TAX and LABOR. Amendment regarding Teleworking (Home Office) and its tax consequences January 11, 2021
On January 11th, 2021 was published in the Official Gazette of the Federation (OGF), the Decree by which article 311 is amended and chapter XII Bis is added of the Federal Labor Law (LFT), on Teleworking (Home Office), regulating a new modality for a person of working at distance in a habitual and subordinated manner, either in the domicile of the employee or in any location the employee chooses, different from the establishments, offices and/or branch offices provided by the employer and in such way that there is no direct or immediate management and supervision of said employer.
In this regard, whenever an employment relationship is developed in more than the 40% of the time in the employee’s domicile or location selected, such relationship will be subject to the provisions applicable to Teleworking. Such Decree will enter into force the following day of its publication.
Teleworking is defined as a form of subordinated employment organization consisting in the performance of remunerated activities in a location different from the employer’s establishments, that does not require the physical presence of the employee in the work center, since the employee is able to use the communication and information technologies to maintain contact and be in control under the employer’s instructions. Conversely, those tasks performed in an occasional or sporadic manner are not considered Teleworking.
The conditions of this modality must be laid down in written form and when applicable, in the corresponding Collective Agreement, with the possibility to modify such modality in a volunteer basis and in written form to the on-site employment modality and vice versa (Reversibility Right).
Under this new modality, the employers will be entitled to the following obligations: (i) provide, install and undertake the maintenance of the working equipment that result necessary to the employees (e.g. computer equipment); (ii) bear the costs that result from Teleworking (e.g. use of internet and the proportional amount of electricity; (iii) keep a registry of the working equipment provided to the employees; and, (iv) respect the right of the employees to “disengage” (log-off) from work when the working hours conclude.
Whereas this modality of Teleworking compels employers to various obligations in which a series of unusual expenses shall be made, we estimate that such expenses are strictly and absolutely essential to the employer’s activities (i.e. taxpayers), and hence deductible for income tax purposes, as long as the provisions set forth in article 27 of the Income Tax Law are fulfilled.
Therefore, we consider that amendments to the Income Tax Law will not necessary; however, we anticipate that the tax authorities would issue general rules thereon.
In addition of being necessary the review, analysis and, where appropriate, modification of the current employment relationships, all expenses and costs incurred by employers (i.e. companies) under the Teleworking modality, must be duly documented in order to demonstrate the indispensability, materiality, and origin for its subsequent deduction.
If you have any questions regarding the foregoing, please do not hesitate to contact us.
Mexico City, January 11, 2021