Cross-Border Remote Work FAQs Mexico
Assume that a foreign national employee of a foreign company wishes to work remotely for a period of time in your country performing services exclusively for the foreign company and not interacting with the local market in your country.
A. Is work authorisation required? If so, please provide a brief description of the type of visa, procedure, processing time, etc.
For a foreign national to be feasible to work within Mexican territory, a work authorisation is required, which entails a temporary residency visa for the foreign national to reside in Mexico for more than 180 days and up to 4 years and receive income without any issues with Mexican authorities. In order to obtain the temporary residency, the foreign national would have to provide the authority with a copy of a valid passport, proof of employment, and income.
Once the visa is processed and approved, the foreign national will be granted a FM-M immigration document (Multiple Migration Form), in which the authority will review the foreign national's entry date. There will be a period of 30 days for the foreign national to apply for a redemption with the National Institute of Migration. This costs 44 USD.
The process of exchange and issuance of the immigration document will be resolved within a period of 1 to 5 business days. Subsequently, the foreigner will have to stamp his fingerprints and sign the exchange authorisation. That same day, the applicant will receive his temporary resident card valid for one year. After which, the temporary resident immigration condition may be renewed annually, up until the 4-year maximum period. The foreign national must provide evidence that the activity authorised subsists to obtain the renewal of his/her immigration status.
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.
For a foreign company not to be considered as a permanent establishment in Mexico, the foreign national should not perform business activities to be executed in Mexico on behalf the company since in that case, the foreign national will be considered as an Agent of the company. The only exception will be if the foreign national is performing preliminary activities to investigate the possibility to start a business in Mexico or is performing activities that are not related to the Mexican
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?
The remote worker would be entitled to social security, employment benefits and taxation under Mexican regulations if the remote worker stayed for longer than 180 days within Mexican territory. As long as there is no employment relationship between the remote worker and a legally established Mexican company, the remote worker will not be subject to local social security or payroll requirement. Such requirements cannot be fulfilled by a foreign company.
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.
Per our last response, if the remote worker stays within Mexican territory for less than 180 days and there is no employment relationship between the remote worker and a Mexican legal entity, then the remote worker will not be entitled to Mexican employment law benefits.
Remote foreign worker
E. Are there special requirements governing remote work in your country which would cover the remote foreign worker?
If the remote worker stays less than 180 days within Mexican territory, then there will not be any benefits that will cover the remote worker.
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?
Since the remote worker will be paid by a foreign and non-Mexican entity, they will not be subject to tax regulations in Mexican territory as long as the foreign national is not considered as agent in Mexico of the foreign company.
Claim for workplace injury
G. Would the remote worker be entitled to bring a claim for workplace injury in your country?
As long as the remote worker stays for less than 180 days within Mexican territory and there is no employment relationship in Mexico, then the remote worker will not be entitled to file any sort of employment and/or social security day.
National healthcare system or insurance
H. Would the remote worker be covered under the local national healthcare system or insurance?
The remote worker will not be covered by the local national healthcare system or insurance, as there is no employment relationship between them and a legally established Mexican company.
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?
No, a foreign employer will not be subject to data privacy and security requirements regarding protection of employee personal information for a foreign employee working remotely in Mexico.
Foreign remote worker
J. Has there been any litigation or specific law or regulation regarding the foreign remote worker in your country?
At the moment, Mexican legislation only foresees teleworking modality. Nevertheless, there is still no specific legislation regulating foreign remote workers.
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) As previously mentioned, Mexico does not have a specific regulation for remote workers, but if the remote worker has an employment relationship in Mexico, then the remote worker will be entitled to employment, social security, and tax regulations from Mexico.
If the remote worker is a Mexican national rendering his/her services for a foreign company with no employment relationship, then the remote worker should declare his/her income to the Mexican IRS.
b) If the employee interacts with the local market, then a risk of creating a Permanent Establishment (discussed above) will arise since he/she will be performing business activity on behalf of the foreign company.