Implications of New Mexican-Sourced Technical Assistance Ruling

In June 2023, the plenary session of the Mexican Federal Tax Court ruled that technical assistance payments do not qualify as business profits under the Convention for the Avoidance of Double Taxation between Mexico and the Netherlands (“MX-NL DTT”) and that, when Mexico is the source jurisdiction, such payments are subject to 25% withholding tax under Mexican domestic law (Jurisprudence IX-J-SS-70).

Although the Court had taken similar positions in the past, this ruling creates binding criterion that lower tax courts are required to apply in future cases under the Mexican principle of “jurisprudence by reiteration”. In opinion of ...