Cross-Border Remote Work FAQs Mexico

Assume that a foreign national employee of a foreign employer wishes to work remotely for a period of time in your country performing services exclusively for the foreign employer and not interacting with the local market in your country.

Work authorisation

A. Is work authorisation required? If so, please provide a brief description of the type of visa, procedure, processing time, etc.

Work authorisation is generally required for foreign nationals who intend to work in Mexico or provide services to a Mexican entity. However, a limited exception may apply to remote workers or digital nomads employed by a foreign company with no operations or clients in Mexico. In these cases, individuals may remain in Mexico for up to 180 days under visitor status (“Visitante sin permiso para realizar actividades remuneradas”), which:

• Does not authorise local employment or participation in the Mexican labour market;
• Does not require prior visa approval for nationals of visa-exempt countries (e.g., the United States, Canada, EU member states); and
• Does not prohibit remote work, provided that:
  • All compensation is paid abroad, and
  • No services are rendered to Mexican entities.

Although current practice by the National Institute of Migration (INM) tolerates such arrangements, Mexican law does not expressly regulate remote work or “digital nomad” activities, and this remains a legally undefined area. Accordingly, the use of visitor status for remote work should be approached with caution, particularly where:

• The individual’s stay becomes prolonged or recurring, or
• Their activities begin to resemble local employment (e.g., working with Mexican clients or receiving payment in Mexico).

In such cases, applying for a Temporary Resident Visa may be advisable. However, this visa typically requires a Mexican company to act as sponsor and is not specifically designed for remote work with foreign employers.

Risk of 'permanent establishment'

B. Is there risk of 'permanent establishment' consequences for the foreign company by virtue of the remote worker’s activities?  If so, what are the main factors determining the exposure.

Yes, there is a potential risk of creating a permanent establishment (“PE”) in Mexico for the foreign employer if the remote employee's activities go beyond limited, auxiliary functions. Under Mexican tax law and consistent with OECD standards, a foreign company may be deemed to have a PE in Mexico if it carries out business through a representative in Mexico who habitually engages in core business activities on its behalf.

The risk increases if the remote worker:

• Regularly negotiates or concludes contracts on behalf of the foreign company;
• Acts as a representative or agent of the company before Mexican clients or prospects;
• Performs key revenue-generating or decision-making functions from Mexican territory;
• Uses their Mexican residence as a business address, or holds themselves out as the local contact for the company.

In such cases, the foreign company could be considered as operating through a “dependent agent PE” and could be subject to Mexican corporate income tax obligations.

To mitigate PE risk, the foreign employee’s role should be limited to preparatory or auxiliary functions, such as internal support, administration, or purely remote services that do not involve client interaction in Mexico.

Local social security and other payroll requirements

C. At what point and under what circumstances would the remote worker become subject to local social security and other payroll requirements?  Can such requirements be fulfilled by a foreign company, and if so, by which mechanisms?

Under Mexican law, a remote employee working from Mexico may become subject to local tax and social security obligations, depending on the length of their stay, the nature of their activities, and whether an employment relationship exists with a Mexican legal entity.

In general:

• If the employee remains in Mexico for more than 183 days in a 12-month period (consecutive or not), they may be deemed a Mexican tax resident, triggering individual income tax obligations in Mexico, even if compensation is paid by a foreign employer.
• Social security (IMSS) and other mandatory employment obligations generally apply only when there is a formal employment relationship with a Mexican legal entity. In the absence of such an entity, a foreign employer cannot directly enrol an employee in IMSS or operate Mexican payroll.

A foreign company without legal presence in Mexico (i.e., no entity, branch, or permanent establishment) cannot directly comply with Mexican payroll or social security obligations, as these require registration with local authorities. Some companies consider working with a local Employer of Record (EOR) or Professional Employer Organisation (PEO)to meet these obligations. However, under Mexico’s strict outsourcing regime, this option is only viable in limited cases, using an EOR may itself create legal and regulatory risk. In practice, when a remote employee works exclusively for a foreign employer with no operations, clients, or infrastructure in Mexico, local payroll and social security obligations do not arise. Nevertheless, the employee may still become subject to Mexican tax residency based on their physical presence, and this may trigger individual income tax obligations, even if compensation is paid abroad.

Local employment law requirements

D. At what point and under what circumstances does the remote worker become subject to local employment law requirements such as is wage-hour, local holidays, annual leave, maternity leave, disability leave, protection against unfair dismissal, etc.

If a remote employee works exclusively for a foreign employer with no legal presence in Mexico and remains in the country for fewer than 180 days, Mexican labour laws typically do not apply, as long as there is no employment relationship with a Mexican entity.

However, local labour and employment protections may apply regardless of nationality or contractual labels if, based on the facts, the relationship meets the conditions of an employment relationship under Mexican labour law. According to the Federal Labour Law, this occurs when there is evidence of:

• Subordination (i.e., the employee is subject to direction and control by the employer),
• Exclusivity or economic dependence,
• Set working hours and regular reporting,
• Ongoing provision of services within the Mexican territory.

If these conditions are met, the employee may be entitled to Mexican employment protections, including:

• Paid annual leave and public holidays,
• Maternity, paternity, and disability leave,
• Limits on working hours and required rest periods,
• Severance and termination protections, including compensation for unjustified dismissal.

In summary, even in cross-border remote work scenarios, substance prevails over form. If the structure and day-to-day reality of the engagement resemble a local employment relationship, Mexican labour rights may apply particularly if the employee resides in the country for an extended period or provides services in a manner consistent with employment under local standards.

Remote foreign worker

E. Are there special requirements governing remote work in your country which would cover the remote foreign worker?

Mexico does not have specific regulations governing foreign employees working remotely for non-Mexican employers. However, if the individual performs their services from within Mexican territory and the relationship is deemed to constitute an employment relationship under Mexican law, the telework provisions of the Federal Labour Law (Articles 330-A to 330-K) and the Official Standard NOM-037-STPS-2023 may apply.

These provisions establish specific requirements for telework arrangements, including:

• A written employment agreement specifying the remote work location, work schedule, and reversibility terms;
• The employer’s obligation to provide necessary tools, ergonomic furniture, and proportional support for internet and electricity expenses;
• Implementation of occupational risk prevention measures, including documentation of home-office safety conditions, ergonomic compliance, and the right to digital disconnection;
• Ongoing compliance with health and safety obligations, as enforced by labour authorities.

It is important to note that these obligations only apply if a local employment relationship is presumed to exist. In cases where the remote employee works solely for a foreign employer with no presence or operations in Mexico, and where no labour relationship is established under Mexican law, these telework requirements do not apply.

Income tax

F. What is the employee’s exposure to local income tax, and under what circumstances is the foreign employer required to arrange for withholding of income tax?

A foreign remote employee who resides in Mexico for more than 183 days within any 12-month period whether consecutive or not may be considered a Mexican tax resident under Article 9 of the Federal Tax Code (Código Fiscal de la Federación). As a tax resident, the employee becomes subject to Mexican income tax (ISR) on their worldwide income, regardless of the source of payment.

However, where the foreign employer has no legal presence or permanent establishment (PE) in Mexico, it is not obligated to withhold or remit Mexican income tax on the employee’s behalf. In such cases, the remote employee bears full responsibility for fulfilling local tax obligations, which may include:

• Registering with the Tax Administration Service (SAT);
• Filing monthly provisional tax payments; and
• Submitting an annual income tax return, if applicable.

Mexico has entered into double taxation treaties (DTTs) with several countries, including the United States, Canada, and EU member states, which may offer relief through tax credits, exemptions, or tie-breaker residency rules. The assessment of tax residency also considers the individual's centre of vital interests, including habitual abode, location of economic ties, and principal income source, consistent with treaty provisions and OECD standards.

Claim for workplace injury

G. Would the remote worker be entitled to bring a claim for workplace injury in your country?

A remote employee who remains in Mexico for fewer than 180 days and does not have an employment relationship with a Mexican legal entity would generally not be entitled to file a workplace injury claim under Mexican labour or social security law.

Workplace injury protections in Mexico such as medical care, wage replacement, and permanent disability benefits are managed through the Mexican Social Security Institute (IMSS) and are available only to employees formally registered under the Mexican social security system. In the absence of:

• A legally recognised employment relationship in Mexico, and
• Enrolment in IMSS by a Mexican employer,

The remote employee would not have stood to bring a workplace injury claim under Mexican law.

In practice, this means that a foreign remote employee working exclusively for a non-Mexican employer and without a local employment relationship would not be covered by Mexican labour protections related to occupational risks.

National healthcare system or insurance

H. Would the remote worker be covered under the local national healthcare system or insurance?

No. A remote employee working exclusively for a foreign employer with no legal presence in Mexico would not be covered under Mexico’s national healthcare or social security system (IMSS).

Access to the public healthcare system and social insurance benefits in Mexico is contingent upon a formal employment relationship with a legally incorporated Mexican entity, which must register the employee with the Mexican Social Security Institute (IMSS) and make corresponding contributions. In the absence of such a relationship, the remote employee is not entitled to coverage for medical services, sick leave, disability, or maternity benefits under the national system.

Private health insurance may be obtained individually, but such coverage would be outside the scope of the national welfare system.

Data privacy and security

I. Is a foreign employer subject to data privacy and security requirements regarding protection of employee personal information for a foreign employee working remotely in your country?

Yes, under Mexico’s Federal Law on the Protection of Personal Data Held by Private Parties (LFPDPPP), a foreign employer may be subject to Mexican data protection obligations if the collection, use, or processing of personal data occurs within Mexican territory, regardless of where the employer is incorporated.

This may apply when a remote employee is physically located in Mexico and uses local infrastructure such as internet networks, devices, or cloud systems accessible from Mexico to handle personal information. In such cases, the foreign employer may be deemed a data controller or processor operating within national territory and, as such, must comply with the LFPDPPP’s requirements, including:

• Issuing a compliant privacy notice (Aviso de Privacidad);
• Implementing appropriate security measures to protect the data;
• Ensuring employees can exercise their ARCO rights (Access, Rectification, Cancellation, and Opposition).

Following the 2024 constitutional reform, the National Institute for Transparency (INAI)  formerly responsible for enforcing the LFPDPPP was dissolved, and its regulatory functions are currently in a transitional phase. Although the LFPDPPP remains in force, enforcement mechanisms and institutional oversight are still being redefined. In the meantime, foreign employers without legal presence in Mexico are unlikely to face active enforcement, but should remain attentive to future regulatory developments.

In short, if employee data is processed from within Mexico, the employer should act conservatively by complying with Mexican data protection standards even if its enforcement is currently limited.

Foreign remote worker

J. Has there been any litigation or specific law or regulation regarding the foreign remote worker in your country?

As of now, Mexican legislation does not specifically regulate foreign remote employees working from Mexico for non-Mexican employers. The legal framework only formally recognises telework (teletrabajo) as a modality under the Federal Labour Law, which applies to employees with a recognised labour relationship in Mexico.

While there is no case law or legislation expressly addressing digital nomads or cross-border remote work, both the immigration and tax authorities have begun to issue administrative guidance and informal interpretations on scenarios involving long-term remote stays and foreign employees working from Mexican territory. These evolving interpretations suggest that physical presence, duration of stay, and the nature of the work performed may trigger local obligations under labour, tax, immigration, and data protection laws even in the absence of a local employment relationship.

Given the legal uncertainty, companies should assess these arrangements on a case-by-case basis, and remain attentive to further regulatory developments.

Citizenship

K. Would any of the above answers change if the remote worker (a) is a citizen of your country, or (b) engages in activity interacting with the local market?

(a) Mexican Citizenship: Yes, certain obligations may change. If the remote employee is a Mexican citizen and has an employment relationship governed by Mexican labour law (e.g., subordination, exclusivity, fixed hours), then they would be entitled to employment rights, social security benefits, and tax obligations in accordance with Mexican law regardless of the employer’s nationality. This includes application of the telework provisions under the Federal Labour Law and NOM-037-STPS-2023, which outlines occupational health and safety obligations in remote settings.

However, if the Mexican national does not have an employment relationship in Mexico and is working exclusively for a foreign employer with no presence in the country, then they are not subject to local labour obligations but may still have personal tax obligations. In such cases, the individual is responsible for declaring and paying income tax to the Mexican Tax Administration Service (SAT), particularly if they are deemed a Mexican tax resident under domestic law.

(b) Interaction with the Local Market: Yes, if the remote employee begins to interact with the Mexican market for example, by engaging local clients, negotiating or closing deals, or using their location in Mexico to carry out business activities on behalf of the foreign employer this may trigger a permanent establishment (PE) risk for the employer under Mexican tax law and OECD standards. In such cases, both employment law and corporate tax obligations could arise for the employer, and the employee may also be seen as having a functional connection to the local economy, which may increase labour and tax exposure.