How to Legally Hire Foreign Employees in Mexico: A Practical Guide for SMEs (2025)

Introduction

In a globalized business environment, hiring foreign talent can be a strategic advantage for Mexican small and medium-sized enterprises (SMEs). Whether for specialized roles, international expansion, or workforce diversity, employing foreign nationals is legal and feasible—as long as specific immigration, labor, and—most importantly—tax requirements are met.

This guide explains how to formally hire foreign workers in Mexico in 2025, based on the Ley de Migración (LMigra), its Reglamento (RegLMigra), the Ley Federal del Trabajo (LFT), the Código Fiscal de la Federación (CFF), and the Ley del Impuesto sobre la Renta (LISR).

We outline the key steps and fiscal implications that your company must address to avoid penalties and ensure full legal compliance.

1. Can an SME legally hire foreign employees in Mexico?

Yes. Any company in Mexico, including SMEs, may legally hire foreign employees in Mexico. However, the employer must meet specific requirements before the Instituto Nacional de Migración (INM) and guarantee the employee’s compliance with labor and tax regulations.

Key requirements:

• Obtain the Constancia de Inscripción del Empleador (CIE) from the INM

• Ensure that the foreign national has an immigration status that authorizes employment

• Sign a contract in accordance with the LFT, register the worker with the Instituto Mexicano del Seguro Social (IMSS), and comply with all CFF and LISR tax obligations

2. Essential Immigration Procedures

a) Employer Registration Certificate (CIE)

This document proves the company's legal standing before the INM and authorizes it to offer employment to foreign nationals. Without the CIE, no immigration procedures may begin (LMigra, RegLMigra).

b) Temporary Resident Visa with Work Authorization

If the foreign worker is abroad, the company must apply for a job offer authorization with the INM. Once approved, the candidate must attend the appropriate Mexican consulate to complete the visa process (LMigra, RegLMigra).

c) Change of Immigration Status

If the foreigner is already in Mexico under a valid immigration status, they may request a change to temporary residency based on a job offer, pursuant to the LMigra and its RegLMigra.

3. Labor Requirements (LFT)

The employment contract must comply with Article 25 of the LFT. Additionally:

• Foreign workers must enjoy equal labor rights as Mexican nationals

• A company may only have up to 10% foreign employees (Article 7 LFT), unless they hold executive or highly specialized technical roles

4. Tax Obligations for SMEs Hiring Foreign Workers

Immigration status alone is not sufficient—foreign workers must also comply with Mexico’s fiscal residency rules, which affect how income tax is applied under the CFF and LISR.

a) When is a foreign national a tax resident in Mexico?

According to Article 9 of the CFF, a foreign individual is considered a Mexican tax resident if:

• They maintain their primary home (casa habitación) in Mexico, or

• Even if they reside elsewhere, their center of vital interests is in Mexico (e.g., if over 50% of their total income originates in Mexico or their principal professional activity is based there)

📌 There is no minimum number of days required. What matters is the location of vital

economic and personal ties.

b) What does tax residency imply?

Under Article 1 of the LISR, tax residents in Mexico are subject to Impuesto sobre la Renta (ISR) on worldwide income, regardless of its source. This implies:

• Registration with the Registro Federal de Contribuyentes (RFC)

• Issuance of Comprobantes Fiscales Digitales por Internet (CFDI), if applicable

• Filing of annual or periodic tax returns, as required by the LISR

For the employer:

• The company must withhold and remit ISR on behalf of the employee, under Article 6 of the CFF

• Failure to comply may lead to tax liabilities, penalties, and surcharges

5. Hiring Foreign Nationals Who Are Not Tax Residents

If the foreign national does not meet the residency criteria under the CFF, they are considered a non-resident. Nonetheless, under Article 1, Section III of the LISR, they are still liable for Mexican-sourced income.

In such cases:

• The company must withhold ISR on Mexican-sourced income at the rates set forth in the LISR (generally 15%–30%, depending on the income category)

• The foreign national is not required to file tax returns if the withholding is final

• The individual may invoke tax treaties to avoid double taxation if they prove tax residency in a country with which Mexico has a treaty (Article 4, LISR)

💡 It is essential to properly identify the worker’s tax residency to avoid double taxation and ensure full compliance with the LISR and CFF.

6. Obligations Before IMSS and INFONAVIT

All employees, regardless of nationality, must be registered with the IMSS on the first day of work.

Employers must also make contributions to the Instituto del Fondo Nacional de la Vivienda para los Trabajadores (INFONAVIT), in accordance with the Ley del Seguro Social (LSS).

7. Example case: Tech Startup in Jalisco

Company: SME software firm in GuadalajaraHire: Canadian artificial intelligence specialist

Compliance Highlights:

• It was determined that the employee had a primary residence in Mexico and derived more than 50% of their income from Mexican sources

• The employee was registered with the RFC as a tax resident under the CFF

• The company calculated ISR withholdings under the wages and salaries regime (LISR, Title IV)

• The employee was enrolled with IMSS, and the company issued monthly CFDI payroll receipts

• Double taxation was avoided using the Mexico–Canada tax treaty, under Article 4 of the LISR

Conclusion: Ensure Legal Compliance When Hiring Foreign Talent

Hiring international professionals can enhance your SME’s competitiveness—but it also brings legal and fiscal responsibilities. It is critical to correctly assess tax residency and meet all obligations related to withholding, registration, and social security, as set out in the LMigra, RegLMigra, LFT, CFF, LISR, and LSS.

✅ Need help hiring foreign employees without tax mistakes?

At UPLAW Abogados, we guide SMEs through the entire process—from immigration filings before the INM to compliant contracts and tax registration with the SAT and IMSS. Avoid costly legal errors and protect your business.

📩 Free consultation at contacto@uplaw.com.mx