1. 1 Rdl & Partner 27.08.2013 Successful together Ciudad de Mxico, 27. August 2013 Erfolgsfaktoren in der Luftfahrtindustrie Potenziale der Deutsch-Mexikanischen Zusammenarbeit Congreso Aeronutico, Deutsch-Mexikanische Industrie- und Handelskammer (CAMEXA)

2. 2 Rdl & Partner 27.08.2013 Overview 03 Free Trade Agreement Mexico-EU (MEUFTA) 02 Regulatory Framework Entry Options Labor Law Work Permit / Immigration Tax System 01 About us 04 IMMEX Program 05 Common Pitfalls 06 Your Contact/ Speaker 3. 3 Rdl & Partner 27.08.2013 We are a one-of-a-kind success story from Germany Founded in 1977 in Nuremberg Sustained growth present in major industrial centres of the world with 91 wholly owned offices in 40 countries Today No. 6 in Germany and one of the leading professional services firms worldwide Integrated services offer comprising audit, legal, tax, management and business consulting Extensive expertise in transactions Focus on growth markets leading positions in China, Eastern Europe and the US Most familiar with your culture and language Designed to assist family owned business organizations in their global expansion 4. 4 Rdl & Partner 27.08.2013 Rdl & Partner worldwide 3.500 colleagues - 91offices - 40 countries Austria Belarus Brazil Bulgaria Croatia Czech Republic Estonia France Georgia Germany Hong Kong Hungary India Indonesia Italy Kazakhstan Latvia Lithuania Mexico Moldova Peoples Republic of China Poland Romania Russian Federation Serbia Singapore Slovakia Slovenia South Africa Spain Sweden Switzerland Thailand Turkey Ukraine United Arab Emirates United Kingdom USA Vietnam 5. 5 Rdl & Partner 27.08.2013 Our offices in Mexico-City and Puebla Only German professional services firm in Mexico Offices in Mexico-City and Puebla Latin American service team based at German headquarters Tailor-made solutions for foreign direct investment audit and accounting, legal and tax consulting, business process outsourcing Investment consulting in Mexico Consulting in all legal aspects within NAFTA, MEUFTA and IMMEX Advice on business process outsourcing in Mexico Advice on transfer pricing strategy 6. 6 Rdl & Partner 27.08.2013 Regulatory Framework Entry Options Local Subsidiary Wholly owned subsidiary Joint Venture Representation Liaison Office Branch Office Distribution Commercial Agent Importer/ Exporter German Corporate Mexico 7. 7 Rdl & Partner 27.08.2013 Regulatory Framework Company foundation Sociedad Annima Sociedad de Responsabilidad Limitada Capital De facto no minimum De facto no minimum Members Min. 2 Shareholders 2 50 Partners Liability Limited to equity participation in the company Limited to the agreed contribution of the partners Comisario Obligatory Optional Wholly owned Subsidiary Optional C.V. = Variable Capital capital divided into a fixed and a variable capital, which can be increased and decreased with a minimum of formalities 8. 8 Rdl & Partner 27.08.2013 Guiding principle: contracts for an indefinite term Termination of employment only possible if there is a legal cause for the dismissal Right to choose between reinstatement or severance compensation for unjustified dismissal 10 % compulsory Employees Profit Sharing from taxable income (PTU) Compared to Germany less vacation days Premium of 25 % of regular pay for vacations Christmas bonus equivalent to 15 days pay (must be paid before December 20 each year) Social security contributions are incurred by both the employer and the employee. But significant part is paid by the employer (represent 20 % - 30 % of the payroll costs) Regulatory Framework Labor Law I - Labor relationship and social security Amendments to Labor Law in force since December 1st 2012 9. 9 Rdl & Partner 27.08.2013 Trial period for contracts of indefinite term Restriction on outsourcing as working regimen Modalities of the remuneration Termination/annulment of the contract Limitations on indemnification in case of court proceedings Extension on employer obligations Legal regulations for expatriate Labor union Regulatory Framework Labor Law II - Amendments to Labor Law since December 1st 2012 10. 10 Rdl & Partner 27.08.2013 Regulatory Framework Work Permit / Immigration Foreigners intending to work in Mexico may apply for the following types of visa: Visitante: Residence permit "Visitante" can not be extended Residente: Visa must be requested at the Mexican Consulate / Embassy Travelers must apply within 30 days at the local immigration office for a residence card Visitante Residente- Temporal Residente- Permanente Length of stay 180 days Up to 4 years permanent Multiple entries No Yes Yes Remunerable work Yes Yes Yes 11. 11 Rdl & Partner 27.08.2013 Corporate Income Tax (ISR) Flat Tax (IETU) Value Added Tax (VAT) Rate 30% 17.5% 0%: medicines, exports 11%: border region 16%: other activities Filing monthly monthly monthly Basis worldwide income operates under cash flow method sale/purchase Federal Level Taxation of companies at federal and state level Regulatory Framework Tax System I Identical taxation rates for S.A. and S. de R.L. 12. 12 Rdl & Partner 27.08.2013 Other considerations Double Tax Treaty with USA and Germany Annual tax return must be filed within the first 3 months of the following NO extensions are available Filing of financial statement with tax opinion (Dictamen fiscal) of an independent public accountant. This procedure has to be followed by taxpayers with: Gross income > ca. 2,3 Mio. EUR Assets > ca. 4,5 Mio. EUR Number of employees > 300 Tax payers are obliged to carry out an annual transfer pricing study if they have transactions with related parties Regulatory Framework Tax System II 13. 13 Rdl & Partner 27.08.2013 Further considerations Losses can be carried forward up to 10 years Adjustment for inflation No withholding tax on dividends paid by Mexican companies, if the dividends are from the taxed profits (from the CUFIN account) Royalties paid to a non resident are subject to withholding tax 30% for patents and trademarks 25% for all other royalties Regulatory Framework Tax System III 14. 14 Rdl & Partner 27.08.2013 Goal Benefits Requirements Elimination of custom duties Elimination of non-tariff barriers on imports and exports Free Trade Agreements, in particular MEUFTA and NAFTA, can be combined Reduction of manufacturing costs and improvement of competitiveness MEUFTA - Certificate of Origin and Rules of Origin must be maintained Boost bilateral trade and investment and create exceptional conditions for business development between Mexico and the EU Free Trade Agreement Mexico-EU (MEUFTA) 15. 15 Rdl & Partner 27.08.2013 IMMEX Program I IMMEX Program is defined as an Who can use the IMMEX Program? instrument to promote foreign direct investment through custom and tax incentives Following companies: Holding Manufacturing Service Shelter Outsourcing 16. 16 Rdl & Partner 27.08.2013 Authorization from the Ministry of Economy Export over 500,000 USD in a one year period or export 10 % of the total revenues At least 30% of the machinery and equipment must be owned by the foreign company Submission of an annual electronic report of total sales and exports Submission of monthly turnover-report for statistical purposes Requirements Benefits Avoid the payment of VAT Temporary import of raw materials, machinery and equipment and administrative equipment without paying any import duties or VAT Eased transfer-pricing rules Automatic inscription in the National Importers registry without application IMMEX Program II 17. 17 Rdl & Partner 27.08.2013 1 Ignoring soft factors such as the maana mentality 2 Caution while employing individuals - customize your contracts to local law 3 Keep up to date with constantly evolving legal and tax changes 4 Doing business in Mexico is part of social life 5 Bring patience! 6 Imposing German standards for administration, timeline, infrastructure Common Pitfalls 18. 18 Rdl & Partner 27.08.2013 Your contact Mexiko-Stadt Jos A. Garca Torre Magenta (17th Floor) Paseo de la Reforma 284 Col. Jurez 06600 Mexico, D.F. Tel.: + 52 (55) 4739-2227 Fax: + 52 (55) 4739-2001 E-Mail: mexiko-stadt@roedl.pro Puebla Jos A. Garca Torre JV III (5th Floor) Va Atlixcyotl 5208 Col. Territorial Atlixcyotl 72810, San Andrs Cholula, Puebla Tel.: + 52 (222) 431-0027 Fax: + 52 (222) 431-0169 E-Mail: puebla@roedl.pro Deutschland Dr. Marcus Felsner Strae des 17. Juni 106 10623 Berlin Tel.: + 49 (30) 810 795-51 Fax: + 49 (30) 810 795-59 E-Mail: marcus.felsner@roedl.pro 19. 19 Rdl & Partner 27.08.2013 Your speaker Dr. Andreas Vo is an attorney-at-law (admitted in Germany) and Head of Legal Services at Rdl & Partner in Mexico. After his studies at the University of Bielefeld, Germany, and the Saint Louis University School of Law, Missouri, U.S.A., he practiced as a lawyer in the areas of German and European Company Law, Mergers & Acquisitions, Banking & Capital Markets and Corporate Finance. Before joining Rdl & Partner Andreas Vo was a partner in a leading Anglo-American law firm in the area of cross-border corporate transactions. Dr. Vo is the author of several scholarly publications and a frequent speaker at conferences in Germany and at international level on Mexico and Latin America in general. Dr. Andreas Vo, LL.M. (SLU) Rechtsanwalt Roedl & Partner S.C. Torre Magenta (17th Floor) Paseo de la Reforma 284 Col. Jurez 06600 Mxico, D.F. Tel.: + 52 (55) 4739-2227 Fax: + 52 (55) 4739-2001 E-Mail: andreas.voss@roedl.pro 20. 20 Rdl & Partner 27.08.2013 The Castellers de Barcelona The Castellers are like us: every single individual counts when working together and when supporting our clients.