If you’re an entrepreneur, freelancer, or digital nomad, you know the pain: navigating complex tax codes and bureaucratic hurdles can feel like a full-time job. In 2025, Mexico offers a refreshingly straightforward path for individuals seeking to operate a business with minimal state interference and optimized tax obligations. Here’s a data-driven breakdown of how the Mexican sole proprietorship regime—Régimen de Personas Físicas con Actividades Empresariales y Profesionales—can empower you to keep more of what you earn, with less red tape.
Understanding Sole Proprietorship Status in Mexico (2025)
Mexico recognizes sole proprietorships under the Régimen de Personas Físicas con Actividades Empresariales y Profesionales. This status allows you to invoice clients, operate independently, and avoid the complexity of forming a separate legal entity. Since 2022, the Régimen Simplificado de Confianza (RESICO) has further streamlined the process for individuals with business, professional, or rental activities.
Key Features at a Glance
| Feature | Details (2025) |
|---|---|
| Status Name | Régimen de Personas Físicas con Actividades Empresariales y Profesionales (incl. RESICO) |
| Eligibility | Individuals with business, professional, or rental activities |
| Annual Income Limit (RESICO) | 3.5 million MXN (approx. $205,000 USD) |
| Income Tax Rate (RESICO) | 1% – 2.5% on gross income |
| Registration | Mexican Tax Administration Service (SAT) |
| Common Users | Freelancers, small business owners, independent professionals |
Why Mexico’s Sole Proprietorship Regime Appeals to Global Entrepreneurs
Unlike many jurisdictions where sole proprietors face high tax rates and endless paperwork, Mexico’s approach is refreshingly pragmatic. The RESICO regime, introduced in 2022 and still available in 2025, is designed for individuals earning up to 3.5 million MXN (about $205,000 USD) per year. Under this system, you benefit from:
- Ultra-low tax rates: Pay just 1% to 2.5% on gross income, with minimal deductions required.
- Simplified compliance: Forget about complex accounting—reporting is streamlined for efficiency.
- Freedom to operate: Invoice clients directly, without the need for a corporate structure.
Mini Case Study: The Digital Nomad Advantage
Consider a freelance software developer relocating to Mexico in 2025. With annual earnings of 2 million MXN (about $117,000 USD), they register under RESICO. Instead of facing the 30%+ tax rates common in many countries, their effective tax rate is capped at 2.5%. The result? More retained income, less time spent on compliance, and greater personal autonomy.
Pro Tips: Optimizing Your Tax Status in Mexico
- Register with SAT
Pro Tip: Complete your registration online via the SAT portal. Have your identification and proof of address ready. - Choose RESICO if Eligible
Pro Tip: If your annual income is below 3.5 million MXN ($205,000 USD), opt for RESICO to access the lowest tax rates and simplest compliance. - Keep Digital Records
Pro Tip: Use digital invoicing tools approved by SAT to streamline your monthly and annual reporting. - Monitor Income Thresholds
Pro Tip: If you approach the 3.5 million MXN limit, plan ahead to avoid unexpected regime changes or compliance issues.
Summary: Key Takeaways for 2025
- Mexico’s sole proprietorship regime is open to individuals, including digital nomads and entrepreneurs, seeking low-tax, low-bureaucracy solutions.
- RESICO offers a simplified tax rate of 1%–2.5% for those earning up to 3.5 million MXN ($205,000 USD) annually.
- Registration is straightforward via the SAT, and compliance is designed for efficiency.
For more details and official guidance, consult these resources:
- SAT: Sole Proprietorship Overview
- SAT: RESICO for Individuals
- Gob.mx: What is RESICO?
- SAT: How to Register for RESICO
With the right strategy, Mexico’s sole proprietorship regime can be a powerful tool for optimizing your tax burden and maximizing your freedom in 2025.