Useme is a platform that comes between you and your international clients. We act as a bridge that allows you to enjoy several benefits, including lower taxes. When you invoice clients from the EU or US through Useme, your invoice will have a 0% VAT rate, and your income tax will be 1%.
Read this article to learn why you can legally invoice clients outside Mexico with reduced taxes.
Individual vs. business invoicing
To understand tax nuances, let’s break down the invoicing process on Useme. As a Mexican freelancer with a Useme account, you can get paid for your freelance services in two ways:
- You can invoice Mexican clients using your registered company (as a business) outside Useme.
- At the same time, you can invoice clients from abroad using your Useme account (as an individual).
For example, you are a copywriter and have two clients: a Mexican company and a US company. You can invoice the Mexican company as a registered business and invoice the US company through Useme as an individual.
Once you send your invoice to Useme, we’ll handle all the client communication and formalities from that point. You won’t have to remind them to pay you or sign any contracts or forms.
How do you invoice clients through Useme?
Here’s what you need to do to invoice your foreign clients through Useme:
- You issue a 0% VAT invoice for Useme. As we mentioned – we are a bridge between you and your foreign client. Therefore, to make a transaction with your client, first, you need to issue an invoice for Useme with 0% VAT.
- We invoice your client and you get paid. We send you your payment deducted only by 1% income tax and our service fee. The income tax will be deducted before deducting the service fee.
For example, your client is to pay you $100 for a job. We will deduct 1% of the income tax, leaving you $99. Then, we deduct a service fee, which is 4.99%, leaving you the final payout of $94.
Useme can issue a service fee invoice on your request. We need to add a 16% VAT to this invoice, but it’s not paid by you or your client. It’s the VAT paid by Useme in Mexico to comply with laws in your country.
Income tax 1% explained
Mexican freelancers who provide their personal services and make transactions with clients using intermediary digital platforms like Useme can be subject to an income tax rate of 1% instead of 20%. Useme withholds 1% of a freelancer’s income tax due and pays it to the SAT.
The withholding of 1% income tax becomes a final tax contribution if you meet two requirements:
- You provide us with your RFC number.
- Your annual income coming from intermediary digital platforms like Useme does not exceed 300k pesos. If it exceeds 300k pesos, the withholding is not final, and you will have to cover the difference between the 1% tax withheld by Useme and the actual rate that applies to you after exceeding this amount.
VAT 0% explained
You can apply the 0% VAT rate because of the cross-border character of your services. In other words, your services will be sold to clients outside Mexico and used outside Mexico. Therefore, they are not subject to the 16% domestic VAT rate.
Invoice from freelancer for Useme
The invoice you issue for Useme must meet two requirements:
- VAT rate code: you have to include the appropriate VAT rate code for the export VAT 0%;
- service description: the service description section on the invoice must mention your client as the final recipient of your service and contain your client’s details (company name, address), but it must also mention Useme as the actual recipient of your invoice.
The income tax of 1%, paid to SAT, won’t be stated on these invoices.
CFDI from Useme – invoices compliant with SAT requirements
Each time a Mexico-based freelancer makes a transaction with a foreign client, we deduct a 1% income tax and pay it to the SAT. You don’t have to deal with it yourself. At the end of each month, we’ll send you a CFDI document with the complement “Technological platforms services” which will contain information about Useme. The document will list all the withheld tax (the 1% income tax) from your earnings collected via Useme.
