What Does Etsy Withhold and Remit to Mexican Tax Authorities?

Quick answer

If you're based in Mexico, to ensure Etsy withholds and remits the minimum necessary amount, add your RFC ID in your Legal and tax information. The taxpayer ID on file must be a valid RFC ID.

To comply with local laws, Etsy withholds a percentage of sales for Mexico sellers to remit to the Servicio de Administración Tributaria (SAT), the Mexico tax authority.

The amount Etsy is required to withhold may be as high as 36%, but will be significantly lower if you have a valid individual Registro Federal de Contribuyentes (RFC) identification number on file with your Etsy account. An RFC ID is a unique tax code that identifies each person registered on the Registro Federal de Contribuyentes.

If you have a business RFC ID on file, Etsy won’t withhold any funds from your sales.

If you have an individual RFC ID, an amount of each order will be withheld to go toward your income tax (ISR). Additionally, if an order ships to an address in Mexico, an additional amount will be withheld on your sale for value added tax (VAT).

You should also ensure that your name, address, and postal code on your Legal and tax information page match the records held by SAT to ensure that SAT can correctly identify you in their systems.

  1. Sign in to Etsy and go to Shop Manager.
  2. Open Finances.
  3. Select Legal and tax information.
  4. Add your RFC ID under Registro Federal de Contribuyentes (RFC).

What percentage of my sales does Etsy withhold and remit to Mexican tax authorities?

The percentage of your Etsy Payments sales withheld depends on whether you have a valid RFC ID on file, and whether the order is shipping to an address in Mexico.

  You have valid RFC as a business You have a valid RFC as an individual You don’t have valid RFC on file
Income Withholding Tax (ISR)
(applied to all sales)
0% 1% 20%
VAT withholding (IVA)
(applies only if sale to Mexican buyer)
0% 8% 16%

 

  You have valid RFC as a business You have a valid RFC as an individual You don’t have valid RFC on file
Income Withholding Tax (ISR)
(applied to all sales)
$0 $1 $20
VAT withholding (IVA)
(applies only if sale to Mexican buyer)
$0 $8 $16
Total withheld $0 $9 $36

  You have valid RFC as a business You have a valid RFC as an individual You don’t have valid RFC on file
Income Withholding Tax (ISR)
(applied to all sales)
$0 $1 $20
VAT withholding (IVA)
(applies only if sale to Mexican buyer)
$0 $0 $0
Total withheld $0 $1 $20

How do I get an RFC ID?

As a shop owner, you must apply for an RFC ID. It’s a different number from your CURP (Clave Única de Registro de Población), which is automatically issued to all citizens and residents.

Please review the instructions for getting an RFC ID on the SAT site.

Individual RFC IDs are 13 characters long: 4 letters followed by 6 digits and 3 letters or numbers.

Business RFC IDs are 12 characters long: 3 letters followed by 6 digits and 3 letters or numbers.

What happens if I provide Etsy with my RFC ID mid-month?

Withholding tax on any sales between the beginning of the month and the time you added your RFC ID will be retroactively recalculated and the difference will be credited in your Payment account. Withholding tax on sales from previous months can’t be recalculated and credited as Etsy will have already reported those sales to the Mexican tax authorities.

It may take a few hours for the recalculation to occur. You won’t be able to change your RFC ID again during this time.

You can add or change your RFC ID at any time, but the withheld tax will not be recalculated after the second-to-last day of every month. This allows our systems time to process any changes before the end of the month. For example, in the month of January, if you update your RFC ID after midnight UTC on the 30th of January your withholding tax will not be recalculated for the month of January.

Let’s look at the following example. Imagine you:

  • added an individual RFC ID on February 10; and
  • only sell items to Mexican buyers.

In this case, starting on February 10:

  • Any new orders will have 9% withheld instead of 36%
  • Withheld amounts for sales between February 1 and February 10 will be recalculated and you’ll be credited for the difference in your Payment account.
  • Orders from January have already been reported to tax authorities and can’t be recalculated and credited.

How can I keep track of the withheld amounts?

For any eligible sales, you can view withheld amounts in your Payment account. You’ll see a line item in your Recent activities for the amount of taxes withheld. You’ll also see the withholding tax categories in your Activity summary.

Etsy will submit the collected taxes monthly. Details of the tax withheld should be available for you to view in the SAT Web Portal as a credit to your taxes each month.

Ensure that your name, address, and postal code on your Legal and tax information page match the records held by SAT to ensure that SAT can correctly identify you in their systems. 

If you have an RFC ID on file, you will also receive a certificate for withheld tax (CFDI) sent to your email each month from notificaciones@businessmail.net. Be sure your email address is up to date in your Account Settings under Email.

If you don’t add your RFC ID on file, we can’t provide you with a CFDI, which could result in you being unable to claim the amount Etsy withholds as a credit when computing your tax liability. We’re not able to provide a CFDI for any months where you didn’t have your RFC ID on file with Etsy and/or your information does not match the data held by SAT.

What information does Etsy report to the Mexican tax authorities?

Etsy provides the Mexican tax authorities details of the transactions sellers make on the Etsy platform using Etsy Payments, or other methods such as PayPal, on a monthly basis. The information reported includes your tax information and details of the transactions carried out via the platform.

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