Nearshoring to Mexico: Legal Opportunities and Risks U.S. Companies and Investors Must Understand

Over the last few years, Mexico has become a strategic destination for what is commonly referred to as nearshoring—the relocation of manufacturing, operations, or investment from distant jurisdictions to geographically closer countries. For U.S.-based businesses, nearshoring to Mexico offers clear advantages: proximity, reduced shipping times, cost efficiencies, and a shared trade framework under the United States-Mexico-Canada Agreement (USMCA).

For individual investors, especially those looking to acquire real estate or manage cross-border assets, Mexico presents an accessible and growing market with favorable legal structures for foreign ownership.

However, while the economic incentives are significant, the legal implications of establishing operations or investments in Mexico are often underestimated. Whether the goal is to set up a factory, acquire property, or structure a long-term presence in the country, the success of any nearshoring strategy depends on a solid legal foundation.

This article provides an overview of the primary legal considerations U.S. companies and individual investors should understand before entering the Mexican market.

Understanding Nearshoring in the U.S.–Mexico Context

Nearshoring refers to the strategic decision by companies to move parts of their supply chain or operations closer to their target market. In the context of U.S.–Mexico relations, it typically involves shifting manufacturing, logistics, customer support, or service functions from Asia or other distant regions to Mexico.

Mexico offers a compelling case for nearshoring. In addition to geographic proximity and shared time zones, the country provides competitive labor costs, skilled talent in sectors such as automotive, aerospace, and technology, and favorable trade conditions under the USMCA. Furthermore, many Mexican states are actively courting foreign investment through industrial infrastructure and fiscal incentives.

It is important to note, however, that the nearshoring trend is no longer limited to corporations. Increasingly, individual investors—particularly real estate buyers and entrepreneurs—are also exploring how to establish legal and financial footholds in Mexico. These range from purchasing rental or vacation properties to launching boutique ventures or professional services for binational markets.

In both cases—whether the investor is a multinational corporation or a private individual—the first step is typically the same: selecting the appropriate legal structure.

Legal Entity Formation: Choosing the Appropriate Structure

Establishing a legal entity in Mexico is often the first step for both companies and individual investors. The appropriate structure will depend on the nature and scale of the planned activities, but the two most commonly used corporate forms are:

• Sociedad Anónima de Capital Variable (S.A. de C.V.): This is a corporate structure equivalent to a corporation under U.S. law. It is well-suited for formal operations, joint ventures, or companies intending to raise capital or scale over time. It requires a board of directors, formal meetings, and compliance with corporate governance requirements.

• Sociedad de Responsabilidad Limitada de Capital Variable (S. de R.L. de C.V.): This form is similar to a limited liability company (LLC) and is often preferred for its flexibility, reduced administrative burdens, and greater privacy. It is commonly used by smaller businesses or by individuals establishing companies for real estate ownership or other private investments.

Incorporation must be conducted before a Mexican notary public and will typically involve the drafting of bilingual bylaws, shareholder agreements, and the registration of foreign investment information with Mexican authorities. Legal advice is essential at this stage to ensure the entity is properly structured for tax efficiency, compliance, and long-term growth.

For many individuals, particularly those seeking to invest in real estate in Mexico, a properly formed legal entity can also serve as the vehicle through which ownership is held. This leads to the next key consideration.

Real Estate Investment Considerations for Individual Investors

For individual investors, Mexico presents significant opportunities in real estate. Foreigners may acquire property throughout most of the country, although special legal structures apply in restricted zones (including coastal and border areas).

There are two main ways to acquire property in Mexico as a non-citizen:

1. Through a Mexican company, which allows full ownership and may provide benefits related to tax, liability protection, and succession planning.

   
   

2. Through a Bank Trust (fideicomiso patrimonial). In this structure, the property is held by a Mexican bank on behalf of the foreign investor, who retains full rights to use, rent, sell, or bequeath the asset.

Regardless of the structure used, buyers must perform careful due diligence, including title verification, zoning compliance, and municipal permits. Rental income generated from Mexican real estate is subject to taxation in Mexico and must be reported accordingly. With proper planning, the U.S.–Mexico Tax Treaty can help avoid double taxation.

Beyond entity formation and real estate ownership, U.S. businesses establishing physical operations in Mexico must also be aware of labor and compliance requirements. Failure to comply with local law in these areas can quickly lead to operational and legal challenges.

Common Legal Risks and Oversights

Despite the growing popularity of nearshoring, many foreign companies and investors encounter difficulties due to preventable legal missteps. Among the most common are:

• Using foreign templates that are not enforceable under Mexican law

• Failing to properly register a business entity or foreign investment

• Entering into real estate transactions without verifying title or municipal regulations

• Structuring investments without analyzing cross-border tax implications

These errors can lead to unnecessary delays, penalties, or disputes. In most cases, they can be avoided with proper legal counsel and a clear implementation strategy.

As with any cross-border initiative, early legal planning not only mitigates risk but ensures alignment with long-term objectives.

Conclusion: A Legal Strategy for Cross-Border Success

Mexico offers a wide range of opportunities for companies and individuals looking to invest, relocate, or expand. The country’s proximity, trade framework, and growing infrastructure make it a leading destination for nearshoring in North America.

However, success in the Mexican market depends not only on business planning but on legal preparation. A clear understanding of the legal landscape—corporate, labor, tax, intellectual property, and regulatory—is critical to reducing risk and building a sustainable presence.

Whether your goal is to open a manufacturing operation, acquire property, or establish a long-term business presence, legal strategy must be part of your entry plan from the outset.

ACV Legal LLC and/or ACV Law S.C. provide guidance to U.S. companies and individual investors seeking to structure their operations and assets in Mexico with legal certainty.  To schedule a consultation, please feel free to reach out. The team would be pleased to support your investment with a legal strategy tailored to your specific goals.