When 2/3 VAT withholding applies
2/3 VAT withholding generally applies when a company or other legal entity pays an individual for servicios personales independientes.
To decide whether it applies, look at what the client is paying for: personal professional expertise and a custom solution, not repairs, installations, manufacturing, or goods classified as actividad empresarial or enajenación de bienes.
| Intellectual and professional work (servicios profesionales / servicios personales independientes) |
Technical work, trade services, or goods (actividad empresarial / enajenación de bienes) |
| The client is paying for knowledge, analysis, and a personalized professional solution. | The client is paying for physical labor, repairs, installations, manufacturing, or tangible goods. |
| Key Criteria | Key Criteria |
|
- Result: Advice, a project, a calculation, code, or a professional opinion - Primary value: The provider's personal qualifications and expertise - The provider's personal expertise is essential. Materials and equipment are secondary - The contract or CFDI may use terms like asesoría, consultoría, desarrollo, or diseño |
- Result: Something installed, repaired, manufactured, or delivered - Primary value: The physical execution of the work or the tangible goods themselves - Materials, spare parts, and equipment often make up a substantial part of the transaction - The work can be performed by a tradesperson, technician, service shop, or commercial business - The contract or CFDI may use terms like reparación, instalación, mantenimiento, or venta |
| Examples | Examples |
|
- Legal services (abogacía) - Accounting services (contaduría) - Software development services (desarrollo de software) |
- Plumbing repair services (reparación de plomería) - Custom furniture manufacturing (fabricación de muebles) - Sale of goods and merchandise (venta de mercancías) |
Example in technology: self-employed professional
| 2/3 VAT withholding applies | 2/3 VAT withholding don't apply under this rule |
| Developing a custom CRM module and advising on system architecture. The client is purchasing an intellectual solution and a personal professional service. | Selling a router and performing its physical installation and configuration. The client is purchasing goods and technical execution. |
VAT-exempt activities: check the actual transaction
VAT exemptions in areas like medicine, education, and copyright apply only to specific qualifying services. They don't apply to everything a professional offers. Always review the actual transaction to decide whether 2/3 VAT withholding applies.
| 2/3 VAT withholding applies Non-exempt professional services (servicios personales independientes) |
2/3 VAT withholding don't apply under this rule Goods, repairs, or trade (actividad empresarial) |
|
- Non-exempt wellness or medical advisory services - Uncertified private training - Logos, slogans, or commercial design |
- Sale of medical supplies, cosmetics, or equipment - Sale of books, uniforms, or educational materials - Printing or selling physical promotional items |