Because freelancers are not our employees and we don't pay taxes on payouts, they must declare any income received via Solar Staff by themselves.
To carry on tax accounting in Mexico for your Solar Staff income, you need to:
Be a tax resident
Obtain a tax ID number (RFC)
Select a tax regime
Tax residence in Mexico
Mexico taxes its residents on their worldwide income, while non-residents are taxed on Mexican-source earnings only.
You are considered a Mexican tax resident if:
Your home is in Mexico.
Your center of vital interests is located in Mexico (more than 50% of your income in a calendar year comes from Mexican sources, or Mexico is the primary place of your professional activities).
Taxpayers are required to file a notice of suspension of activities (aviso de suspensión de actividades) if they terminate their economic activities or change their tax residency (instructions).
Tax ID number (RFC)
In order to legally receive income in Mexico, you must have the Mexican TIN (Tax Identification Number) called RFC (Registro Federal de Contribuyentes). Important:
Mexican citizens and foreign residents (residence permit holders) over 18 years of age are required to register with the tax authorities and receive an RFC code, free of charge.
Before engaging in any work, residents must register with the tax administration and receive their RFCs.
Non-resident foreigners based in Mexico can't have RFCs and legally work or receive any income on the Mexican territory.
Mexico's Federal Taxpayer Registry is open to the public, so it's possible to validate an RFC on its website by entering the number and checking its current status.
RFCs are assigned by Mexico's Tax Administration Service (SAT). They contain 13 characters in the case of individuals (4 letters + 6 digits + 3 alphanumeric characters) and 12 characters for legal entities (3 letters + 6 digits + 3 alphanumeric characters). The document confirming and carrying the RFC is called CIF (Cédula de Identificación Fiscal, or taxpayer identification card). It is issued by the Mexican government to each taxpayer to be used for opening bank accounts, obtaining loans, paying taxes, and so on.
Useful links: obtaining RFC and CIF, RFC examples, more about RFC and CIF.
Freelancer taxes
Tax liabilities in Mexico depend on the freelancer's regime and/or fulfillment of certain conditions. To change your tax regime in Mexico, you need to file an update notice on economic activities and obligations (aviso de actualización de actividades económicas y obligaciones). There are certain requirements that apply irrespective of the tax regime, such as the need to issue invoices through an electronic platform:
For invoices totaling less than MXN 2 million, you can use the free SAT platform.
If the amount exceeds MXN 2 million (or the SAT platform seems too complicated), you can opt for a SAT-authorized third-party electronic invoicing platform (list here).
IMPORTANT! Solar Staff does not have the option to choose a tax status for freelancers based in Mexico, but you can fill in your tax ID in your account.
Read on for more details.
Fiscal incorporation regime (Régimen de Incorporatión Fiscal, RIF)
The fiscal incorporation regime can be applied by individuals with an annual income from business activity of up to MXN 2 million, provided that the person is not in a partnership with a legal entity and does not require a professional title to carry on business. This regime offers attractive tax benefits.
Important! This regime was introduced as part of the 2014 tax reform and can be applied for 10 consecutive fiscal years from the date of registration, provided RIF was selected before August 31, 2021 and a notice of permanent RIF registration was filed in January 2022 (learn more). Otherwise, SAT will switch the taxpayer to RESICO. |
RIF includes the following taxes:
Value-added tax (Impuesto al Valor Agregado, IVA) on the supplies of goods and provision of services: guide here.
Special tax on production and services (Impuesto Especial sobre Producción y Servicios, IEPS): learn more here.
Income tax (Impuesto Sobre la Renta, ISR) is calculated taking into account the following offsets: in the first year, the ISR amount is reduced by 100%, in the second year – by 90%, and so on for 10 years. The tax is accrued at a rate between 1.92% and 35%. The tax is paid every 2 months. You must make the bimonthly payment and submit your RIF returns no later than the 17th of March, May, July, September, November, and January of the following year. Learn more about reporting, reductions, and calculation.
Go here for step-by-step instructions on filling out returns for all the taxes.
Simplified trust regime (Régimen Simplificado de Confianza, RESICO)
The simplified trust regime was introduced in 2022. It can be applied by individuals who engage in professional or business activities and whose income from such activities doesn't exceed MXN 3.5 million per year. The advantages of this regime include not having to keep accounting records, profit and loss reports, and so on, because the taxes are calculated based on collected tax invoices.
Important! Individuals whose income is currently subject to preferential regimes and incentives cannot take advantage of the RESICO regime. |
RESICO includes the following taxes:
Value-added tax (IVA) on the supplies of goods and provision of services: calculated at the general rate of 16% (in border states, the VAT rate can be reduced by 50%, making it 8% instead of 16%).
Income tax (ISR) is calculated based on gross income (no deductions) at the following rates:
Monthly income (up to), MXN | Tax rate, % |
25,000 | 1 |
50,000 | 1.1 |
83,333.33 | 1.5 |
208,333.33 | 2 |
3,500,000 | 2.5 |
RESICO taxpayers must pay the above taxes and make the following declarations:
Declaration of monthly and final payments (declaración de pagos mensuales y definitivos): The calculation of income tax; common deadline for submission and tax payment, until the 17th day of the month following the reporting period. Step-by-step instructions for filling out and filing are available here.
Declaration of VAT withholding (declaración de entero de retenciones de IVA): This document is submitted monthly and constitutes a full report on the VAT withholding; common deadline for submission and tax payment, until the 17th day of the month following the reporting one. Step-by-step instructions for filling out and filing are available here.
Annual declaration of an individual (declaración anual de personas físicas): Contains information on income tax and is filed in April of the year following the reporting one. Step-by-step instructions for filling out and filing are available here + FAQ.
Informative declaration of operations with third parties (declaración informativa de operaciones con terceros – DIOT): This statement includes information on the activities of your suppliers as it pertains to VAT. The submission deadline is no later than the month following the reporting one, or every six months (we recommend checking with the tax office to know if this declaration is mandatory for you).
In addition, the SAT website has an invoice viewer (Visor de facturas emitidas y recibidas para el pago mensual, provisional y definitivo del régimen simplificado de confianza), which lets you see the total accumulated amount of invoices issued and received for the month. This data is used to pre-fill ISR and VAT declarations.
It is possible to permanently lose the right to use this regime in the following cases:
The taxpayer doesn't comply with the tax liabilities (doesn't pay the taxes).
Three or more monthly payments are missed during the tax year.
No annual return is provided.
If the taxpayer's income exceeds the MXN 3.5 million limit, it is possible to switch to paying taxes as an business and professional activity regime.
Business and professional activity regime (Régimen de Actividad Empresarial y Profesional, RAEP)
The business and professional activity regime can be applied by individuals who receive income from commercial and professional activities. There are no restrictions on the amount of income and types of activity (this regime covers about 40% of individuals in Mexico).
RAEP includes the following taxes:
Value-added tax (IVA) on the supplies of goods and provision of services, levied at a rate of 16% or 8%.
Income tax (ISR), calculated based on gross income at the following rates:
Taxable income, MXN | Tax on the bottom limit, MXN | Tax on excess, % |
up to 8,952.49 | 0 | 1.92 |
8,952.50–75,984.55 | 171.88 | 6.40 |
75,984.56–133,536.07 | 4,461.94 | 10.88 |
133,536.08–155,229.80 | 10,723.55 | 16 |
155,229.81–185,852.57 | 14,194.54 | 17.92 |
185,852.58–374,837.88 | 19,682.13 | 21.36 |
374,837.89–590,795.99 | 60,049.40 | 23.52 |
590,796.00–1,127,926.84 | 110,842.74 | 30 |
1,127,926.85–1,503,902.46 | 271,981.99 | 32 |
1,503,902.47–4,511,707.37 | 392,294.17 | 34 |
from 4,511,707.38 | 1,414,947.85 | 35 |
Calculation example Income = MXN 100,000, so the tax comes out to: |
The tax amount can be reduced through the following deductibles:
Expenses and investments necessary for carrying on business, as well as annual expenses (see here for a full list of deductions).
RAEP taxpayers must pay the above taxes and make the following declarations:
Declaration of provisional (monthly) and final payments (pagos provisionales o definitivos de personas físicas): The calculation of income tax; common deadline for submission and tax payment, until the 17th day of the month following the reporting period.
Declaration of VAT withholding (declaración de entero de retenciones de IVA): This document is submitted monthly and constitutes a full VAT report; common deadline for submission and tax payment, until the 17th day of the month following the reporting period. Step-by-step instructions for filling out and filing are available here.
Annual declaration of an individual (declaración anual de personas físicas): Contains information on income tax and is filed in April of the year following the reporting one. Step-by-step instructions for filling out and filing are available here + FAQ.
Informative declaration of operations with third parties (declaración informativa de operaciones con terceros – DIOT): This statement includes information on the activities of your suppliers as it pertains to VAT. Taxpayers under this status are exempt from filing this report if their income for the previous year does not exceed MXN 4 million (or if they began their activities during the year and assume that the income will not exceed that threshold). The submission deadline is no later than the month following the reporting one, or every six months.
Tax regime for digital platforms (Régimen de Plataformas Tecnológicas/Digitales)
Introduced by SAT in June 2022, the digital platforms regime sees income come in from digital platforms. It applies to both the person receiving income as a user of a digital platform and the digital platform itself, provided the individual's annual income (including salary and interest) does not exceed MXN 300,000.
To find out whether SAT considers a particular platform digital, use this List of Digital Service Providers (Solar Staff is not on the list) published in the Federation's official bulletin. If the relevant company is on that list, you have to register as a person receiving income through digital platforms. We recommend contacting the platform's support to find out whether they owe you (or are going to make) the respective withholdings.
Under Régimen de Plataformas Tecnológicas, when you provide your RFC to the platform, your tax liabilities are as follows:
Income tax (ISR): When paying you, the digital platform withholds and transfers tax to SAT as an advance calculated as a percentage of the total income (excluding VAT), and does so at the following rates:
Type of activity | ISR |
Ground public transit and goods delivery services | 2.1% |
Lease of accommodation (hosting) | 4% |
Sale of goods and rendering of services | 1% |
Value-added tax (VAT, IVA) on the supplies of goods and provision of services, levied at a rate of 8% (learn more). To learn which digital services are subject to VAT, see here. For VAT purposes, digital platforms acting as intermediaries are legally obliged to request the following information from customers:
Full name
RFC key
Unique Population Registry Code (CURP)
Tax residence information
Bank details, including CLABE (Clave Bancaria Estandarizada)
Property address (only for accommodation lease services)
Lodging tax (Impuesto Sobre Hospedaje, ISH): Only applicable in the case of accommodation lease services rendered through platforms like Airbnb (learn more).
Important! Not having an RFC and/or failing to provide it to the digital platform will result in taxes being levied at different rates: 20% ISR and 16% IVA. |
To make use of this regime, you must submit a notice so that the withholdings made by digital platforms are considered final (within 30 days after the first income under this regime). After opting for this regime, you cannot change it for 5 years (starting from the date of the notice).
The above rates are final if annual income does not exceed MXN 300,000 (there are no deductions, and you must provide documentary evidence of tax remittance by the platform); if the income limit is exceeded, the tax is calculated at RAEP rates (deductions available).
Régimen de Plataformas Tecnológicas taxpayers must pay the above taxes and make the following declarations:
Informative declaration of the use of digital platforms (declaración informativa por el uso de plataformas tecnológicas), which contains a list of your customers if:
The digital platform acts as an intermediary, pays remuneration, withholds VAT.
The digital platform acts as an intermediary, but doesn't pay remuneration or withhold taxes.
These reports must be filed monthly, no later than the 10th day of the following month. Step-by-step instructions for filling out and filing are available here.
Declaration of VAT withholding (declaración de retenciones) is submitted monthly before the 17th day of the month following the reporting one. Step-by-step instructions for filling out and filing are available here.
Declaration of payments of individuals (declaración de pagos de personas físicas): Information on income tax and VAT, submitted monthly before the 17th day of the month following the reporting one. Step-by-step instructions for filling out and filing: ISR, IVA.
Additional info
Official website of Mexico's Tax Administration Service (SAT). The coordinates of SAT offices in Mexico.
Tax calculator for different tax regimes.
Learn more about liabilities and reporting forms. Commercial companies in Mexico compared (only individual arrangements are possible with Solar Staff).
Mexican-based freelancers can make payments to bank accounts through Solar Staff (see here for a full list of methods). Important: The name of the bank account's beneficiary must match the name in the Solar Staff account.
Income received through Solar Staff is declared based on the Offer Agreement using data from certificates and invoices.
If you have any questions, get in touch via the chat in your Solar Staff account or email us at [email protected].