What is a Factura in Mexico? (and why you might need one)

This post will explain what a factura is, why expats might need one, and how to request a factura when buying goods or services in Mexico.

I distinctly remember the first time I was asked by a service provider in Mexico if I needed one. I’d finished a doctor’s appointment in Guadalajara and was at the reception desk waiting to pay.

The receptionist threw me a curveball when she asked, ¿Requiere una factura? As a new resident in Mexico, my Spanish wasn’t great, but I did know the word for receipt (recibo). This wasn’t that, so I hastily replied “No, gracias.”

When I left the office I was puzzled not to receive a detailed invoice showing the service received. A few months passed before I realized my error — and why a foreigner living in Mexico might need to answer “Si” when asked about a factura.

What’s a Factura?

Companies in Mexico are obligated to issue facturas for all income they earn. This document serves as an invoice and is registered with SAT (Mexico’s tax authority).

As such they’re commonly (but not always) used in business and personal financial transactions.

They contain details like what products or services were purchased, the amount paid, the IVA tax assessed, the business’s legal name and address, and identifying tax information for the business and purchaser.

Now, just because a business is required to create a factura, it doesn’t mean you’ll automatically get one every time you buy something in Mexico.

As I learned in the doctor’s office, it won’t be prepared for you unless you say you need it.

This is because creating a factura costs the business money. They’re prepared by authorized third parties, and businesses with significant transaction volume typically buy a fixed quantity per year. A small, independent contractor may even pay for them individually.

Why Should You Request a Factura?

There are two key reasons to request a factura. The first is for filing an insurance claim, and the second is for reducing taxes owed to the Mexican government.

Assuming you’re not running a local business in Mexico, below is a list of the most common scenarios where expats should ask for a factura.

1. 1. Medical expenses. Credit card statements or basic receipts from a cash register won’t cut it when filing an insurance claim for reimbursement. If filing a claim for reimbursement by an insurance provider in Mexico, you must submit a factura. nnTechnically, they aren’t needed for reimbursement by an insurer outside Mexico. However, in my experience requesting a factura is the easiest way to get a detailed invoice from a medical provider showing what you paid and what services you received. nnSo it’s still a good idea to request one even if you don’t plan to submit it for a claim, to have for your medical records.
   2. Automobile purchases. When you buy a new car a factura is created by the dealer that serves as the vehicle’s title. You‘ll need it to prove ownership when registering the vehicle. nnThe factura is also needed if you sell the vehicle—as it gives the new owner proof of ownership. This is why you must keep your auto factura in a very safe place, i.e. in a secure location, not inside the vehicle itself.
   3. Real Estate-related purchases. Be sure to request a factura for all real estate transactions. This includes notary services used to buy the property, and for any home improvement projects (besides cosmetic stuff) you do later on. nnWhen properly documented (more on this below), these costs can be included in your cost basis at the time of sale, to lower your capital gains tax.

How to Request a Factura

All facturas are now generated electronically by government-authorized third parties (using software) that businesses have contracted with for these services. Once a factura is requested, it’s synced with SAT’s database and the business income gets recorded in real time.

Hence, you shouldn’t get any ideas about doctoring one up in your home office if you forgot to request it!

As a rule, you should request a factura in person when you complete a purchase under one of the scenarios above. Most businesses will refuse to issue them after the month the transaction occurred has closed. Others may use an even shorter cutoff for factura requests.

When requesting a factura, the business will typically ask you for:

• • Your full legal name

• • Your legal address in Mexico

• • Your RFC Number

An RFC number is akin to a Social Security number in the U.S., and given to expats with permanent or temporary residency in Mexico upon request. They are issued by SAT by appointment only. For details on how this process works, please read my previous post – and know that you do not need to pay a “fixer” to get an RFC number!

The provider may also ask you for your régimen fiscal when preparing the factura. The first time this happened it caught me off guard as I didn’t know what it was. Fortunately, it can be found on your RFC paperwork (check p. 2) provided by SAT.

Your régimen fiscal is akin to your tax status. If you’re a foreign resident not working in Mexico, it’s typically assigned as “sin obligaciones fiscales” (no tax obligations).

That said, there are plenty of other categories to fall into so it’s essential to check and provide the correct code, if asked.

If you’re a tourist or foreign resident in Mexico who doesn’t have an RFC number, you can still get a factura. In this case you’d request that it be issued using the universal RFC tax ID called Publico en General with an RFC of XAXX010101000. It’s a generic number but still valid.

Now, there’s a good chance the person you’re dealing with won’t know about this – so be prepared to share it with them and insist on getting a factura if they resist.

Even though every factura generates an electronic file sent to SAT, consumers are only given the option of a paper or PDF copy of the factura to keep, so it’s important not to lose this document.

How to Read a Factura

Below is an example of what a factura looks like, and what it contains.

A Couple of “Gotchas” to Avoid with Facturas

1. 1. If the factura is for more than $2,000 MXN, it won’t be tax-deductible if the payment was made in cash. For purchases of $2,000 MXN+ you must pay by credit card, electronic bank transfer, or check for it to be tax-deductible.
   2. When paying by credit card, electronic bank transfer, or check the funds must be sourced from an account that matches the individual’s name/address/tax ID provided to the business issuing the factura. If they don’t match, you won’t get the tax deduction.
   3. Conversely, the recipient of your payment by credit card, electronic bank transfer, or check must also match the business name on the factura you received for the tax deduction to be valid. No match? No deduction.

When receiving a factura, it’s good practice to check these things and request a fix if necessary details aren’t provided, or don’t match up.

Looking over some of the facturas I’ve received in recent months, I uncovered errors I’d previously overlooked. If not corrected, those errors or omissions can cause headaches later when a claim or tax deduction doesn’t go through.

What May Happen if You Don’t Request a Factura

While there’s no guarantee, a business may charge you less if you don’t need a factura.

This is because a company that doesn’t generate a factura can exclude this income from their report to SAT and also skip assessing you the 16% IVA (sales) tax.

Of course, they’d have to know in advance of payment that you don’t require one.

Now I’m not advocating that anyone help Mexican businesses evade paying taxes. I’m just letting you know how things sometimes work in practice in Mexico.