Are you a freelancer looking for information about VAT? Go here to learn more.
Starting this June, we will begin collecting the Value Added Tax, or VAT, on the Upwork fees that you pay as a client. We plan to start collection in mid-June –– stay tuned for the exact date (we’ll email you as soon as we know).
Under Mexican law, we are required to collect this tax and forward it to the Mexican government. 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. Talk with a trusted tax advisor for more information on whether you are eligible to claim VAT tax. Unfortunately, we cannot provide specific tax advice.
If you’re using Upwork as a client based in Mexico, a 16% VAT will be applied to the following:
- Client marketplace fees
- Contract initiation fees (paid at the start of a new contract)
- Membership fees (for example, for a Client Plus plan)
- Featured Jobs (tax will be applied to the cost of post, which is currently $29.99)
- Conversion fee (this is the fee you pay if you move a relationship off of Upwork)
For example, let’s say you pay a freelancer $250 USD for a fixed-price project. You would pay Upwork’s normal 5% marketplace fee of $12.50. Under Mexican law, we would then collect a 16% VAT tax on that fee. That means the VAT we collect will be $2.
Note: We will not collect VAT on the fees you pay to freelancers for their services.
Entering your RFC
In order to claim credit for any VAT paid in Mexico, 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 here.
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 and will be providing us with a registration number soon. We will provide our registration number to you once we have it.
Frequently Asked Questions
Upwork only charges VAT to clients in countries that require it, which currently includes Mexico and a few other countries. We continue to update our processes as tax laws continue to change around the world.
A law was passed in Mexico which requires VAT to be collected from individuals and businesses operating from Mexico when they purchase electronic services from non-Mexican businesses (like Upwork). To comply with this law, we need to collect VAT on the services we provide to clients in Mexico and forward this tax to the Mexican tax authorities. Upwork is an online platform that brings freelancers and clients together. Upwork's services qualify as electronic services, which are subject to VAT at the place where the customer (i.e., the freelancer or client) is established or resides. Therefore, the services supplied by Upwork to freelancers and clients who reside in, have a permanent address in, or are established in Mexico are subject to VAT there. Upwork is responsible for charging, collecting, and remitting this VAT when providing these services to our Mexican-based customers.
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 are exempt from VAT in Mexico, you must claim a credit from the Mexican authorities when you file your taxes. In order 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 services provided by our company to anyone residing in Mexico. This applies even if you are a digital nomad and only temporarily residing in Mexico. Every time you officially register in a different country, you should update your address information on Upwork. For example, if you move to and work from South Africa, you may be entirely subject to South African laws. If you then move to Mexico, and you are officially registered there, you should update your Upwork address, and VAT will be assessed accordingly. Please consult a tax professional if you have questions as to whether and how the VAT applies to you and your business.
We do not share any client information with the Mexican government. We only report the VAT amount collected by Upwork.