Clients in Mexico are charged a 16% VAT on select Upwork service fees, excluding freelancer payments. To claim a tax credit for VAT when they file their taxes with the Mexican government, clients must have their RFC (Mexican tax ID) on file in their Upwork account during the time VAT is collected. VAT applies regardless of temporary residency, and clients need to keep their location updated.
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.
Calculating VAT
If you’re using Upwork as a client based in Mexico, a 16% VAT will be applied to the following, for example:
- Client Marketplace Fees
- Contract Initiation Fees
- Featured Jobs (tax will be applied to the cost of post)
- Conversion Fee
Example: If you pay a freelancer $250 USD for a fixed-price project and a 5% Marketplace Fee of $12.50 USD, we would collect a 16% VAT tax on that fee, which would be $2 USD.
Note: We will not collect VAT on the fees you pay to freelancers for their services.
We show the VAT amounts on your invoices, which can be found on your transaction history.
Entering your RFC and claiming a tax credit
You may be able to claim any tax paid on your tax return; if you plan to do so, you must have your Registro Federal de Contribuyentes (RFC) on file with us at the time that the VAT is collected. You can add your RFC in your account's Tax information.
We collect the tax and remit it to the Mexican government. The Mexican Tax Administration Service (Servicio de Administración Tributaria, SAT) keeps track of all companies that have registered to pay VAT.
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.
Frequently Asked Questions
Freelancers and clients who reside in, have a permanent address in, or are established in Mexico are subject to VAT there.
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.
Upwork is required to assess VAT on the services we provide to anyone residing in Mexico, even if you're only living there temporarily. Every time you officially register in a different country, you should update your tax residence in your account's Tax information. We'll automatically adjust your VAT to correspond with the rates in your new country of residence or stop collecting if there is no VAT, or a similar tax, in your new country.
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 account's Tax information.
We do not share any client information with the Mexican government. We only report the VAT amount collected by Upwork.