How VAT works for clients in Mexico VAT

In this article

• What is Mexico VAT and why does Upwork collect it?
• What services for clients does VAT apply to on Upwork?
• What is Mexico's VAT rate?
• What is an RFC in Mexico?
• Do I have to enter my RFC on Upwork?
• How do I enter my RFC on Upwork?
• I'm exempt from paying VAT in Mexico. Are you still going to charge me?
• Do I have to pay Mexico VAT if I'm only residing in Mexico temporarily?
• Do you share my information with Mexican tax authorities?

Disclaimer:

This article is for general information only and should not be considered tax advice. It may not be updated in real time and may not reflect recent changes. We strongly encourage you to consult your country’s tax authority or your tax advisor with questions related to your specific situation.

What is Mexico VAT and why does Upwork collect it?

Value-added tax, or VAT, is a tax on goods or services, including our services to you, and Mexico requires Upwork to collect it and send it to the government of Mexico.

We’re required to comply with the tax laws of countries where we do business to continue to operate there. We send the collected VAT directly to the Mexican government, and the Mexican Tax Administration Service (Servicio de Administración Tributaria, SAT) keeps track of all companies that have registered to pay VAT.

What services for clients does VAT apply to on Upwork?

Examples of services and purchases where VAT applies:

• Marketplace fee
• Contract Initiation fees
• Featured Jobs purchases (tax will be applied to the cost of post)
• Conversion Fee
• Recruiter fee

Since we charge tax when your government requires it, this tax may change or apply to additional services at any time.

What is Mexico's VAT rate?

It's 16% of the cost of the service being purchased.

Example: On $100 USD in Marketplace fees, you'll pay $16 USD in tax, for a total of $116 USD.

You can see the estimated tax when you check out (for purchases), and the final charge on your invoices and in your transaction history.

What is an RFC in Mexico?

An RFC is the Registro Federal de Contribuyentes, the tax ID for Mexico. It's similar to Social Security Numbers in the U.S. If you've recently arrived in Mexico and need to acquire an RFC, go here for more information and to start the process. When you have it, file it with us in your tax information.

Do I have to enter my RFC on Upwork?

You may need to do so for your tax purposes. If you plan to claim a  credit for any VAT paid on your tax return, you must have your Registro Federal de Contribuyentes (RFC) on file with us in your tax information at the time that the VAT is collected. Any VAT collected from you during a time when your RFC was not on file with us will not be claimable.

How do I enter my RFC on Upwork?

• Go to Account settings (desktop) or Settings (mobile) > Tax information
• Click the pencil icon to enter or edit your info
• Select Save

I'm exempt from paying VAT in Mexico. Are you still going to charge me?

Yes. Upwork is required to collect VAT from freelancers and clients who reside in, have a permanent address in, or are established in Mexico.

If you're exempt from VAT in Mexico, you must claim a credit from the Mexican authorities when you file your taxes. To do so, you must have your Registro Federal de Contribuyentes (RFC) on file with us — any VAT collected from you during a time when your RFC was not on file with us will not be claimable.

Consult with a tax expert if you are uncertain as to how the VAT in Mexico and any exemptions apply to you.

Do I have to pay Mexico VAT if I'm only residing in Mexico temporarily?

Yes. As long as your tax residence is set to Mexico, we’re required to collect this tax. If you move, update your tax information — we’ll adjust accordingly.

Do you share my information with Mexican tax authorities?

We do not share any client information with the Mexican government. We only report the VAT amount collected by Upwork.