Countries › Mexico › Guide › 15. Exiting › Returning capital from Mexico on exit: liquidation payouts, capital reductions, CUCA, CUFIN and the 10 percent withholding

Returning capital from Mexico on exit: liquidation payouts, capital reductions, CUCA, CUFIN and the 10 percent withholding

Argentina. For full detail on Argentina, go to The Argentine Thread.

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

Whether money leaves through a capital reduction or a liquidation payout, Mexican tax law treats it the same way: the restated contributed capital (CUCA) per share comes back tax free and anything above it is distributed profit. Distributed profit covered by the net tax profit account (CUFIN) bears no further company tax; any part not covered bears 30 percent on the amount grossed up by 1.4286, paid by the company, and a 10 percent withholding applies to profits distributed to foreign shareholders. In company law a capital reduction that returns money must be published and can be blocked by creditors in court until they are paid or secured.

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

Tax free part of a capital return	Contributed capital account (CUCA) balance per share LISR art. 78, as of 2026-10-26 · in force
Gross up factor for tax on profits outside CUFIN	1.4286 factorLISR arts. 10 and 78, as of 2026-10-26 · in force
Company tax on distributed profit outside CUFIN	30 % of profit x 1.4286 (about 42.86 % of the profit) %LISR arts. 9, 10 and 78, as of 2026-10-26 · in force
Withholding on dividends to foreign residents	10 %LISR art. 164, section I, as of 2026-10-26 · in force
Creditor opposition window after the last publication of a capital reduction	5 daysLGSM art. 9, as of 2026-10-26 · in force

The rule

1. A capital reduction that returns money to shareholders (or releases unpaid calls) is published in the Ministry of Economy electronic system. Creditors may oppose it in court, alone or together, from the date of the decision until five days after the last publication; while the opposition lasts the reduction is suspended until the company pays or secures the opposing creditors to the judge's satisfaction or the opposition is dismissed by final judgment. For an S.A. a capital reduction is an extraordinary meeting matter.
Cost to do it: No federal fee for the PSM publication; notary fees for the meeting are private.
Example: An S.A. resolves to return MXN 10,000,000 of capital on 1 June; the notice is published on 3 June; creditors can oppose until 8 June. A bank owed MXN 2,000,000 opposes and the return is suspended until the bank is paid or secured. / Return of about USD 535,797 blocked by a claim of about USD 107,159.Ley General de Sociedades Mercantiles (LGSM), DOF 4 August 1934 (Chamber of Deputies consolidated text, last reform DOF 20 October 2023), Arts. 9 and 182, section III, 1934-08-04 official text · verified 2026-10-26 · changed: The DOF 13 June 2014 reform replaced newspaper publication with publication in the Ministry of Economy electronic system.

2. On a capital reduction the company subtracts from the amount paid per share the CUCA balance per share on the payment date; the excess times the number of shares redeemed is distributed profit. That profit may come from the CUFIN up to the CUFIN balance attributable to those shares. To the extent it does not, the company pays tax at 30 percent on the profit grossed up by the factor 1.4286. A second test adds as distributed profit the excess of accounting equity over CUCA, less the profit already found, with the same CUFIN and gross up treatment. The same rules apply to liquidations and to share buybacks charged to capital.
Cost to do it: Company level tax of 30 percent on the grossed up non CUFIN profit, equal to about 42.86 percent of that profit.
Example: A company in liquidation pays its foreign parent MXN 50,000,000; CUCA is MXN 30,000,000 and CUFIN MXN 15,000,000. Distributed profit is MXN 20,000,000; MXN 15,000,000 comes from CUFIN with no company tax, and the MXN 5,000,000 balance bears MXN 5,000,000 x 1.4286 x 30 percent = MXN 2,142,900. / Payout of about USD 2,678,983: capital USD 1,607,390, profit USD 1,071,593, company level tax USD 114,816.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Art. 78, 2013-12-11 official text · verified 2026-10-26

3. A Mexican company that distributes dividends or profits outside the CUFIN pays tax on them at 30 percent after grossing up by 1.4286, as a final payment by the 17th of the following month, and may credit it against its own income tax of that year and the next two years. Distributions from the CUFIN bear no such tax.
Cost to do it: As above; in a final liquidation there may be no later income tax to credit it against, so it is usually a pure cost.
Example: In the example, the MXN 2,142,900 cannot be credited if the liquidation year shows no tax payable. / About USD 114,816 of potentially unrecoverable tax.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Art. 10, 2013-12-11 official text · verified 2026-10-26

4. Dividends and profits distributed by a Mexican resident have a Mexican source. Section I of art. 164, which also governs the calculation of profit distributed on capital reductions, requires the paying company to withhold 10 percent on the dividends or profits it distributes to foreign residents and to give them a statement of the amount and tax; the tax is final. A tax treaty may reduce it, subject to the treaty's conditions.
Cost to do it: 10 percent of the distributed profit, unless a treaty lowers it.
Example: On the MXN 20,000,000 of distributed profit the company withholds MXN 2,000,000, leaving the parent MXN 48,000,000 before any home country tax. / Withholding of about USD 107,159; net to the parent about USD 2,571,824.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Art. 164, section I, 2013-12-11 official text · verified 2026-10-26

5. In a liquidation the liquidator pays the remaining equity to shareholders only after creditors are paid or reserved and after the final balance is approved, against delivery of the share certificates; amounts unclaimed for two months are deposited with a bank.
Cost to do it: Bank deposit cost only.
Example: The parent's MXN payout is wired once the approving meeting is held and the certificates are cancelled. / Not a monetary rule.Ley General de Sociedades Mercantiles (LGSM), DOF 4 August 1934 (Chamber of Deputies consolidated text, last reform DOF 20 October 2023), Arts. 243, 247, 248 and 249, 1934-08-04 official text · verified 2026-10-26

Item	MXN	USD
Payout	50,000,000	2,678,983
Less CUCA (tax free)	30,000,000	1,607,390
Distributed profit	20,000,000	1,071,593
of which from CUFIN	15,000,000	803,695
of which outside CUFIN	5,000,000	267,898
Company tax on non CUFIN part (x 1.4286 x 30%)	2,142,900.00	114,816
10% withholding on distributed profit	2,000,000	107,159
Net to parent after withholding	48,000,000	2,571,824

Liquidation payout of MXN 50,000,000 to a foreign parent (LISR arts. 10, 78 and 164; USD at 18.6638)

Worked example

Same payout with a CUFIN of MXN 20,000,000 or more: no company level tax, only the MXN 2,000,000 withholding (about USD 107,159), unless a treaty reduces it.
Same payout with no CUFIN at all: company tax of MXN 8,571,600 (about USD 459,263) plus the withholding.

Step by step

1. Reconstruct the CUCA and CUFIN from incorporation, restated for inflation, with supporting deeds and bank statements.
2. Model the payout per share: CUCA first, then CUFIN, then the taxable excess.
3. Consider paying a CUFIN dividend before liquidation if accounts allow, then returning capital.
4. For a capital reduction, publish the resolution and wait five days after the last publication for creditor oppositions.
5. Withhold 10 percent (or the treaty rate with residence evidence), pay by the deadline and issue the withholding statement.
6. Keep the capital and dividend records for the life of the company plus the retention period (CFF art. 30).

Common traps

Calling the whole payout a return of capital: only CUCA is tax free (LISR art. 78).
Losing CUCA support: capital increases without deeds and bank statements are hard to prove (CFF art. 30 requires keeping them).
Forgetting the second equity test of art. 78, section II, when accounting equity exceeds CUCA.
Paying before the creditor opposition window closes on a capital reduction (LGSM art. 9).
Assuming the corporate tax on non CUFIN profit can be credited later: in a final liquidation there may be no future tax to credit it against (LISR art. 10).

Sources

← Taxes during a Mexican liquidation: the early year end, monthly payments, January returns, the final return and exit by change of residenceSelling the shares of a Mexican company as a foreign seller: 25 percent of the price or 35 percent of the gain, buyer withholding, the accountant's report and treaty relief →