As of June 2020, the Digital Platforms Tax framework («DPT») came into force in Mexico. This framework legally requires all digital platforms, local and foreign, to withhold Income tax and Value Added Tax (VAT) from users and remit it to the Mexican Tax Authorities (Servicio de Administración Tributaria – SAT) when users earn income from properties located in Mexico.
Withholding is the process through which the withholding agent (in this case, the platform) retains an amount of money from the payee (in this case, a Host) to remit it to the tax authority on payee’s behalf. Every digital platform is required to do so. Therefore, not only lodging and travel platforms must withhold taxes, but also transport, food delivery, and commercial platforms, among others, are required to do so. It does not matter if they are national or foreign platforms, they all have the same obligation.
As a foreigner to Mexico, if you obtain income from a property located in Mexico listed on Airbnb, you will be subject to withholding requirements of the DPT.
What’s the Withholding Income Tax Rate?
The Withholding Income Tax Rate definition depends if you have a Mexican Tax Registration number (“RFC” is the its Spanish acronym) or not.
If as an individual foreign resident you have an Individual Mexican Tax Registration (RFC) number, you will be subject to a 4% Income Tax withholding rate.
For example, if you are a foreigner, have an individual RFC registered on your Airbnb profile, and you earn $5,000 from properties located in Mexico, listed on Airbnb, your net payment will be $4,800, since 4% of the $5,000 ($200) must be withheld to comply with tax requirements.
| Item | Amount |
| Gross income | $5,000 |
| Tax withheld (4%) | $200 |
| Net income | $4,800 |
In the case you are an incorporated company or legal entity with tax residence in Mexico, no withholding will apply.
For example, if you are a foreigner but have a corporate / business RFC registered on your Airbnb profile, and you earn $5,000 from properties located in Mexico, listed on Airbnb, your net payment will be the same $5,000, since no withholding will apply.
| Item | Amount |
| Gross income | $5,000 |
| Tax withheld (0%) | $0 |
| Net income | $5,000 |
In both cases, it is necessary to submit your RFC on your Airbnb profile to be subject to the correct withholding rate. In addition, you must take into consideration that, by applying the 4% or 0% withholding rate, you may be required to comply with Mexican tax obligations such as filing monthly and annual tax returns, paying monthly taxes, and other requirements, in addition to meeting your country of origin’s tax obligations.
Regarding individuals, monthly tax returns are generally due by the 17th of the following month, and are filed electronically. If you only earn income from digital platforms, the filing should be done through the Mexican tax authority’s digital platforms website. If in addition to your digital platforms income you receive rents from other properties located in Mexico, you should additionally file through the “Tax filing and payments” website. If you do not receive rents but do earn income from business activities or professional services in Mexico, you should file all your income through the “Tax filing and payments” website. This is important since each form is different.
Annual tax returns are generally due by April 30th of the following year, and are also filed electronically.
Besides tax returns, another important obligation is digital invoicing which must cover all earned income. When a guest or customer doesn’t provide his tax information, invoices must be issued using the generic Tax Id: XAXX010101000. Mexican digital invoices can be issued through the SAT’s website. To issue invoices, you must have a digital signature.
If you do not have a Mexican Tax ID Number, you are not bound to follow the Mexican invoicing guidelines, but should issue an invoice in agreement with the rules in your home country.
If you do not submit your Mexican Tax Registration number (RFC), an Income Tax withholding rate of 20% will be applied to your earnings on the gross income obtained from properties located in Mexico.
For example, if you are a foreigner and do not submit an RFC (Mexican Tax Registration number) on your Airbnb profile, and you earn $5,000 from properties located in Mexico and listed on Airbnb, your net payment will be $4,000, since 20% of the $5,000 ($1,000) must be withheld to comply with tax requirements.
| Item | Amount |
| Gross income | $5,000 |
| Tax withheld (20%) | $1,000 |
| Net income | $4,000 |
Note: The fact that Airbnb withholds taxes from your gross income does not exempt you from complying with your country of origin’s tax obligations.
How can I obtain a Mexican Tax Registration Number (RFC)?
As a non-resident in Mexico, you can get your Mexican Tax ID, known as Registro Federal de Contribuyentes (RFC), free of charge. You can file to obtain your RFC at the Servicio de Administración Tributaria office following these steps [in Spanish].
To get your RFC, you will need the following documents:
- Proof of address, such as a utility bill (no older than 4 months), bank account statement (no older than 4 months), lease agreement or mortgage statement.
- Your current immigration document issued by the competent authority (if applicable, extension or renewal of the migratory document) must be presented. You can also use a multiple immigration form (FMM), which could be requested online, as long as you also show your valid passport.
- A document stating your tax identification number of your country of residence, when you are required to have it in that country. It should be a certified, legalized, or apostilled copy. When these documents are in a language other than Spanish, a translation into Spanish by an authorized translator must be submitted.
If your immigration document is in process, you can present proof of Application Registration, which is issued by the Mexican National Immigration Institute and contains the Unique Processing Number (NUT, Número Único de Trámite).
It is strongly recommended to also get your Mexican digital signature. For this procedure, you will also need a USB flash memory.
At the end of the procedure, you will obtain a receipt of registration in the Registro Federal de Contribuyentes, containing tax identification card, obligations guide and two-dimensional barcode (QR).