Remote Work Tax Mexico
Assess your remote work corporate tax / Permanent Establishment (PE) risks in Mexico
Are you planning to hire in Mexico?
Launching a remote work policy?
Have your employees already spent time working in Mexico?
Or are you wondering whether you should approve a future trip by an employee to Mexico?
Through our remote work tax assessment, we cover all angles to ensure you remain compliant for all local regulations and avoid the costly mistake of creating PE in Mexico, which leads to corporate tax filing obligations.
How we can help
Schedule a call with our team to investigate the circumstances behind your in-country presence and resulting obligations.
Length of time. Frequency. Seniority of position. Type of work. Industry. Decision making process. Contract execution. IP generation. Data transfer.
All these things need to be considered to understand whether you create PE or have filing obligations.
Key Permanent Establishment tax risks in Mexico impacted by remote work
Mexican Income Tax Law considers a PE to be any place in Mexico where business activities or services are carried out or rendered by non-residents, such as agencies, offices, mining exploration sites, or any other place of exploration, extraction, or exploitation of natural resources, regardless of the length of time involved.
Tax reforms in 2020 included additional provisions to determine when a foreign resident creates a PE in Mexico. A foreign entity can trigger PE when it acts in Mexico through a dependent agent. For example, when executing contracts where:
- The contracts are executed in the name of or on behalf of the non-resident.
- The contracts provide for the transfer of the rights or grant the temporary right to use property or imply transferring such temporary right.
- The contracts commit the non-resident to provide a service.
A foreign insurance company could also be considered as having a PE when it engages in activities consisting of insuring risk or collecting premiums in Mexico through a party other than an independent agent.
Foreign residents are deemed to have a PE when conducting certain oil and gas activities in Mexico for more than 30 days. This implies that the foreigner would need to satisfy all enrolment, compliance, documentation, withholding, and tax filing and payment obligations applicable to Mexican branches of foreign residents.