Mexico

Employer of Record (EOR) in Mexico

Only 399 EUR per employee per month

Rivermate's Employer of Record (EOR) solution helps companies hire remote employees in Mexico . We take care of global payroll, taxes, benefits, compliance and HR activities. So you can focus on growing your business. Our Employer of Record (EOR) solution is beneficial to companies that want to hire remote employees in a breeze. On this page you will find employment information for Mexico.

Employer of Record people
A coin
Currency
Mexican Peso
A pin
Capital
Mexico City
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Region
Americas
Megaphone
Language
Spanish
Hire remote employees
Population
128932753
A pile of gold
GDP
$1.151 trillion
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GDP growth
0.0204
Business suitcase
Ease of doing business
72.4
Planet earth
World GDP share
0.0142

1. Grow your team in Mexico with Rivermate as your Employer of Record (EOR) / PEO

Payroll, benefits, taxes, and compliance can be difficult to manage in Mexico , particularly if you don't have established local relationships. You can hire employees in Mexico effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global Employer of Record (EOR) solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

2. Summary

Mexico, formally known as the United Mexican States, is a nation in southern North America. The United States borders it on the north; the Pacific Ocean on the south and west; Guatemala, Belize, and the Caribbean Sea on the southeast; and the Gulf of Mexico on the east. Mexico is the world's 13th-largest nation by area, with 1,972,550 square kilometers (761,610 square miles); with around 126,014,024 residents, it is the 10th-most populated country and has the most Spanish-speakers. Mexico is structured as a federation of 31 states and its capital, Mexico City. With a population of almost 21 million people, the capital is not just a primate city, but also one of the world's biggest. Guadalajara, Monterrey, Puebla, Toluca, Tijuana, Ciudad Juárez, and León are other large cities.

Pre-Columbian Mexico dates back to 8,000 BCE and is considered one of the world's six civilization cradles. The Mesoamerican area, in particular, was home to several interrelated civilizations, including the Olmec, Maya, Zapotec, Teotihuacan, and Purepecha. Last but not least were the Aztecs, who ruled the area in the century before European contact. The Spanish Empire and its indigenous allies defeated the Aztec Empire from Tenochtitlan, now Mexico City, in 1521, creating the province of New Spain. From the colonial period forward, the image of Mexico's prehispanic indigenous civilizations has played a critical part in the construction of a unique Mexican identity, as embodied by the post-independence national flag with Aztec eagle. The Spanish state and the Catholic Church, both controlled by the Spanish crown, had crucial, interconnected institutional roles in extending colonial territory, imposing Christianity, and promoting the Spanish language over the three centuries after the conquest. Spanish power brought Mesoamerican indigenous peoples into colonial order, initially preserving indigenous social and economic institutions. Indigenous elites were acknowledged as nobles during Spanish control, and they functioned as liaisons between their communities and the Spanish governing apparatus. Northern Mexico was located outside of Mesoamerica; it was sparsely inhabited, and the indigenous peoples resisted invasion. Under Spanish dominion, the vast and diversified indigenous populations, known as "Indians" (indios), were at the bottom of the formal racial hierarchy, with the tiny number of white, European Spaniards (espaoles) at the top and the small community of mixed-race castas in the center. The discovery of vast silver resources beyond the zone of established indigenous people in Zacatecas and Guanajuato in the 1540s saw the Spanish Empire expand northward, with population increase as riches was extracted. Wealth from Asia and the New International streamed into Europe via the ports of Acapulco and Veracruz, contributing to Spain's role as a key world power for the following decades and causing a pricing revolution in Western Europe. The colonial order came to an end in the early nineteenth century with the War of Independence against Spain, which began in 1810 as a result of Napoleon's invasion of Spain and was successfully concluded in 1821 by an alliance of mixed-race insurgents led by Vicente Guerrero and previously royalist creole elites led by Agustn de Iturbide.

Political and economical instability characterized Mexico's early existence as an independent nation state. Liberal and conservative forces often altered the structure of administration, which alternated between brief monarchs and republics. During the nineteenth century, the nation was invaded by two foreign powers: first, following the Texas Revolution by American immigrants, which resulted in the Mexican–American War and massive territory losses to the United States after defeat in 1848. The Constitution of 1857 incorporated liberal reforms aimed at integrating indigenous people and limiting the role of the military and the Catholic Church. Conservatives responded with the Reform War, inviting France to invade and crown Maximilian Habsburg as Emperor against the Republican opposition headed by liberal President Benito Juárez. With the conclusion of the American Civil War and France's evacuation of its troops for the war with Prussia, the republicans supported by the United States reclaimed the nation and deposed the monarch. The dictatorship of military hero Porfirio Daz, who tried to modernize Mexico and restore order, dominated the later decades of the nineteenth century. The Porfiriato period (1876-1910) caused widespread social upheaval and culminated in the commencement of Mexico's decade-long civil war (Mexican Revolution). This struggle resulted in significant changes in Mexican culture, notably the adoption of the 1917 Constitution, which is still in force today.

The surviving Revolutionary generals reigned as a series of presidents until the murder of Alvaro Obregón in 1928, when the Institutional Revolutionary Party (PRI) was formed the following year. The PRI ruled Mexico for 70 years, beginning with a series of paternalistic developmental policies that yielded significant economic success, such as President Lázaro Cárdenas' socially-oriented nationalization attempts. Mexico also played an essential part in the United States' war effort during WWII, contributing to economic expansion. However, the PRI administration degraded over decades into a series of violent repressions (such as the Tlatelolco Massacre at the start of the 1968 Olympics), electoral frauds (such as the 1988 election), and a shift to a more US-aligned neoliberal economic strategy in the late twentieth century. The passage of the North American Free Trade Agreement in 1994 precipitated a significant indigenous insurrection in the state of Chiapas. In 2000, the PRI lost the presidency for the first time to the conservative party (PAN).

Mexico is a poor nation, ranked 74th on the Human Development Index, yet it possesses the world's 15th-biggest nominal GDP and 11th-largest PPP economy, with the United States as its major economic partner. Mexico is a regional and intermediate power due to its vast economy and population, worldwide cultural impact, and gradual democratization; it is often characterized as a rising power but is regarded a recently industrialized state by numerous scholars. However, the nation continues to face socioeconomic inequality, poverty, and widespread criminality. It scores low on the Global Peace Index, owing to persistent warfare between the government and drug trafficking syndicates, who struggle fiercely for the US drug market and trade routes. Since 2006, this "drug war" has resulted in almost 120,000 fatalities.

Mexico has the most UNESCO World Heritage Sites in the Americas and the seventh most in the world. It is also one of 17 megadiverse nations on the planet, ranking sixth in natural biodiversity. Mexico's diverse cultural and ecological history, as well as its varied temperature and topography, make it a popular tourist destination: in 2018, it was the world's sixth most-visited country, with 39 million foreign tourists. Mexico is a member of the United Nations, the Group of 20 (G-20), the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO), the Asia-Pacific Economic Cooperation forum, the Organization of American States, the Community of Latin American and Caribbean States, and the Organization of Ibero-American States.

Hiring talented employees in a short span is not an easy task. Partnering with an Employer of Record (EOR) like Rivermate in Mexico is your best option, giving your organization enough time to focus on other aspects of international expansions like project management and inventory management. The EOR takes care of all the compliance and legal issues while helping you speed up hiring using their knowledge of domestic employment practices and virtual onboarding tools. Top EORs also have provisions for the e-signing of documents to enable faster onboarding.

3. Public holidays

4. Types of leave

There is no information about the types of leave for this country.

Paid time off

Mandatory Vacations:


1 year seniority - 6 days

2 years seniority - 8 days

3 years seniority - 10 days

4 years seniority - 12 days

5 to 9 years seniority - 14 days

10 years or above – additional 2 days per 5 years.


A no carryover policy is imposed in Mexico.

Public holidays

Mexico recognizes eight public holidays.

Sick days

No minimum required by law.

Maternity leave

Mothers are entitled to up to three months of leave fully paid by social security.

Paternity leave

Fathers are entitled to one week of leave fully paid by the employer.

Parental leave

Parental leave in Mexico is not mandatory. However, private companies can choose to impose this.

Other leave

5. Employment termination

There is no information about employment information for this country.

Termination process

Although no formal process is required, it is encouraged that the termination be formalized before the conciliation and arbitration court.

Notice period

No notice period for termination is required.

Probation period

Probationary periods are optional in Mexico, but the common practice is 3 months.

Severance pay

If the resignation is voluntary, the employer is required to pay the employee all accrued benefits. If an employee has at least 15 years of service, he or she is entitled to 12 days' pay for each year worked. Employers must pay all benefits due to employees who are terminated for cause. The employer will also entitle 12 days of pay for each year worked by the employee. Severance pay will equal three months' salary, 20 days for each year of service, and a seniority bonus of 12 days per year of service for terminations without cause. Additionally, the employee will be compensated for lost wages from the date of termination to the date on which the employer complies with the Labor Board's decision.

6. Working hours

There is no information about the working hours for this country.

General working schedule

In general, office jobs operate from 8:00 a.m. to 6:00 p.m., although working hours have increased in recent years and frequently extend until 7:00 p.m. or later. It's worth noting that in Mexico, lunch breaks range from one hour for regular workers to three hours for executives. With the advent of the modern working era, the cultural tradition of a "Siesta" became extinct.

Overtime

Employees earning minimum wage may work up to 9 hours per week without being paid. The next nine hours will be compensated at a rate of 200 percent of salary, with any additional hours compensated at a rate of 300 percent.

Employees earning more than the minimum wage are exempt from overtime pay for 50% of the hours worked per week, up to a maximum of five minimum wage hours per week. The first nine hours will be compensated at a rate of 200 percent, and subsequent hours at a rate of 300 percent.

7. Minimum wage

There is no information about the minimum wage for this country.

The minimum wage is 141.70 MXN per day. However, the minimum wage in the Free Economic Zone of the Northern Border is different and is set at 213.39 MXM per day.

8. Employee benefits

There is no information about the employee benefits for this country.

The Mexican Social Security Institute (Instituto Mexicano del Seguro Social, IMSS), a federal agency in Mexico, requires all workers to have access to public health care. However, given some of the drawbacks of the public health care system, such as long wait periods to visit a doctor or specialist, a scarcity of physicians, a lack of flexibility, and so on, many companies provide their workers supplementary private medical insurance.

As part of their employment compensation, several businesses provide their workers with a private insurance plan. Despite the fact that fewer than 3% of Mexicans have private medical insurance, private medical services account for 52% of overall medical expenditures in the nation. Private insurance is often chosen since it covers more costly procedures.

Because the statutory benefits in Mexico are very generous, companies seldom provide many extra perks. Flexible work hours are a typical perk, and job sharing and telecommuting opportunities are often provided. Employers may provide extra advantages such as supplementary contributions to retirement savings, reallocation allowances for foreigners, and Life Insurance on occasion.

9. Taxes

There is no information about the taxes for this country.

Corporate tax

The corporate income tax (CIT) applies to income earned by Mexican resident taxpayers from global sources, as well as income earned by foreign residents from Mexican wealth sources and income earned by foreign residents from permanent establishments (PEs) in Mexico.

CIT is levied at a federal rate of 30%.

All corporate entities, including civil organizations, branches, and so on, are subject to the tax laws that apply to Mexican companies (unless specifically ruled out, such as not-for-profit organisations).

Taxpayers who only participate in agricultural, livestock, fishery, and forestry operations are eligible for a 30% decrease in their tax obligation.

Even if recent inflation rates have been steady at low levels, the Mexican Income Tax Law includes provisions to recognize the impacts of inflation for tax purposes in the areas of monetary assets and liabilities (annual monetary adjustment) and depreciable assets.

After a company has paid its CIT, after-tax profits (i.e. earnings from the after-tax earnings account, Cuenta de Utilidad Fiscal Neta or CUFIN) may be given to shareholders with no corporate tax charge. A withholding tax (WHT) of 10% is levied on dividend payments made to individuals or foreign persons (including foreign companies); this WHT does not apply to distributions of earnings subject to corporate-level tax made prior to 2014. If a corporation makes a distribution from earnings that have not been subject to CIT for any reason, such as distributions of book earnings (i.e., earnings that have not yet been recognized for tax purposes in Mexico), the corporation will also be subject to CIT on the grossed-up distributed earnings (gross-up factor is 1.4286).

Tax paid on dividends issued in excess of CUFIN may be applied to the CIT of the year or the two fiscal years after the year in which the tax on non-CUFIN distributions was paid. The CUFIN for the tax years in which the credit is claimed must be reduced by the amount of the grossed-up dividend payout.

Individual income tax

Resident people, regardless of nationality, are liable to Mexican income tax on their global income. Non-residents, even Mexican nationals who can establish tax residency in a foreign country, are taxed solely on income earned in Mexico.

For an income between MXN 0 to MXN 7,735.00, the tax rate is 1.92 percent.

For an income between MXN 7,735.01 to MXN 65,651.07, the tax rate is 6.4 percent.

For an income between MXN 65,651.08 to MXN 115,375.90, the tax rate is 10.88 percent.

For an income between MXN 115,375.91 to MXN 134,119.41, the tax rate is 16 percent.

For an income between MXN 134,119.42 to MXN 160,577.65, the tax rate is 17.92 percent.

For an income between MXN 160,577.66 to MXN 323,862.00, the tax rate is 21.36 percent.

For an income between MXN 323,862.01 to MXN 510,451.00, the tax rate is 23.52 percent.

For an income between MXN 510,451.01 to MXN 974,535.03, the tax rate is 30 percent.

For an income between MXN 974,535.04 to MXN 1,299,380.04, the tax rate is 32 percent.

For an income between MXN 1,299,380.05 to MXN 3,898,140.12, the tax rate is 34 percent.

For an income above MXN 3,898,140.13, the tax rate is 35 percent.

If the employee is deemed a non-resident for Mexican tax reasons, the tax rate on pay will range from 15% to 30%. The first MXN 125,900 in employment income earned during a 12-month floating period is tax-free.

VAT, GST and sales tax

VAT is levied at a standard rate of 16% on all sales of goods and services, as well as lease payments and imports of products and services.

In the case of the northern border area, a tax credit of 50% on the VAT rate may apply, resulting in a rate of 8% rather than 16%.

10. VISA and work permits

There is no information about VISA and work permits for this country.

Foreigners wishing to work in Mexico must apply for a work permit as well as a residence visa.

The National Institute of Immigration is in charge of all immigration in Mexico, including the issuance of work permits.

Mexico has both temporary and permanent visas; the employee should apply for both with the help of the potential employer. Foreign nationals who want to stay in Mexico for longer than 180 days must get a temporary residence visa. People holding a temporary resident visa, in addition to the Mexico work permit, may live and work in the nation for up to four years with a Mexico work visa.

A foreigner may apply for a permanent residency visa after four years of employment (with the same firm).

11. Employer Of Record service terms

There is no information about the Employer of Record (EoR) service terms for this country.

Employment contracts

In Mexico, it is legally needed to have a robust employment contract in place that specifies out the conditions of the employee's remuneration, benefits, and termination criteria. A salary and any compensation amounts should always be stated in Mexican pesos rather than a foreign currency such as USD in an offer letter and employment contract in Mexico.

With Rivermate being your Employer of Record (EoR) in Mexico, you do not have to worry about the employment contracts, as we take care of that.

Minimum assignment length

There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.

Payment currency

Mexican Peso

13.Opening a subsidiary in Mexico

There is no information about the working hours for this country.

How to set up a subsidiary

A subsidiary enables you to operate as a branch of a parent firm while serving local clients in Mexico. In Mexico, it is known as a S.A. de R.L. (Anonymous Society of Limited Responsibility) or S.A. de C.V. (Anonymous Society of Variable Capital) and operates similarly to an LLC in the United States. The subsidiary has limited autonomy from the parent firm, and the parent company is still accountable for anything that goes wrong.

The procedure of establishing a Mexico subsidiary starts with selecting a company name and registering with the Ministry of External Affairs (SRE). Your name should be accepted if there are no duplicates. You will subsequently sign into a pro forma agreement under which any non-Mexican shareholder will be governed by Mexican law.

Hire a local attorney to draft paperwork such as company governance, period of existence, and others for you. Many work, salary, and benefits rules in Mexico may be explained by them. Every document should be notarized, and a power of attorney should be established for your subsidiary.

Subsidiary laws

You must comply with all Mexico subsidiary requirements as soon as you create a subsidiary, including zoning, environmental restrictions, health and sanitary concerns, and immigration.

Taxation is one of the most important parts of Mexico's subsidiary law. In most cases, the parent firm in the United States will obtain a tax credit for any income, dividends, and withholding taxes paid to the Mexican government. However, in order to avoid significant penalties, it is essential to comply with all Mexican tax rules. You must register for taxes and register as an employer with Mexican Social Security.

Subsidiaries in Mexico must pay workers in pesos using an in-country bank account. This is also how you will pay social security and other taxing organizations.

13. Why choose Rivermate as your Employer of Record / PEO in Mexico

Establishing an entity in Mexico to hire a team takes time, money, and effort. The labor law in Mexico has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into Mexico simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record (EOR) solutions in Mexico give you peace of mind so you can focus on running your business. Please contact us if you'd like to learn more about how Rivermate can help you hire employees in Mexico via our Employer of Record (EOR) / PEO solution.

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