Intercompany Loan Agreement Mexico

An Intercompany Loan Agreement Mexico (Acuerdo de Préstamo entre Empresas Relacionadas) is a formal legal contract documenting a loan transaction between two or more related companies (partes relacionadas) within the same corporate group, governed primarily by the Ley del Impuesto sobre la Renta (LISR) Articles 76 fraction XII and 90, and the Código Fiscal de la Federación (CFF) Article 86-A, confirming that intercompany financing is structured at arm's length prices (precios de libre competencia) and documented to withstand SAT (Servicio de Administración Tributaria) transfer pricing audits.

Article 76 fraction XII of the Ley del Impuesto sobre la Renta requires Mexican personas morales engaged in transactions with partes relacionadas — whether domestic (partes relacionadas nacionales) or foreign (partes relacionadas extranjeras) — to maintain contemporaneous documentation (documentación comprobatoria) demonstrating that intercompany transactions, including loans, are conducted at prices and interest rates that would prevail between independent parties in comparable transactions under comparable circumstances (principio de plena competencia or arm's length principle). This obligation aligns Mexico's transfer pricing framework with the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, which Mexico has adopted as an OECD member state.

LISR Article 90 extends the arm's length obligation to individuals (personas físicas) who are part of related-party groups and engage in intercompany financing transactions, requiring them to charge interest at market rates and document compliance. The Código Fiscal de la Federación Article 86-A requires that taxpayers engaged in financing transactions with foreign related parties (partes relacionadas extranjeras) disclose these transactions in the informativa de operaciones con partes relacionadas (Forma Fiscal 76) filed annually with the SAT.

The Banco de México (Banxico) publishes the Tasa de Interés Interbancaria de Equilibrio (TIIE) — the primary Mexican interbank reference rate — which serves as the benchmark for establishing arm's length interest rates on intercompany loans denominated in Mexican pesos (MXN). For intercompany loans denominated in US dollars (USD), the Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York serves as the primary USD reference rate following the replacement of LIBOR in 2023. The SAT expects intercompany loan interest rates to be benchmarked against these market reference rates, adjusted for the credit risk profile of the borrower entity.

The Código Civil Federal (CCF) Articles 2384 through 2397 govern the mutuo civil (civil loan), while the Código de Comercio Articles 358 through 364 govern the mutuo mercantil (commercial loan). Intercompany loans between Mexican companies are typically structured as mutuo mercantil since both parties are comerciantes under the Código de Comercio. The interest on a mutuo mercantil is taxed as ingreso acumulable under LISR Title II for the lending company and deductible as gasto estrictamente indispensable for the borrowing company under LISR Article 25, provided the loan meets the arm's length requirements of LISR Article 76.

Thin capitalization rules under LISR Article 28 fraction XXVII limit the deductibility of interest paid by a Mexican persona moral to its foreign related parties when the debt-to-equity ratio exceeds 3:1. Interest on excess debt above this ratio is non-deductible for ISR purposes. These thin capitalization rules do not apply to financial system entities (sistema financiero) or to interest on debt used to finance public infrastructure projects under LISR Article 28 fraction XXVII exceptions.

An Intercompany Loan Agreement Mexico is required whenever a company within a Mexican corporate group lends money to or borrows money from another company in the same group — whether the counterparty is a Mexican subsidiary, a foreign parent corporation, or a sister company — and the transaction must comply with LISR Article 76 fraction XII transfer pricing documentation requirements.

The agreement is essential when a Mexican holding company (empresa controladora) lends working capital (capital de trabajo) to a Mexican subsidiary (empresa subsidiaria) to fund operations, payroll, or capital expenditures. Without a formal written intercompany loan agreement at arm's length terms, the SAT can reclassify the intercompany transfer as a dividend distribution (dividendo presunto) or an aportación de capital, triggering ISR and potential ISR withholding consequences under LISR Article 140.

The document is required when a Mexican empresa takes a loan from its foreign parent company (empresa matriz extranjera) — a common structure where the parent funds the Mexican subsidiary's expansion or acquisitions. In this case, the agreement must also comply with CFF Article 86-A disclosure requirements and the intercompany interest payments to the foreign parent are subject to ISR withholding under LISR Article 166 at rates between 4.9% and 35% depending on the lender's country of residence and applicable tax treaty (convenio para evitar la doble imposición).

The agreement is needed for cash pooling arrangements (concentración de tesorería) where a treasury centre (centro de tesorería) within the corporate group manages liquidity by lending and borrowing among group members on a daily or weekly basis. These arrangements require master intercompany loan agreements that comply with LISR Article 76 and Banco de México foreign exchange regulations.

Under CFF Article 86-A, all intercompany financing transactions with foreign related parties must be reported annually in the Forma Fiscal 76 (Operaciones con Partes Relacionadas), including the loan amount, interest rate, currency, and term. Failure to file or filing with inaccurate data exposes the Mexican taxpayer to penalties under CFF Article 86-A and transfer pricing adjustments under LISR Article 90.

Manufacturers operating in Mexico under the maquiladora or IMMEX (Industria Manufacturera, Maquiladora y de Servicios de Exportación) regime administered by the Secretaría de Economía also frequently require intercompany financing agreements when the foreign parent advances inventory, tooling costs, or production financing to the Mexican IMMEX entity. Under the IMMEX decree and LISR transfer pricing rules, these advances must be documented at arm's length terms to avoid SAT reclassification as taxable income of the Mexican entity.

A compliant Intercompany Loan Agreement Mexico under LISR Articles 76 and 90 and CFF Article 86-A must contain the following essential components:

Party Identification: Full legal names, RFC numbers, and registered domicilios of the lending company (empresa prestamista) and borrowing company (empresa prestataria), including their corporate relationship — e.g., empresa controladora / subsidiaria, or empresas hermanas. The relationship must be established to confirm the partes relacionadas status under LISR Article 90.

Loan Amount and Currency: The principal amount (capital prestado) in MXN or USD, stated in numerals and words. If in foreign currency, the applicable exchange rate (tipo de cambio) for accounting purposes under the Código Fiscal de la Federación Article 20 and Banco de México published rates must be referenced.

Arm's Length Interest Rate: The agreed interest rate (tasa de interés pactada), benchmarked against TIIE (for MXN loans) or SOFR (for USD loans) plus a credit spread reflecting the borrower's credit risk profile. The LISR Article 76 fraction XII documentation must demonstrate that this rate equals the rate that unrelated parties would agree under comparable circumstances — typically supported by a transfer pricing study (estudio de precios de transferencia).

Loan Term and Repayment Schedule: The loan term (plazo del préstamo), amortization schedule (tabla de amortización), and maturity date (fecha de vencimiento). Short-term working capital loans are typically 90 to 365 days; medium-term loans run 1 to 5 years. The repayment schedule must be commercially reasonable for arm's length compliance.

Interest Payment Dates: The dates on which interest accrues (devengo de intereses) and is payable (pago de intereses), typically monthly or quarterly. LISR Article 9 requires that accrued interest be recognized for ISR purposes in the fiscal year it accrues, regardless of when cash payment is made.

Withholding Tax Provisions: If the lender is a foreign related party (parte relacionada extranjera), the agreement must address ISR withholding on interest payments under LISR Article 166, including the applicable withholding rate (4.9% for qualifying lenders in treaty countries, up to 35% for non-treaty jurisdictions), and the obligation to file retenciones with the SAT.

Thin Capitalization Compliance: A representation that the loan does not cause the borrower's debt-to-equity ratio to exceed the 3:1 limit under LISR Article 28 fraction XXVII for loans from foreign related parties, or an acknowledgment that interest on excess debt will be treated as non-deductible.

Transfer Pricing Documentation: A reference to the contemporaneous transfer pricing documentation (documentación de precios de transferencia) maintained under LISR Article 76 fraction XII, including the functional analysis, comparables analysis, and selected transfer pricing method (comparable uncontrolled price method — método de precio comparable no controlado — is most common for intercompany loans).

Default and Acceleration: Events of default (causas de vencimiento anticipado) including failure to pay interest, insolvency of the borrower, and material adverse change — allowing the lender to accelerate and demand immediate repayment of principal and accrued interest.

Governing Law and Dispute Resolution: Submission to Mexican law and to the jurisdiction of the tribunales competentes in the city where the borrower is domiciled, consistent with Código de Comercio Article 1050.

forms-legal.com provides this Intercompany Loan Agreement Mexico template as a compliance reference. Intercompany loans between related parties with significant amounts — above $13,000,000 MXN equivalent — may trigger country-by-country reporting (CbCR) obligations under LISR Article 76-A and OECD BEPS Action 13. These agreements should always be reviewed by a Licenciado en Derecho fiscal and a transfer pricing specialist before execution.