Since the Upwork community is international, it is important for us to stay in compliance with tax laws in each country so that you can continue to collaborate through Upwork no matter where you live and work. One of the ways we do this is by collecting the Value Added Tax.
Value Added Tax, or VAT, is a consumption tax assessed on Upwork’s supply of digital services.
Upwork charges VAT to freelancers and agencies in certain countries unless specific exemption requirements are met. Upwork is required to collect this tax and pay it to the appropriate government agency.
VAT is assessed on digital services provided by Upwork (i.e. freelancer service fees, membership fees, and Connects purchases), not on services freelancers and agencies provide their clients. VAT rates are calculated according to the local rate of the freelancer’s country of residence.
Please see country-specific tabs to further understand how VAT applies to you. For a complete list of country specific tabs, go here. We encourage you to consult your tax advisor with questions that relate to your specific situation.
Mexico (MX)
Calculating VAT
As a freelancer registered in Mexico you will be assessed a 16% VAT on the following, for example:
- The amount you pay for Connects
- Membership fees (for example, for a Freelancer Plus plan)
- Freelancer service fees
For example, let’s say you earn $100 from a new client. You’ll be charged the regular 10% freelancer service fee of $10. Under Mexican law, we will then apply the 16% VAT to that $10 fee. This means we would collect $1.60 in VAT from you.
Note:
You will not be charged VAT on your earnings.
You can see the VAT amounts we collect on your invoices, which can be found on your Transaction History.
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. You can add your information and RFC number by going to your account's Tax Information.
If you have already added your RFC for purposes of Mexican income tax withholding, you do not have to add it again.
Frequently Asked Questions
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 freelancers and agencies 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 in your account's Tax information. 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, 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 freelancer information with the Mexican government. We only report the VAT amount collected by Upwork.
