What Is REPSE in Mexico? Complete Guide
Understand REPSE in Mexico, who must register, what counts as specialized services, and the penalties for non-compliance under the 2021 reform
What Is REPSE in Mexico?
REPSE is Mexico’s official registry for companies that provide specialized services or specialized works. Any business offering specialized services that involve making personnel available to a client, and that are not part of the client’s corporate purpose or main economic activity, must be registered.
REPSE was created as part of Mexico’s 2021 outsourcing reform to control subcontracting, protect employees, and ensure companies comply with labor, tax, and social security laws.
The registry is mandatory for service providers operating in these categories.
REPSE meaning: REPSE stands for Registro de Prestadoras de Servicios Especializados u Obras Especializadas, the national registry of authorized specialized service providers.
Managed by STPS: The Secretaría del Trabajo y Previsión Social (STPS) reviews applications, verifies compliance, and grants REPSE authorization.
Created after the 2021 outsourcing reform: REPSE was introduced to eliminate illegal outsourcing and ensure only compliant companies offer specialized services.
Purpose: REPSE establishes a legal oversight framework, protects employees’ rights, and guarantees that providers pay IMSS, ISR, and all mandatory employer obligations.
REPSE strengthens labor transparency and ensures companies operate legally when offering specialized services in Mexico.
Why REPSE Was Created (The 2021 Outsourcing Reform Explained)
Mexico introduced the 2021 outsourcing reform to stop years of abuse in labor subcontracting. Many companies used outsourcing schemes to avoid registering employees with IMSS, paying benefits, or fulfilling tax obligations.
These practices caused major losses to employees and the government. The reform changed the entire system by banning subcontracting of core business activities and allowing only specialized services with strict oversight.
Prior abuse of outsourcing and labor subcontracting: Before 2021, many companies used third parties to hide real employment relationships, reducing salaries on paper and lowering benefit payments illegally.
Companies avoided IMSS, INFONAVIT, tax, and benefit obligations: Outsourcing firms often registered employees with lower salaries or avoided social security entirely, harming employees and creating tax gaps.
Reform banned subcontracting of core business activities: Companies may no longer outsource activities directly related to their main business purpose. Employees performing core tasks must be hired directly.
Only specialized services or specialized works are allowed: Outsourcing is now permitted only when the service is different from the client’s main business activity.
REPSE introduced to regulate and register providers: Specialized service providers must obtain REPSE authorization from STPS to operate legally.
The reform ensures transparency, protects employees, and strengthens compliance across Mexico’s labor market.
What Are Specialized Services Under REPSE? (What Qualifies and What Does Not)
Specialized services are the core concept of REPSE. To comply with the 2021 outsourcing reform, companies must understand which services qualify as “specialized” and which are considered part of the client’s core business.
Definition of Specialized Services
Specialized services are activities that are not part of the client company’s corporate purpose or main business activity. These services require technical skills, certifications, or specific expertise that the client does not perform internally.
To be considered specialized under REPSE, the provider must demonstrate experience, proof of activity, and full compliance with tax and social security obligations.
Specialized services can support a company, but they cannot replace or duplicate work tied to the company’s main economic activity.
Difference Between Core Activities vs Non-Core Activities
Core activities are the essential functions that define a company’s main business purpose, as stated in its corporate bylaws. These tasks cannot be outsourced.
Non-core activities, on the other hand, are supportive functions that do not form part of the company’s primary purpose. Only these non-core functions qualify as specialized services.
To determine this, authorities compare the provider’s activity with the client’s corporate purpose. If both perform the same activity, REPSE outsourcing is not allowed.
Examples of Specialized Services (IT maintenance, security, logistics, etc.)
Many support functions qualify as specialized services because they require technical expertise unrelated to a client’s core business.
Common REPSE-approved categories include IT maintenance, cybersecurity, building security, cleaning, logistics, equipment repair, payroll services, accounting, call center support, and machinery maintenance.
These services may involve personnel working on the client’s premises, but they remain legal as long as they do not overlap with the client’s corporate purpose. Companies must describe these services clearly when applying for REPSE registration.
Services That Do NOT Require REPSE (purely digital, no personnel at client site)
Certain services do not require REPSE registration because no personnel is deployed to the client’s workplace, and there is no labor subcontracting.
Examples include cloud software, SaaS products, website development performed remotely, digital marketing, remote consulting, and automated online services.
These activities do not qualify as “specialized services” because they do not involve sending employees to the client’s site. When services are delivered digitally and without labor integration, REPSE is not necessary.
Who Must Register in REPSE?
REPSE registration is mandatory for any company or individual that provides specialized services or specialized works in Mexico.
If a business sends its personnel to perform tasks at a client’s workplace and those tasks are not part of the client’s core business, registration is required.
Understanding who must register helps prevent fines, contract cancellations, and non-compliance with the 2021 outsourcing reform.
Companies or individuals providing specialized services: Any provider offering activities classified as “specialized” under the reform must obtain REPSE authorization from STPS before operating legally.
Businesses sending their own employees to a client’s operations: REPSE is required when a company provides or makes its employees available to another company to perform services for its benefit. When there is no provision or making available of personnel to the client, REPSE is not required.
Mexican companies and foreign companies operating in Mexico: REPSE authorization is available only to companies legally established in Mexico. This includes Mexican entities and foreign companies operating through a Mexican subsidiary or local entity. Foreign companies without a Mexican establishment cannot register directly and must work with REPSE-registered providers.
Contractors & subcontractors involved in specialized works: Construction, maintenance, security, IT, logistics, and other subcontractors must register when personnel is assigned to client operations.
When a business does NOT need REPSE: REPSE is not required when the service does not involve providing or making personnel available to another company, or when the company is performing its own core business activities.
Correct REPSE registration ensures companies operate legally and avoid penalties under the outsourcing reform.
REPSE Registration Requirements (Legal, Fiscal, and IMSS Obligations)
To obtain REPSE authorization, companies must demonstrate full legal, tax, and social security compliance.
The registration process is strict because STPS must confirm that the provider meets all employer obligations before offering specialized services.
Any missing document or inconsistency can result in rejection. Proper preparation ensures a smooth approval and long-term compliance under Mexico’s outsourcing reform.
Active RFC and tax compliance with SAT: The company must have an active tax ID (RFC) and be fully compliant with SAT filings, including ISR, IVA, and payroll taxes. SAT must show no outstanding debts.
Proof of IMSS and INFONAVIT compliance: Applicants must provide evidence of correct IMSS registration, contribution payments, and Infonavit compliance. This confirms the company meets social security obligations.
Employer risk classification: Companies must present their workplace risk level as assigned by IMSS, showing accurate classification and contribution history.
Corporate documents: Incorporation documents, bylaws, legal powers of attorney, and business activity descriptions are required to verify the company’s identity and legal structure.
Valid e-firma: A current electronic signature is mandatory for submitting and validating the REPSE application.
Exact description of specialized services: Companies must clearly define the specialized services they want registered. STPS evaluates this description carefully.
Public registry listing: Once approved, the provider appears on the official STPS REPSE public registry.
Meeting these requirements ensures compliance and eligibility to legally offer specialized services in Mexico.
REPSE Compliance Obligations After Registration
Once a company is registered in REPSE, compliance does not end. STPS requires ongoing legal, fiscal, and social security compliance to keep the registration valid.
Providers must update information, maintain accurate reporting, and ensure all employer obligations remain fully current. Failure to comply can lead to suspension or cancellation of REPSE authorization.
Ongoing compliance protects both the provider and clients operating under the 2021 outsourcing reform.
Keep tax, IMSS, and INFONAVIT payments up to date: Companies must stay current with SAT filings, IMSS contributions, and Infonavit obligations. Any irregularity can trigger REPSE suspension.
Maintain accurate payroll and social security reporting: Employers must calculate SBC correctly, issue CFDI payroll receipts, and report all wages and contributions without errors.
Update description of specialized services when needed: If the company adds new specialized services or modifies existing ones, the REPSE registry must be updated to remain accurate and compliant.
Provide REPSE registration to clients: Clients must receive the REPSE number in contracts to prove legal compliance. This avoids penalties during inspections.
Renewal every 3 years: REPSE authorization must be renewed every three years with updated documents.
Documentation required for audits: STPS may request payroll records, contracts, IMSS payments, invoices, and corporate documents to verify compliance.
Maintaining REPSE compliance ensures continued legal operation and protects companies under Mexico’s strict outsourcing rules.
Obligations for Companies That Hire Specialized Service Providers in Mexico
Companies that hire specialized service providers in Mexico must follow strict rules under the 2021 outsourcing reform. The goal is to ensure the service is genuinely specialized, the provider is legally registered, and all labor and tax obligations are met.
Employers who fail to follow these requirements may face joint liability, fines, and contract cancellations. This section is critical for compliance and protects businesses from major legal risk.
Must verify provider’s REPSE registration: Before signing any contract, the client must confirm that the provider is listed in the official STPS REPSE registry (https://repse.stps.gob.mx). Hiring a non-registered provider for services that require REPSE is illegal and may expose the client to fines, loss of tax deductibility, and joint liability.
Must keep copies of IMSS/INFONAVIT/SAT compliance letters: Clients must request and retain proof that the provider is up to date with IMSS contributions, Infonavit obligations, and SAT tax compliance.
Must ensure the activity is not their core business: The client must review its own corporate purpose to ensure the outsourced activity is non-core. If it relates to the main business activity, outsourcing is prohibited.
Joint liability if provider violates laws: Clients may be held jointly responsible for unpaid IMSS, Infonavit, or tax obligations if the provider fails to comply.
Contracts must clearly define specialized services: Agreements must specify the specialized nature of the service and match the provider’s REPSE activity description.
Following these obligations protects companies from fines, audits, and legal exposure under the outsourcing reform.
Penalties and Legal Risks for Not Complying With REPSE
Failure to comply with REPSE rules can create severe financial, tax, and legal consequences. STPS, SAT, IMSS, and INFONAVIT actively monitor specialized service providers and the companies that hire them.
Understanding these penalties helps businesses avoid major liabilities under Mexico’s outsourcing reform.
1. Fines for Not Having REPSE Registration
Companies providing specialized services without REPSE authorization face high STPS fines. These penalties can reach thousands of pesos per employee involved, depending on the violation.
Clients who hire non-registered providers may also be fined. STPS often conducts workplace inspections to verify REPSE compliance, so operating without registration puts both parties at immediate legal risk.
2. Loss of Tax Deductibility for Contractor Payments
If a provider lacks REPSE registration, all payments made to them become non-deductible for the client. This means the hiring company must pay full ISR without deducting contractor expenses, significantly increasing tax liability.
SAT automatically disallows deductions tied to non-compliant outsourcing, making REPSE verification essential for financial and tax planning.
3. Joint Liability for IMSS/INFONAVIT Obligations
If a provider violates social security laws, the client becomes jointly liable. This includes unpaid IMSS contributions, missing Infonavit payments, interest, and penalties.
Mexican authorities treat non-compliant subcontracting as a shared responsibility. Clients must keep compliance letters to protect themselves, or they risk absorbing the provider’s entire debt.
4. Invalid Contracts Under the LFT
Using a non-REPSE provider can invalidate the specialized service arrangement under labor law.
Authorities may reclassify workers as employees of the client, creating new obligations for payroll, benefits, and back payments.
5. Possible Criminal or Fiscal Penalties for Fraudulent Outsourcing
Intentional evasion of REPSE rules may trigger criminal consequences. Fraudulent outsourcing schemes , such as hiding employees, falsifying payroll, or avoiding IMSS, can lead to fiscal crimes under SAT regulations.
Penalties may include asset seizure, suspension of operations, or criminal charges for responsible individuals. Compliance is essential to avoid severe legal outcomes.
REPSE for Foreign Companies Operating in Mexico
Foreign companies operating in Mexico must understand that REPSE rules apply to them the same way they apply to Mexican companies.
Any foreign business that hires specialized service providers, deploys staff in Mexico, or works with contractors performing non-core activities must verify REPSE compliance.
The outsourcing reform applies even when the parent company is located abroad, and mistakes can create tax, labor, and permanent establishment risks.
Foreign companies must use REPSE providers: When subcontracting specialized services in Mexico, foreign companies must ensure the provider is properly registered in REPSE. Hiring a non-registered vendor is illegal.
Using non-REPSE vendors creates legal exposure: Foreign companies may face fines, denied tax deductions, and joint liability for IMSS or Infonavit debts when the provider is not compliant.
REPSE applies even if parent company is abroad: Location does not exempt a business from REPSE rules. If services are performed in Mexico or personnel are deployed locally, the law applies.
Permanent establishment (PE) risks: Hiring contractors incorrectly or avoiding REPSE obligations may cause SAT to classify the foreign company as having a permanent establishment in Mexico, triggering tax obligations.
Why foreign companies misunderstand REPSE: Many assume outsourcing rules are similar to their home country or misunderstand the core vs non-core distinction.
Correct REPSE compliance protects foreign companies from tax exposure and legal penalties in Mexico.
Why HRM Is the Safest REPSE-Compliant EOR in Mexico
Choosing the right REPSE-compliant is critical for any company operating in Mexico. Human Resources Mexico (HRM) stands out because it is a real, physical Mexican EOR with deep expertise in labor, tax, and social security laws.
Unlike global platforms that depend on hidden intermediaries or shell entities, HRM handles every aspect of compliance directly inside Mexico.
This ensures total transparency, legal certainty, and protection for foreign companies navigating the strict rules created by the 2021 outsourcing reform.
16+ years of physical operations: HRM has been operating in Mexico for more than 16 years, providing real, on-ground support backed by proven local experience.
Fully REPSE-registered: HRM holds active REPSE authorization, meaning it meets all STPS, SAT, IMSS, and INFONAVIT requirements.
Real local HR & payroll team: All payroll, social security, tax calculations, and labor processes are handled by HRM’s in-country specialists.
No intermediaries or shell entities: HRM hires employees directly under its legal entity, avoiding subcontracting risks.
Transparent compliance: HRM ensures accurate IMSS, INFONAVIT, SAT, and REPSE reporting every month.
Protects clients from outsourcing violations: HRM shields client companies from penalties, joint liability, and REPSE-related risks.
Planning to hire in Mexico and need guaranteed REPSE compliance? HRM gives you a safe, transparent, and fully legal path to build your team.
Contact HRM to get a custom proposal tailored to your compliance needs.
FAQs About REPSE in Mexico
Who needs REPSE registration?
Any company or individual providing specialized services or specialized works to another business in Mexico must register in REPSE. This applies when personnel are sent to a client’s workplace to perform activities that are not part of the client’s core business.
What counts as a specialized service?
A specialized service is any activity that does not form part of a client’s corporate purpose or main economic activity. It must require technical skills or expertise and must not overlap with the client’s core business operations. Only these non-core services qualify for REPSE.
Can foreign companies be affected by REPSE rules?
Yes. Foreign companies hiring specialized services in Mexico or deploying personnel locally must follow REPSE rules. Location does not exempt them. Using non-REPSE providers can cause tax, labor, and permanent establishment exposure for foreign businesses.
What happens if a company hires a non-REPSE provider?
Hiring a non-REPSE provider is illegal. Payments become non-deductible, contracts may be invalid, and the client may face fines, joint liability for IMSS/INFONAVIT debts, and outsourcing penalties. Both parties risk sanctions under the 2021 reform.
How often must REPSE be renewed?
REPSE registration must be renewed every three years. Companies must update documentation, verify compliance with SAT, IMSS, and INFONAVIT, and ensure their specialized service descriptions remain accurate. Failure to renew results in loss of authorization.
