In force since December 28, 1993
US–Mexico Tax Treaty
Every rate below carries the article that sets it and the date we read it — because protocols move rates and leave the article numbers alone.
Every rate on this page is cited to the treaty article that authorises it. Treaty texts last read September 9, 2026.
Quick answer
The US–Mexico income tax treaty has been in force since December 28, 1993. It reduces US withholding on Mexico residents’ US-source income below the 30% statutory rate — portfolio dividends at 10%, interest at 15%. You claim it with Form W-8BEN before you are paid, not on a return afterwards.
Key takeaways
- In force since December 28, 1993, amended by 2 protocols — which is why the article numbers below carry their amendment chain.
- There is a conditional 0% dividend tier for very large corporate holdings, and it cannot be claimed on ownership alone — see below.
- No totalization agreement is in force, so social security contributions can be owed to both countries with no relief.
- Claim it on Form W-8BEN before payment. A treaty rate you did not claim is recovered only by filing a US return.
The rates, by article
Each figure below is the ceiling the treaty sets on US withholding, with the article that sets it.
US–Mexico withholding ceilings. Statutory rate without a treaty: 30%.
| Income type | Treaty rate | Instead of |
|---|---|---|
| Dividends — portfolio | 10%Article 10(2)(b), as substituted by the 2003 protocol, Article II(a) | 30% |
| Dividends — direct (corporate holder) | 5%Article 10(2)(a), as substituted by the 2003 protocol, Article II(a) | 30% |
| Interest | 15%Article 11(2)(c) | 30% |
| Royalties — All royalties, including equipment rental and broadcast film | 10%Article 12(2) | 30% |
The direct-dividend rate of 5% requires the beneficial owner to be a company holding at least 10% — Per cent of voting stock, held directly.. No holding period applies to the 5% tier. The 12-month period applies only to the conditional 0% tier.
A rate without its article is not an answer
Protocols replace whole articles and usually keep the article number while changing the rate inside it. That is why every figure above shows its article as amended. Reading the base treaty text alone — which is what the IRS-hosted PDF gives you — produces superseded rates for several treaties in this set.
The conditional 0% tier
It exists, and ownership alone does not get you there. Every condition has to be met independently.
This is the figure most commonly quoted without its conditions. The treaty does provide a 0% rate on dividends for very large corporate holdings — but it is conditioned on more than a percentage, and a claim that meets the ownership test and fails a limitation-on-benefits test is simply wrong.
0%
Article 10(3)(a), as substituted by the 2003 protocol, Article II(a)
Every one of these must be true:
- The beneficial owner is a company resident in the other state
- It has owned shares representing 80% or more of the voting stock of the payer
- For a 12-month period ending on the date the dividend is declared
- AND it meets one of the limitation-on-benefits routes in Article 17 — or, alternatively, it owned 80% or more, directly or indirectly, before 1 October 1998; the Article 17 routes are entitlement under Article 17(1)(d)(i) or (ii), entitlement under Article 17(1)(g), or a competent-authority determination under Article 17(2)
An alternative route: A trust, company or other organisation operated exclusively to provide pension, retirement or other employee benefits, whose income is generally exempt in its state of residence, also gets 0% — provided the dividends are not derived from carrying on a business. Article 10(3)(b).
Does not apply to: Article 10(4) disapplies the 5% and 0% tiers for certain REIT dividends, with separate 10%, 5% and interest-in-real-property tests.
Because the conditions include a limitation-on-benefits test that no lookup can resolve from a country and an income type, our tool states the conditions rather than asserting the rate applies to you. That is a deliberate refusal, not a gap.
Interest — the exceptions
The headline interest rate is not the whole story for this treaty.
Interest here splits by category rather than running at a single rate. Presenting the lowest as “the” treaty rate overstates the benefit, so every class is shown:
Interest rates by class
| Class of interest | Rate |
|---|---|
| Exempt — a Contracting State or its subdivisions, interest paid by them, qualifying pension and employee-benefit organisations, and loans of three years or more made or guaranteed by Banco Nacional de Comercio Exterior, Nacional Financiera, the Export-Import Bank or OPIC | 0%Article 11(4) |
| Loans granted by banks, investment banks, savings banks and insurance companies; and bonds or securities regularly and substantially traded on a recognised securities market | 4.9%Article 11(2)(a) |
| Interest paid by banks, and interest paid by a purchaser of machinery and equipment to the seller on a sale on credit, where the beneficial owner is not in the 4.9% category | 10%Article 11(2)(b) |
| All other interest | 15%Article 11(2)(c) |
| Interest paid on back-to-back loans | Left to domestic law |
These exceptions change the answer even where the headline rate is clear:
Back-to-back loans
Interest paid on back-to-back loans is taxed under the domestic law of the state in which it arises, not at any treaty rate.
Article 11(2), closing sentence
Effectively connected interest
Where the interest is attributable to a permanent establishment or fixed base, Article 7 or Article 14 applies instead of the rate table.
Article 11(6)
Where people get this wrong
Each of these is a claim we found stated incorrectly on other sites, or a condition that is routinely dropped.
There is no single Mexican interest rate.
Most treaties set one interest rate. This one tiers it, and the tier turns on who the lender is and how the instrument trades — not on the amount or the borrower. Quoting 'the' Mexico interest rate without saying which tier is a mistake.
Equipment rental is a royalty here.
Article 12(3) sweeps industrial, commercial and scientific equipment into the royalty definition at the full 10%. Several other treaties treat equipment rental separately and more favourably.
Students, teachers and pensions
These articles decide more real cases than the withholding rates do — and they are the ones the savings clause fights over.
Students and trainees
Not yet verified. We have not read the students and trainees article directly against the treaty text, so this page does not state it. Rather than summarise it from a secondary source, we leave it out — every other figure here carries the article it came from, and this one would not. Read the treaty text linked in Sources below, or ask a preparer who handles cross-border returns.
Teachers and researchers
Not yet verified. We have not read the teachers and researchers article directly against the treaty text, so this page does not state it. Rather than summarise it from a secondary source, we leave it out — every other figure here carries the article it came from, and this one would not. Read the treaty text linked in Sources below, or ask a preparer who handles cross-border returns.
Pensions
Not yet verified. We have not read the pensions articles directly against the treaty text, so this page does not state it. Rather than summarise it from a secondary source, we leave it out — every other figure here carries the article it came from, and this one would not. Read the treaty text linked in Sources below, or ask a preparer who handles cross-border returns.
How to claim it
Before you are paid, on a W-8BEN given to the payer. Not on a return afterwards.
- Give the payer a Form W-8BEN. Name Mexico on line 9. For ordinary dividend and interest claims that is all Part II needs — leave line 10 blank.
- For royalties, scholarships or a conditioned claim, line 10 needs the article and rate. How to find your article number walks through it, and the articles for this treaty are in the table above.
- Check whether a disclosure is owed. Most individual FDAP claims are waived from Form 8833, but a position that overrides the Code may not be.
- If tax was already withheld at 30%, the routes are a refund claim on a US nonresident return, or the foreign tax credit in your own country.
Get the form in before the payment, not after
A treaty rate is applied by the payer at the moment they pay you. Submit the W-8BEN afterwards and the 30% has already gone — recovering it means filing a US return and waiting the better part of a year.
How this treaty compares
The same four rates for every country in this set, so you can see where Mexico actually sits.
| Country | Dividends | Dividends (large stake) | Interest | Royalties (lowest) |
|---|---|---|---|---|
| Brazil | No treaty30% statutory | No treaty30% statutory | No treaty30% statutory | No treaty30% statutory |
| Canada | 15%Article X(2)(b) | 5%Article X(2)(a), as amended by the 1995 protocol, Article 5(1) | 0%Article XI(1), as replaced by the 2007 protocol, Article 6split by category | 0%Article XII(3)split by class |
| China | 10%Article 9(2) | 10%Article 9(2) | 10%Article 10(2)split by category | 7%Article 11(2), read with the protocol, paragraph 6split by class |
| France | 15%Article 10(2)(b), as replaced by the 2009 protocol | 5%Article 10(2)(a), as replaced by the 2009 protocol+0% tier, conditional | 0%Article 11(1)split by category | 0%Article 12(1), as replaced by the 2009 protocol |
| Germany | 15%Article 10(2)(b), as substituted by the 2006 protocol | 5%Article 10(2)(a), as substituted by the 2006 protocol+0% tier, conditional | 0%Article 11(1) | 0%Article 12(1) |
| Italy | 15%Article 10(2)(b) | 5%Article 10(2)(a) | 10%Article 11(2)split by category | 0%Article 12(3)split by class |
| Japan | 10%Article 10(2)(b) | 5%Article 10(2)(a)+0% tier, conditional | 0%Article 11(1), as replaced by the 2013 protocol, Article IVsplit by category | 0%Article 12(1) |
| Korea | 15%Article 12(2)(a) | 10%Article 12(2)(b) | 12%Article 13(2)split by category | 10%Article 14(2)split by class |
| Philippines | 25%Article 11(2)(a) | 20%Article 11(2)(b) | 15%Article 12(2)split by category | 15%Article 13(2)(a) |
| Spain | 15%Article 10(2)(b), as replaced by the 2013 protocol, Article IV | 5%Article 10(2)(a), as replaced by the 2013 protocol, Article IV+0% tier, conditional | 0%Article 11(1), as replaced by the 2013 protocol, Article Vsplit by category | 0%Article 12(1), as replaced by the 2013 protocol, Article VI |
| United Kingdom | 15%Article 10(2)(b) | 5%Article 10(2)(a)+0% tier, conditional | 0%Article 11(1) | 0%Article 12(1) |
Every figure is read from the treaty text or a protocol, with the authorising article shown beneath it. Two flags matter as much as the numbers: split means the treaty charges different rates for different categories of payment, so the figure shown is the lowest and may not be yours; +0% tier means a conditional zero rate exists for large corporate holdings, which depends on ownership, a holding period and a limitation-on-benefits test that a table cannot resolve. Use the lookup for either.
Frequently asked questions
What is the US–Mexico tax treaty withholding rate on dividends?
10% on portfolio dividends under Article 10(2)(b), as substituted by the 2003 protocol, Article II(a), against a statutory rate of 30% without a treaty. A corporate holder owning at least 10% qualifies for 5% instead. You claim it by giving the payer a Form W-8BEN naming Mexico as your country of residence for treaty purposes — before the payment is made, not afterwards.
What is the interest withholding rate under the US–Mexico treaty?
It depends on the kind of interest, which makes this treaty unusual — 0% on exempt — a contracting state or its subdivisions, interest paid by them, qualifying pension and employee-benefit organisations, and loans of three years or more made or guaranteed by banco nacional de comercio exterior, nacional financiera, the export-import bank or opic, 4.9% on loans granted by banks, investment banks, savings banks and insurance companies; and bonds or securities regularly and substantially traded on a recognised securities market, 10% on interest paid by banks, and interest paid by a purchaser of machinery and equipment to the seller on a sale on credit, where the beneficial owner is not in the 4.9% category, 15% on all other interest. Quoting the lowest of those as "the" treaty rate overstates the benefit, so you have to identify which class your interest falls into before claiming a rate. Our lookup shows every class rather than picking one.
What is the royalty rate under the US–Mexico treaty?
10% under Article 12(2). The Article 12(3) definition is unusually broad — it expressly includes motion picture films, works for television, and industrial, commercial or scientific equipment, all at the same 10%. Royalty claims need line 10 of Form W-8BEN completed with the article and the rate, because the line 9 representation alone does not cover them.
Can I get 0% on dividends under the US–Mexico treaty?
Only if every condition is met, and ownership alone is not enough. The tier under Article 10(3)(a), as substituted by the 2003 protocol, Article II(a) requires ownership of at least 80%, held for 12 months, and satisfaction of a limitation-on-benefits test that no tool can resolve from your country and income type alone. Article 10(4) disapplies the 5% and 0% tiers for certain REIT dividends, with separate 10%, 5% and interest-in-real-property tests. We state the conditions rather than assert the rate applies to you.
How do I claim US–Mexico treaty benefits?
Give the payer a Form W-8BEN before you are paid, naming Mexico on line 9 as your country of residence for treaty purposes. For ordinary dividend and interest claims that is all of Part II you need — leave line 10 blank. Royalties, scholarships and conditioned claims do need line 10, with the treaty article and rate. The form goes to the payer, never to the IRS.
Has the US–Mexico treaty been amended?
Yes — by 2 protocols. Protocol signed with the convention. Article 10 (Dividends) deleted and a new Article 10 substituted, adding a conditional 0% tier for holdings of 80% or more. Article 1 replaced, Article 11A amended, and Article 13(4) (Capital Gains) replaced. This matters more than it sounds: a protocol usually replaces a whole article while keeping its number, so the article you cite stays the same and the rate inside it changes. Reading the base treaty text alone produces superseded rates.
Does the US–Mexico treaty cover social security?
No, and there is no separate agreement either. The income tax treaty does not reach social security contributions, and there is no totalization agreement in force with Mexico. An agreement was signed but has NEVER entered into force, and only entry into force counts. Mexican nationals working in the United States pay US social security and Medicare in full. The practical result is that contributions can be owed to both systems with no relief — and no foreign tax credit, because a social security contribution is not an income tax.
Can a US citizen use the US–Mexico treaty?
Rarely. Nearly every US treaty contains a savings clause reserving the right for the United States to tax its own citizens and residents as though the treaty did not exist, with a short list of preserved articles. We have not read this treaty's savings clause directly, so we do not state its article here — but the practical answer for a US citizen is usually the foreign tax credit rather than the treaty.
Sources
Every figure on this page was read from a primary source on the date shown beside it. This country’s file was last read in full on September 9, 2026.
- US–Mexico protocol signed 26 November 2002 (in force 2003) — Article 10 substitution, including the conditional 0% dividend tier
- US–Mexico Income Tax Convention, signed 18 September 1992, with protocol — All Mexico articles
- SSA POMS GN 01701.005 — International Social Security (Totalization) Agreements — Which countries have a totalization agreement in force, and each agreement's effective date
For the Mexican side of a cross-border position, calcu.mx covers Mexican tax; everything here is the US side.
Treaty rates are ceilings on withholding, not a computation of your liability, and conditions inside an article can change the answer for you specifically. This page is educational and is not advice on your position.
Related
Tax Treaty Benefits & Country Lookup
Free tool: is there a treaty with your country, what rate, and which form claims it
Form W-8BEN
The form your broker or payer asks for, and what it actually does
Foreign Tax Credit
The relief that works when no treaty does — credit against deduction
Form 8833
When you must disclose a treaty position, and what to write on each line
Totalization Agreements
Social security, the second treaty network, and why it covers different countries
Educational information, not tax advice
Every rate and article on this page is cited to the treaty text it comes from, so you or your accountant can check it. Treaty provisions turn on facts we do not know about you — residency, beneficial ownership, limitation-on-benefits conditions and the savings clause can all change the answer. Read the article before you rely on the number, and take advice on anything material.
Social security
A separate agreement decides this, not the tax treaty — and it covers a different list of countries.
An agreement was signed but has NEVER entered into force, and only entry into force counts. Mexican nationals working in the United States pay US social security and Medicare in full.
The consequence is real money: someone working across the two countries can owe social security contributions to both, with no relief and no credit — because a social security contribution is not an income tax, the foreign tax credit does not reach it either.