Does your software provider in Mexico need REPSE?
By the Stonework team · Updated · 8 min read · Versión en español
Short answer
Your software provider needs REPSE, Mexico's registry of specialized service providers, only if it places its workers at your service to provide a specialized service. If it delivers a system built by its own staff, without placing anyone at your disposal, the registration does not apply (articles 12 to 15 of the Federal Labor Law, Ley Federal del Trabajo). If what you get is developers who join your team to carry out your core business, that is subcontracting of personnel and it is prohibited, with or without registration. The fine ranges from 2,000 to 50,000 UMA, $234,620 to $5,865,500 MXN in 2026, and it also applies to whoever benefits (article 1004 C).
What the Federal Labor Law has said since 2021
REPSE is the common name for the registry of specialized service providers kept by the Ministry of Labor (Secretaría del Trabajo y Previsión Social, STPS). Amounts in this guide are in Mexican pesos (MXN).
The 2021 reform of the Federal Labor Law (Ley Federal del Trabajo) set these rules, which remain in force in the text published by the Chamber of Deputies. The quotes are our translation of the Spanish text.
| Article | What it says, in short |
|---|---|
| 12 | Prohibits subcontracting of personnel: when someone "provides or makes available its own workers for the benefit of another" person |
| 13 | Allows subcontracting of specialized services that "are not part of the corporate purpose or the predominant economic activity" of the recipient, if the contractor is in the registry |
| 14 | The contract is in writing, with the object of the service and the approximate number of workers. If the contractor fails to meet its obligations to its workers, the company that hired it is jointly and severally liable |
| 15 | The Ministry of Labor grants the registration to providers that are up to date on taxes and social security. It is renewed every three years and the registry is public online |
| 1004 C | A fine of 2,000 to 50,000 UMA (a reference unit, explained below) for anyone who subcontracts personnel or provides specialized services without registration, and the same fine for whoever benefits |
The question that decides everything is not whether your provider builds software. It is whether it delivers a service to you or places people at your disposal.
When your provider does not need REPSE
When it delivers a result: a system with a scope, stages and dates, built by its staff, with its tools and under its own organization. No one on its team ends up at your service.
That is how the Ministry of Labor explained it when the reform took effect: if the service does not involve placing workers at the client's disposal (puesta a disposición), there is no need to register (IDConline, August 2021).
Around that time, the head of the Ministry's Decent Work Unit (Unidad de Trabajo Digno) said this happens when the contractor sends its staff to the client to fulfill a contract, and that receiving instructions from the client is not enough for it to exist (El Contribuyente).
Under that criterion, reviewing progress and approving deliveries is not enough to count as placing workers at your disposal.
When it does need it
When its developers are at your company's service to fulfill the contract: they work continuously inside your team or at your premises, on whatever you need as it comes up.
That is legal only if four conditions are met at the same time:
- It is a specialized service.
- It is not part of your corporate purpose or your predominant economic activity (article 13).
- The provider has a current registration in the registry (articles 13 and 15).
- There is a written contract stating the object and the approximate number of workers (article 14).
If one is missing, it is no longer a permitted specialized service.
The staff augmentation case
Staff augmentation means renting developers by the month to work inside your team, on your priorities. It is the case that raises the most questions.
- If your company makes software, because it is in your corporate purpose or it is your predominant activity, development cannot be a specialized service for you (article 13). It is subcontracting of personnel, prohibited by article 12. The provider's REPSE does not make it legal.
- If your company does not make software, it may fit as a specialized service, with a registered provider and a written contract (articles 13 to 15).
- If what the contract describes is people and not a service, such as "three developers at your disposal," that is what article 12 defines as subcontracting of personnel. With or without registration, it is prohibited.
The line depends on what is agreed and on how the work happens in practice. Before signing a contract like this, have a labor lawyer review it.
What you risk as the client
Fines are set in UMA (Unidad de Medida y Actualización), the reference unit Mexican law uses instead of fixed peso amounts. In 2026 one UMA is worth $117.31 MXN per day, according to INEGI, Mexico's national statistics institute.
| Situation | Consequence | Where it says so |
|---|---|---|
| You benefit from subcontracting that breaks articles 12 to 15 | Fine of 2,000 to 50,000 UMA: $234,620 to $5,865,500 MXN in 2026 | Federal Labor Law, article 1004 C |
| The contractor does not pay the workers it used for your service | You are jointly and severally liable for those obligations | Federal Labor Law, article 14 |
| You pay for subcontracting of personnel tied to your corporate purpose and your predominant activity | That payment is not deductible and its VAT (IVA, value added tax) cannot be credited | Federal Tax Code (Código Fiscal de la Federación), article 15 D |
| You pay for a specialized service without checking the registration or getting copies of the payroll receipts and proof of the contributions paid to IMSS (Mexican Social Security Institute) | You lose the deduction | Income Tax Law (Ley del Impuesto sobre la Renta), article 27, section V |
| You pay for a specialized service and do not get from the contractor the VAT documentation the law requires | You file an amended return that reduces the VAT you credited | Value Added Tax Law (Ley del Impuesto al Valor Agregado), article 5, section II |
Article 15 D of the Federal Tax Code does allow you to deduct specialized services and credit their VAT when the contractor is registered and the requirements of the income tax and VAT laws are met.
What corporate buyers ask for and how to answer it in a proposal
One example is the list BDO publishes for its supplier control module. It asks for a current registration certificate, payroll CFDIs (the electronic receipts Mexico uses for invoices and payroll) for the staff, and IMSS and INFONAVIT (workers' housing fund) contribution payments.
It also asks for income tax and VAT returns, and the filing receipts submitted every four months to IMSS and INFONAVIT.
Some procurement departments ask all their providers for this, even when the service is not subcontracting. If you are the provider and you deliver a system, your proposal should explain it like this:
- What is delivered: a system with scope, stages and dates, not hours of people's time.
- Who does it and how: your staff, with your tools and under your organization.
- What does not happen: no one on your team is placed at the client's disposal or does its predominant activity.
- What you provide instead: your tax compliance opinion (opinión de cumplimiento de obligaciones fiscales) and the contract with the scope in writing.
If the service does involve placing people at the client's service, the answer is not to explain. It is to register or change the way you work.
What changed in 2026
On June 9, 2026 the Ministry of Labor published an administrative order (acuerdo) to simplify procedures in the DOF (Diario Oficial de la Federación, Mexico's official gazette). It merges registration, renewal and cancellation into a single procedure.
For providers with up to ten workers, the response time drops from 20 to 5 business days and requirements are removed. The order does not change what can be subcontracted or the requirements in the law.
When you need none of this
If you are buying a system with deliverables and dates, do not ask your provider for REPSE "just in case." It does not need it. The registration does not make anything legal that is not, and you may shut out good providers.
What does protect you as a buyer is a contract that describes the result, including who owns the source code.
If you are still comparing providers, start with what custom software costs in Mexico.
Frequently asked questions
- How do I know if my provider has REPSE?
- The registry is public and available online (Federal Labor Law, article 15). Search for the provider's registered company name and check that the registration is current: it is renewed every three years.
- Did the 2026 order change what can be subcontracted?
- No. The June 9, 2026 order merges registration, renewal and cancellation into a single procedure and shortens the response time for providers with up to ten workers, but it does not touch articles 12 to 15 of the Federal Labor Law.
- If the provider has REPSE, can my software company rent its developers?
- No. If software is your corporate purpose or your predominant activity, it cannot be a specialized service for you (article 13), and placing staff at your disposal is prohibited subcontracting (article 12).
- What happens if I hire a provider without knowing it was not registered?
- The fine of 2,000 to 50,000 UMA also applies to whoever benefits (Federal Labor Law, article 1004 C), and you lose the deduction if you did not check the registration when you paid (Income Tax Law, article 27, section V).
Sources
Most sources are Mexican laws and providers, published in Spanish.
- Ley Federal del Trabajo, texto vigente (última reforma DOF 14 de mayo de 2026). Cámara de Diputados.
- Decreto de reforma en materia de subcontratación laboral (DOF 23 de abril de 2021). Diario Oficial de la Federación, copia publicada por el IMSS.
- Ley Federal del Trabajo, artículo 1004 C (copia del texto vigente). mLey.mx.
- Código Fiscal de la Federación, artículo 15 D (copia del texto vigente). mLey.mx.
- Ley del Impuesto sobre la Renta, artículo 27 (copia del texto vigente). mLey.mx.
- Ley del Impuesto al Valor Agregado, texto vigente. Cámara de Diputados.
- Acuerdo por el que se establecen acciones de simplificación para trámites que se realizan ante la Secretaría del Trabajo y Previsión Social. Diario Oficial de la Federación, 9 de junio de 2026.
- Aspectos a considerar para registrarse en el REPSE. IDConline, 9 de agosto de 2021.
- La Secretaría del Trabajo aclara qué es poner a disposición a un trabajador. El Contribuyente, 23 de agosto de 2021.
- Módulo de control de proveedores con REPSE. BDO México.
- Unidad de Medida y Actualización 2026, comunicado de prensa 1/26. INEGI, 8 de enero de 2026.
Notice. This guide explains the law in general terms, based on the current texts it cites. It is not legal or tax advice and does not replace a lawyer or an accountant who knows your case.
How we make these guides. Every figure has its source and its date; what has no source does not go in, and illustrative examples are labeled as such. We review them before publishing, every three months and whenever something they cite changes. These English versions are translations of our Spanish guides.
When this guide is reviewed. When the Federal Labor Law is amended on subcontracting, when the Ministry of Labor publishes new criteria on placing workers at a client's disposal, or when INEGI publishes the 2027 UMA.
Who writes it. The Stonework team, a software studio in Mexico City that builds and runs EventQR, CuentaFácil and Conto, and builds custom software for companies.