Mexico does not impose inheritance or gift taxes, providing significant advantages for intergenerational wealth transfer. However, early planning remains essential. Proper planning – whether through a will or during one’s lifetime – can save tens or even hundreds of thousands of shekels, especially for assets with high capital gain potential or international tax implications.
This article outlines the benefits of investing in Mexico, compares the situation to Israel and European countries, and emphasizes the importance of early planning and drafting a will for efficient inheritance execution.
Currently, Mexico does not charge any tax on the transfer of assets via inheritance or gifts from the donor, the deceased, or the recipient. This makes it an attractive destination for planning family wealth and intergenerational investments.
Why Planning Still Matters?
Despite the absence of inheritance tax in Mexico, asset transfer planning isn’t only a tax issue – it’s also legal, regulatory, and familial. Early planning helps streamline bureaucratic processes, prevent disputes, and anticipate possible tax liabilities in other countries.
Inheritance Tax in Israel vs. Mexico
Like Mexico, Israel does not impose estate or inheritance taxes. However, in certain situations, taxes might apply, for example, capital gains tax upon selling the inherited asset.
The tax treaty between Israel and Mexico includes provisions to avoid double taxation, but it is important to plan the reporting and submission accurately to avoid double taxation. Click here to read the Israel-Mexico tax treaty in English on the Ministry of Finance website.
Comparison to Other Countries
Many countries still impose inheritance tax at varying rates:
- South Africa: 20%–25%
- France: 5%–60%
- Germany: 7%–50%
- Belgium: 3%–80%
- Netherlands: 10%–40%
- Brazil: 4%–8%
In contrast, countries like Austria, Norway, and Sweden, like Mexico, have abolished the inheritance tax.
Drafting a Will in Mexico – The Key to Tax Savings and Avoiding Disputes
Even without an inheritance tax, drafting a will in Mexico is important due to local inheritance laws. Assets do not always automatically transfer to heirs. Procedural steps, such as obtaining an inheritance order or permit to execute the estate, may be required. A will ensures the distribution of assets according to the testator’s wishes and helps avoid future conflicts.
A well-structured, detailed plan ensures a smooth and efficient asset transfer. It must reflect the testator’s intentions and comply with legal requirements to remain valid. In many cases, it is possible to choose the applicable jurisdiction for the will, which can significantly affect the inheritance planning and execution.
Without a will, the default law that applies is that of the testator’s last and primary place of residence. If you own assets in Mexico, we recommend drafting a will to ensure the asset transfer goes as smoothly as possible. This can help avoid misunderstandings or lengthy legal proceedings after death.
Practical Information for Inheriting in Mexico
To realize an inheritance in Mexico, documents such as the deceased’s death certificate, will (if exists), copies of heirs’ identification documents, asset ownership documents, bank account confirmations, and more are usually required.
It should be considered that the process of realizing an inheritance from Mexico can take between several months to a year or more, depending on the complexity of the deceased’s estate, the number of heirs, the existence of a will, etc.
Inherited Assets in Mexico? 6 Key Steps
1. Clarify Legal and Factual Background
First, you must check the type of asset that is to be inherited, its location, the identity and status of the heirs, the value of the property, and more.
2. Review Timing and Location for Asset Realization
It is necessary to examine whether it is worth selling the property now and, if so, where should it be sold – in Mexico or in Israel?
3. Regulatory and Banking Aspects
It is recommended to check the costs of money transfers, whether it is necessary to open an account in Mexico or another country in order to transfer funds, what permits are required, etc.
4. Transfer the Asset to Israel
It is necessary to consider whether to transfer the property itself or its consideration, and what the implications are in terms of tax, exemptions, deductions, etc.
5. Examine Future Impacts on Property
It is recommended to examine the future effects on the property – for example, a future sale of the property in many cases will be subject to capital gains tax in Israel as well.
6. Transfer Asset to Israel
Performing all necessary actions, submitting documents, dealing with banks in Mexico and Israel, and transferring the property.
How We Can Help
The goal is to transfer the inheritance to heirs in Israel in the most tax-efficient way, while addressing legal issues in Israel and Mexico and issues related to banking and regulation. For example, whether it’s better to realize a certain asset in Mexico or transfer it to Israel; how to transfer inheritance funds to a bank account in Israel; how to use various exemptions between heirs; whether to give gifts during lifetime; whether to establish a trust, and more. Strategic planning, according to law and tax treaties, is essential to minimize tax liabilities.
Nimrod Yaron & Co. has extensive experience in guiding Israelis with assets or inheritances abroad, including in Mexico – starting from the initial planning phase, through dealings with authorities in both Mexico and Israel, to transferring inheritance funds to the heirs’ bank accounts.
We work in cooperation with all relevant professional entities in Mexico and Israel and provide legal solutions both in terms of taxation and banking, tailored to the circumstances of the case.
If you’ve inherited assets or plan to bequeath assets in Mexico, our international tax and inheritance law team would be happy to advise. Contact us for an initial consultation.
Do I have to pay tax in Israel on an inherited asset from Mexico City?
There is no inheritance tax in Israel. However, capital gains tax may apply after the sale of the property. It is important to check the recommended date for selling the inherited property.
Why is planning for intergenerational asset transfers important?
Transferring assets from abroad to an intergenerational level is not only a family matter, but is also a tax and financial matter. Early planning, while addressing legal issues in Israel and abroad, may save a lot of money and prevent legal complications.
What happens if there is no will?
In the absence of a will, the inheritance will be divided among the legal heirs in accordance with Mexican inheritance law.
What documents are needed to inherit in Mexico?
In order to realize an inheritance in Mexico, documents such as a death certificate, a will (if one exists), copies of the heirs’ ID cards, property ownership documents, bank account confirmations, and more are required.
How long does the inheritance process take in Mexico?
It should be taken into account that the process of realizing an inheritance in Mexico can take between several months and a year or more, depending on the complexity of the testator’s estate, the number of heirs, the existence of a will, and other factors.
