Upwork collects income tax and VAT from freelancers in Mexico—2.5% or 20% income tax depending on whether a valid RFC is provided, and up to a 16% VAT on Upwork earnings and fees.
In this article
- What taxes does Upwork collect from freelancers in Mexico?
- Why does Upwork collect taxes for Mexico?
- What does Mexico VAT apply to for freelancers?
- What is the income tax rate collected from freelancers in Mexico?
- Do you withhold income tax for Mexico before or after the Freelancer Service Fee is charged?
- What is the Mexico VAT rate?
- What is the RFC for Mexico?
- How do I enter my RFC on Upwork?
- Do I have to provide my Registro Federal de Contribuyentes (RFC) to work on Upwork?
- Where can I see the amount of tax that Upwork collects for Mexico?
- Are there any exemptions to Mexico VAT or income tax?
- Will you collect VAT and income taxes if I'm living in Mexico temporarily?
- What happens to Mexico taxes if I update my location or personal information?
- Why am I seeing a VAT deduction on my earnings?
- How much VAT will be deducted from my earnings?
- Will this affect all of my contracts?
- What happens if I haven’t added my tax information?
What taxes does Upwork collect from freelancers in Mexico?
If you're freelancing from Mexico, Upwork is required to collect two types of taxes on behalf of the Mexican government:
- Income tax on your earnings
- Value-added tax (VAT) on your earnings, purchases, and fees paid
Why does Upwork collect taxes for Mexico?
Because Upwork operates in Mexico, we’re required to follow local tax laws — just like any other company doing business there. That includes collecting and sending certain taxes to the government.
What does Mexico VAT apply to for freelancers?
Some examples of where VAT applies:
- Earnings from clients
- Connects purchases
- Membership fees
- Freelancer Service Fee
What is the income tax rate collected from freelancers in Mexico?
That depends on whether you’ve entered a valid RFC (Registro Federal de Contribuyentes) — your Mexican tax ID — in your Upwork tax information:
- With valid RFC on file: the rate is 2.5% of your earnings. Note: The RFC must match SAT’s records (Servicio de Administración Tributaria) or the 20% rate still applies
- If you don’t add a valid RFC or your RFC is rejected: the rate is 20% of your earnings
Important: We collect this income tax from all freelancers in Mexico―whether you are operating as an individual or a business (corporation, partnership, etc.).
What is the VAT rate collected from freelancers in Mexico?
The rate depends on your Mexican tax ID (RFC) status and, in some cases, your client’s location.
Individuals:
- 8% → Mexican tax ID (RFC) is valid (pending or accepted) + client in Mexico
- 16% → Mexican tax ID (RFC) is missing or rejected + client in Mexico
- 0% → client outside Mexico
Businesses:
- 8% → Mexican tax ID (RFC) is valid (pending or accepted)
- 16% → Mexican tax ID (RFC) is missing or rejected
- Client location does not affect the rate for businesses.
Important: We collect this income tax from all freelancers in Mexico―whether you are operating as an individual or a business (corporation, partnership, etc.).
Do you withhold income tax for Mexico before or after the Freelancer Service Fee is charged?
Before. Upwork calculates income tax on your gross earnings — the amount you invoice your client before any service fees or reductions.
What is the RFC for Mexico?
The Registro Federal de Contribuyentes, often referred to as an RFC number, is the tax ID for Mexico.
It’s a unique alphanumeric identifier, with 12 digits for businesses and 13 digits for individuals.
How do I enter my RFC on Upwork?
- Go to Manage Finances > Tax information
- Enter your RFC
- Ensure your legal name and postal code in the Tax information are the same as in your Constancia de Situación Fiscal (CSF) certificate
- Electronically sign the certifications to complete the forms
Once you enter your RFC:
- We’ll check whether it's valid, active and matches your registered fiscal information according to the Mexican Tax Administration Service's (Servicio de Administración Tributaria/SAT) records. For your RFC to be validated, combined with your name and postal code will need to match the information that shows on your same as in your Constancia de Situación Fiscal (CSF) certificate
- If your RFC is validated, we’ll only collect 2.5% income tax instead of 20%
- The RFC will display on your invoices
Do I have to provide my Registro Federal de Contribuyentes (RFC) to work on Upwork?
No, but if you don’t enter a valid RFC in your tax information:
- We’ll have to collect income tax at a higher rate (see above)
- You may not be able to claim VAT credits on your tax return for VAT collected on Upwork
Where can I see the amount of tax that Upwork collects for Mexico?
- VAT: On your invoices and on your transactions. For purchases, you’ll also see an estimate of VAT when you checkout
- Income tax: On your transactions
Are there any exemptions to Mexico VAT or income tax?
No, Mexico doesn’t offer any applicable exemptions for these taxes on platforms like Upwork.
Will you collect VAT and income taxes if I'm living in Mexico temporarily?
Yes. As long as your tax residence is set to Mexico, we’re required to collect them. If you move, update your tax information — we’ll adjust accordingly
What happens to Mexico taxes if I update my location or personal information?
- If you change your location in your tax information, we'll automatically adjust to your new country. You may have to enter a new tax ID.
- If you make other changes, such as changing your legal name, you may need to revalidate your RFC.
Why am I seeing a VAT deduction on my earnings?
Mexican tax law requires platforms like Upwork to collect VAT on services provided by freelancers and agencies in Mexico. We then submit the VAT collected to the tax authority on your behalf.
Who does this apply to?
This applies if:
- You’re a freelancer or agency
- And your tax address (or profile address, if missing) is in Mexico
It applies to both individuals and businesses.
How much VAT will be deducted from my earnings?
The rate depends on your Mexican tax ID (RFC) status and, in some cases, your client’s location.
For individuals:
- 8% → if your Mexican tax ID (RFC) is valid (pending or accepted) and your client is in Mexico
- 16% → if your Mexican tax ID (RFC) is missing or rejected and your client is in Mexico
- 0% → if your client is outside Mexico
For businesses:
- 8% → if your Mexican tax ID (RFC) is valid (pending or accepted)
- 16% → if your Mexican tax ID (RFC) is missing or rejected
Client location does not affect the rate for businesses.
Will this affect all of my contracts?
It depends on your client’s location and your Mexican tax ID (RFC) status.
For example:
- If you’re an individual working with clients outside Mexico → no VAT is withheld
- If you’re working with clients in Mexico → VAT may apply
What happens if I haven’t added my tax information?
If your Mexican tax ID (RFC) or business status is missing or incomplete:
- You may be treated as an individual with an invalid RFC
- The higher 16% rate may apply
Adding and verifying your tax information can help ensure the correct rate is used.