We are not a law firm. Do not consider our information as legal advice. This information has been summarized based on our legal inquiries. Information can become obsolete from one day to another due to changes in laws, regulations, or government procedures. Consult labor and tax attorneys for legal advice. (Note from HR Mexico staff)
Private Employment Benefits in MexicoThe Mexican constitution and the Federal Labor Law of Mexico outline the minimum mandatory benefits that an employee is to receive.
The key word is "minimum." An employer must provide the minimum benefits but can offer additional benefits as well. Many employers in Mexico offer a variety of private employee benefits as part of the compensation package in Mexico. A few of the most common additional private benefits in Mexico are: Vales de Despansa (Food card) - (Tax deductible for the employee and employer with caps) - This employee benefit is probably one of the most common. In the past, this benefit was provided as coupons. The employees would spend the coupons at the store like cash for groceries. Now, the benefit comes in the form of a card, similar to a credit card. Private Medical, Dental & Life Insurance - (Tax deductible for the employee and employer) - Private health insurance (medical, dental and life) is a common private benefit offered by many employers. The cost per person on average is less than $1,500 USD per year. A very large difference in cost compared to health insurance costs in the United States of America. Typically, the private medical insurance is 100% covered by the employer and is paid for by the employer for the employee only. Private health insurance can be payroll deducted as well.. The life insurance can't be offered to foreign employees working legally in Mexico. The life insurance is for Mexican citizens only. Savings Fund & Match - (Tax deductible for the employee and employer with caps) - To date (Sep 2017), there is no national level private retirement plan or savings fund similar to a 401-k in Mexico. An very popular private benefit as an alternative is the Savings Fund & Match. The employee can opt to have a particular percentage deducted from their pay check and placed in a savings fund. The employer can opt to match part of or all of the percentage the employee is saving. The funds go into the employers bank account (Obviously it is recommended that the employer open an account just for the savings fund.) The savings fund is normally pitched as interest bearing. However, our experience is that very little interest is paid by the bank and the taxes on the interest pretty much leave the account at zero interest gained. The employer must have a savings fund policy for the employees that provides a date every year where the employee must withdraw the funds. |
Food card, Gas card, and IAVE for toll roads
MetLife Mexico
Private Health Insurance
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Company cars / vehicles for employees in Mexico
Gas & IAVE Card (Federal Toll Roads in Mexico) - (Tax deductible for the employee and employer depending on the employee job description and use) - This employee benefit is mostly offered to employees that travel for their job. Common job positions that apply are sales people, technicians, installers, drivers, consultants, analysts, supervisors, etc. If the employee must travel to perform their job, the employer can offer this benefit as a 100% taxable benefit to the employee and the employer.
If the employee is not required to travel for their job, the employer can still offer this benefit and the gas card amount will be reflected in the employee's payroll as a taxable benefit.
Car Allowance - (Taxable for the employee and employer. A car allowance is considered taxable compensation in Mexico) - We don't recommend this benefit due to the tax consequences for both the employee and the employer. However, this is a private benefit that can be offered in Mexico.
Company Car - (Tax deductible for the employee and employer depending on the employee job description and use) - This employee benefit is mostly offered to employees that travel for their job. Common job positions that apply are sales people, technicians, installers, drivers, consultants, analysts, supervisors, etc. If the employee must travel to perform their job, the employer can offer this benefit as a 100% taxable benefit to the employee and the employer.
Housing - (Tax deductible for the employee and employer providing strict criteria are met and is capped) - This employee benefit can be offered if it can be demonstrated that the employee can't perform their job according to the employment contract unless housing is provided. Therefore, logically applies more for foreign employees that come to Mexico legally with the right to work and need the company to provide them with housing because they had no housing in Mexico to begin with. There are caps as to how much the rent or monthly payment is tax deductible. If the amount is higher than the permitted capped amount, the difference will be taxable to the employee and the employer. The appropriate contract should be signed with the employee relating to the housing benefit.
If the employee is not required to travel for their job, the employer can still offer this benefit and the gas card amount will be reflected in the employee's payroll as a taxable benefit.
Car Allowance - (Taxable for the employee and employer. A car allowance is considered taxable compensation in Mexico) - We don't recommend this benefit due to the tax consequences for both the employee and the employer. However, this is a private benefit that can be offered in Mexico.
Company Car - (Tax deductible for the employee and employer depending on the employee job description and use) - This employee benefit is mostly offered to employees that travel for their job. Common job positions that apply are sales people, technicians, installers, drivers, consultants, analysts, supervisors, etc. If the employee must travel to perform their job, the employer can offer this benefit as a 100% taxable benefit to the employee and the employer.
Housing - (Tax deductible for the employee and employer providing strict criteria are met and is capped) - This employee benefit can be offered if it can be demonstrated that the employee can't perform their job according to the employment contract unless housing is provided. Therefore, logically applies more for foreign employees that come to Mexico legally with the right to work and need the company to provide them with housing because they had no housing in Mexico to begin with. There are caps as to how much the rent or monthly payment is tax deductible. If the amount is higher than the permitted capped amount, the difference will be taxable to the employee and the employer. The appropriate contract should be signed with the employee relating to the housing benefit.
