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Exiting through an asset sale in Mexico: income tax on gains, VAT on the assets, buyer liability for taxes and employer substitution

Last verified: 2026-10-26 · Status: Stable

Instead of selling shares, a Mexican company can sell its business or assets and then distribute or liquidate; gains on fixed assets and land are taxable income at 30 percent and the undeducted balance of assets sold is deducted that year. VAT at 16 percent applies to assets sold by a company, except land, housing and shares; the buyer of a business becomes jointly liable for its past taxes up to the value of the business. Employees pass with the business: the seller remains jointly liable for labor and IMSS obligations for six months after notice.

USD conversions use MXN 18.6638 per US dollar, the US Federal Reserve H.10 noon buying rate in New York for 23 October 2026 (FRED series DEXMXUS), the latest observation available when this page was verified. Mexican tax law uses the Banxico FIX for foreign currency amounts, which differs slightly. Conversions are for orientation only.

Key facts

VAT standard rate	16 %LIVA art. 1, as of 2026-10-26 · in force
Corporate income tax rate	30 %LISR art. 9, as of 2026-10-26 · in force
Former employer joint liability after substitution notice	6 monthsLFT art. 41, as of 2026-10-26 · in force
Former employer IMSS joint liability after notice	6 monthsLSS art. 290, as of 2026-10-26 · in force
Cap on buyer's liability for seller's taxes	Value of the business acquired CFF art. 26, section IV, as of 2026-10-26 · in force

The rule

1. Gains on the sale of fixed assets, land, securities and shares are accumulable income of the selling company, taxed at the 30 percent corporate rate. When assets are sold, the part of their cost not yet depreciated is deducted in that year.
Cost to do it: 30 percent of the gain at company level, before any later dividend or liquidation tax.
Example: A plant with a remaining tax basis of MXN 35,000,000 is sold for MXN 60,000,000: gain MXN 25,000,000, tax MXN 7,500,000. / Gain about USD 1,339,491, tax about USD 401,847.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Arts. 9, 18, section IV, and 31, 2013-12-11 official text · verified 2026-10-26

2. Companies charge VAT at 16 percent on the sale of goods in Mexico. Exempt are land, buildings used as housing, used movable goods (except when sold by companies) and partnership interests, receivables and credit instruments. So business assets sold by a company bear VAT except the land and housing portion.
Cost to do it: 16 percent VAT on taxable assets, usually creditable for a VAT registered buyer.
Example: Plant sold for MXN 60,000,000: land MXN 20,000,000 exempt, buildings and machinery MXN 40,000,000 taxed, VAT MXN 6,400,000. / VAT about USD 342,910 on about USD 2,143,186 of taxable assets.Ley del Impuesto al Valor Agregado (LIVA), DOF 29 December 1978 (Chamber of Deputies consolidated text, last reform DOF 12 November 2021), Arts. 1 and 9, sections I, II, IV and VII, 1978-12-29 official text · verified 2026-10-26

3. A buyer of a business (negociación) is jointly and severally liable for taxes caused by the activities of the business while it belonged to the seller, up to the value of the business. Acquisition of a business is presumed, unless disproved, where SAT finds links between transferor and transferee such as transfers of assets or liabilities, common directors or controlling shareholders, legal representatives, suppliers, address or premises, IMSS registered workers, trademarks or patents, or fixed assets.
Cost to do it: Exposure up to the value of the business acquired; liability covers surcharges and restatement but not fines.
Example: A buyer pays MXN 60,000,000 for a business; SAT later assesses MXN 5,000,000 of the seller's pre sale taxes. The buyer can be pursued for it, within the MXN 60,000,000 cap. / Exposure about USD 267,898, capped at about USD 3,214,779.Código Fiscal de la Federación (CFF), DOF 31 December 1981 (Chamber of Deputies consolidated text, last reform DOF 9 April 2026), Art. 26, section IV, 1981-12-31 official text · verified 2026-10-26 · changed: The DOF 12 November 2021 reform added the presumptions of business acquisition (items a to i).

4. A change of employer does not affect employment relationships. The former employer is jointly liable with the new one for labor obligations arising before the substitution for six months from the notice to the union or the workers; for the substitution to take effect, the business assets must be transferred to the new employer.
Cost to do it: Seniority and benefits carry over; no severance is owed by reason of the transfer itself.
Example: Workers with ten years of service transfer with the plant; their seniority continues with the buyer. / Not a monetary rule.Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), Art. 41, 1970-04-01 official text · verified 2026-10-26

5. For IMSS purposes there is employer substitution when essential business assets are transferred with the intention of continuing the business (presumed), or when the majority shareholders of both employers are the same and the line of business is the same. The former employer remains jointly liable for IMSS obligations arising before the written notice to IMSS for six months; IMSS must notify the new employer of the debt within that period.
Cost to do it: Exposure for unpaid IMSS contributions of the seller.
Example: The buyer gives IMSS written notice at closing so that the six month period starts running. / Not a monetary rule.Ley del Seguro Social (LSS), DOF 21 December 1995 (Chamber of Deputies consolidated text, last reform DOF 15 January 2026), Art. 290, 1995-12-21 official text · verified 2026-10-26

Point	Share sale	Asset sale
Tax on the seller	25% of price or 35% of gain (foreign seller)	30% of the company's gain, then tax on distribution
VAT	Exempt	16% on taxable assets; land exempt
Buyer's tax exposure	Inherits the company with all history	Joint liability up to business value
Employees	Unchanged employer	Employer substitution, six months joint liability

Share sale versus asset sale (LISR, LIVA, CFF, LFT, LSS); illustrative plant of MXN 60,000,000

Worked example

Asset sale of MXN 60,000,000 with a tax basis of MXN 35,000,000: the company pays 30 percent on the MXN 25,000,000 gain (MXN 7,500,000, about USD 401,847), charges VAT of MXN 6,400,000 on the non land portion, then distributes the cash under the CUCA and CUFIN rules.
Compare with selling the shares directly, where a foreign seller pays 25 percent of the price or 35 percent of its gain.

Step by step

1. Compare after tax proceeds of a share sale and an asset sale plus liquidation.
2. Allocate the price between land, buildings, equipment and intangibles; VAT and gains depend on it.
3. Buyer: run tax due diligence and seek indemnities, given the joint liability up to the business value.
4. Give written notice of employer substitution to the union or workers and to IMSS.
5. Issue electronic invoices with VAT; then liquidate or distribute the proceeds.

Common traps

Ignoring VAT on the asset sale price: it is due on all taxable assets sold by a company (LIVA arts. 1 and 9).
Buyers assuming an asset deal leaves the seller's tax past behind: CFF art. 26, section IV can reach them.
Not giving the substitution notice: the six month periods only start from notice (LFT art. 41; LSS art. 290).

Sources

← Group restructurings before an exit in Mexico: share transfers at tax cost and SAT authorizations to defer tax on intragroup salesClosing a Mexican operation and the workforce: statutory closure causes, labor court approval, three months plus seniority premium and the priority of workers' claims →