Stock Plans in Mexico

Summary Table
(Updated as of December 2023)

On the surface, Mexico is one of the easier countries in which to offer stock awards to employees. There are generally no foreign exchange or securities laws concerns for the issuer. Care should be taken with the labor law issues; the documentation should clearly state that the awards are being granted by a foreign parent company and not the local employer, if that is the case. Each participant should sign a side agreement acknowledging that the issuer is the foreign parent company. Data privacy considerations can usually be addressed using a country-specific addendum.

Payroll tax compliance is only required where the local employer makes the grant or bears the cost of the award. Accordingly, a recharge of the stock award costs to the local employer creates not only the administrative burden of payroll compliance but also labor law exposure. Where payroll reporting is not required, the employee should report the income on the annual tax return and pay the taxes due accordingly.

Overview of Stock Plans in Mexico