KPMG report: Mexican-sourced technical assistance payments subject to withholding tax under Netherlands treaty
Technical assistance payments subject to 25% withholding tax under Mexican domestic law
Technical assistance payments subject to 25% withholding tax under Mexican domestic law
The plenary session of the Mexican Federal Tax Court in June 2023 held (IX-J-SS-70) that technical assistance payments did not qualify as business profits under the Mexico-Netherlands income tax treaty and that, when Mexico is the source jurisdiction, such payments are subject to 25% withholding tax under Mexican domestic law.
Although the court had taken similar positions in the past, this decision creates binding criterion that lower tax courts are required to apply in future cases under the Mexican principle of “jurisprudence by reiteration.”
Read an October 2023 report* [PDF 243 KB] prepared by professionals from KPMG LLP and the KPMG member firm in Mexico that discusses the implications of the court’s decision and in particular, whether the decision could constitute a treaty override.
* This article originally appeared in Tax Management International Journal (5 October 2023) and is provided with permission.
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