Distribution Center in Mexico (Purchase & Operation)

Our client is a Venezuelan company from the flavor and fragrance market which was looking to expand to Mexico in order to be closer to local customers and provide an overall better and expedited service and delivery.

To that extent, our client also was interested in purchasing land in the city of Guadalajara, Jalisco on which he could then build their local distribution center.

All things considered, we began to study our client’s needs to better understand them. It was possible to work via a branch through which he could invoice and service local customers and thus, ownership would be of the Venezuelan parent company. Also, we could set up a local entity as a subsidiary which in legal regards, would provide a Mexican entity with local TaxID as well as the possibility to hire locally and their own Venezuelan personnel as well as directors.

The latter was the better fit for our client considering that they wished to have a more present approach to the local market –have a Mexican entity, local TaxId, local employees-; objectives that would not have appropriately been achieved through a Branch operating fiscally as a permanent establishment.

We began working on proxies for our attorneys to incorporate the entity on behalf of the Venezuelan company. Also, in close work with our client we drafted the company agreement which in this case, was a local SA company (Sociedad Anónima) primarily because our client frequently received private investment.

Once all documents were approved, they were signed before a Notary Public and our legal representative registered the company and obtained its TaxID (Registro Federal de Contribuyentes).

Then we proceeded to open the company’s bank account and were able to receive the necessary funds to purchase the desired land via capital contributions to the new Mexican subsidiary, and with that, expand their business to Mexico.

Our client finished construction of its Distribution Center in 2022 and has been a fully operational company since then, sourcing and selling goods within the Mexican market without significant troubles. Also, this subsidiary is able to distribute dividends to its Venezuelan parent company at a 5% reduced tax rate benefiting from Mexico’s large base of Tax Treaties, specifically the treaty Mexico currently has in effect with Venezuela.

If you have doubts about how to start your operations and expand your company to Mexico, contact us and we will advise you on how to achieve your goals.