cost involved aside from the fee for permanent residency. It is super simple and immigration is one of the easiest and most efficient Mexican govt. departments to deal with. Nor does anyone "pay an immigration agent to guide them through the process". Immigration agents cannot and do not charge for the service they provide, they are govt. employees, they work at the INM offices.

Your friends must have paid an immigration lawyer, a retired immigration official, or some sort of facilitator. When all they really needed to do was hire a translator to go to the immigration office with them if they don't speak Spanish. All the INM agents I have dealt with over the years at the INM office were quite helpful and show you exactly what forms you need to fill out, for free. It is part of their job. Unfortunately many foreigners who don't bother to learn Spanish and get super intimidated by having to deal with Mexican bureaucracy get taken advantage of by some of these facilitators. 

And you do not have to become a permanent resident after 4 years as a temporary, although most people do.  You can start the temporary residency process over again at a Mexican consulate in the US.

I understand you prefer to remain a tourist, but what you prefer is not relevant in this case- it isn't a personal decision- earning money on a rental in Mexico as a tourist is illegal.  You cannot operate a business here on a tourist visa, anymore than you can in the US, or anywhere else. You might be able to get away with it, but just be aware that you are breaking Mexican law. And how are you going to pay whoever is managing your property in your absence without proper receipts and facturas? 

[Sarah977]

@Karen3152  "Bottom line - as far as I can tell, you are not breaking Mexican law if you don't submit an RFC to AirBnb."

I don't know how to make this any clearer to you than I have already tried to. It is against the law, both immigration and tax law, to run any kind of business or earn money on Mexican property as a tourist. Period. Airbnb knows nothing about Mexican immigration law.

Do you think the Mexican tax dept. and immigration are stupid? All they have to do is pull up a page of Airbnb ads for anywhere in Mexico and check whether those properties are operating legally or not. 

Americans complain about Mexicans and other foreigners illegally earning money in the US, then Americans turn around and do the same thing in Mexico. 

You also don't understand about being able to deduct the 20% from your US taxes. The 20% is not an expense- it is charged to your guests, not you. It isn't deducted from your payout, it isn't income, therefore there is nothing for you to deduct. It isn't witholding tax for you, it is witholding tax for Airbnb, charged to the guests, that Airbnb then submits to the Mexican tax dept. The reason you get a witholding tax form from VRBO is because the host pays all fees and taxes on VRBO. 

[Peter-and-Wendy2]

I have given up for the time being in trying to get a response from Airbnb concerning tax status and issues.  Very little of our booking comes through this platform so it has not impacted us greatly yet.  But, I do wish you luck!

[Deborah1145]

I wrote a detailed response however it keeps not posting saying error.  Short story is they are only collecting the VAT if you indicate your country of residence (COR) as Mexico.  In their system, to have COR as Mexico, you must have a Mexican bank account and be paid in Mexico in pesos in addition to providing your RFC.  They know the issue and know they are not complying with the law.  Their customer service manager implied it is a software issue, however I don’t think that is legit.   They are collecting the Lodging tax for each state and made a deal with them to submit de-identified monies in aggregate.  So there is nothing submitted to the Mexican govt which identifies you had rentals and collected taxes and remitted. All you get is the report you can download which details your rents and fees.  Income for hosts who are foreign will be submitted to their COR if over the minimum.  Do you think they don’t know that VRBO is collecting the tax properly and therefore if you have a property listed on both  guests pays 16% less on AB&B site because they are not collecting VAT… Took me almost an entire day of emails and chats to get this info out of them.  Not impressive.  Directly contrary to what they said on the tax zoom call.  Very frustrating.  FYI penalties for non compliance with the law are severe for the property owner.  Very frustrating!

[Peter-and-Wendy2]

hmmm!

[Peter-and-Wendy2]

Deborah,

The "hmmm!" in our preceding message was just me testing to see if my reply would go through.  Obviously it did but many of my replies do not.  Anyhow, thank you for your most thorough explanation above.  It has been the inability of Airbnb personnel to follow-up with me to answer questions that I do not rely on this site for our business.  I wish we could.  Good luck to renters out there who do.

[Sarah977]

@Peter-and-Wendy2  What happens here with the posts not going through usually happens with longer posts, or if you walk away from what you are writing and come back to finish it up later. They time-out. 

So it's a good idea to copy your post before clicking on Reply, that way you can just quicky paste it back into a new reply field, hit Reply, and it'll post.