Contractual penalties are not deductible if the excuse clause went unused
Income tax. Deduction of contractual penalties paid is not available under article 32, section VI, of the relevant law when a contractual mechanism to avoid payment exists and is not exercised (legislation in force in 2013).
Official heading (Spanish): IMPUESTO SOBRE LA RENTA. NO PROCEDE SU DEDUCCIÓN POR EL PAGO DE PENAS CONVENCIONALES EN TÉRMINOS DEL ARTÍCULO 32, FRACCIÓN VI, DE LA LEY RELATIVA, CUANDO EXISTE UN MECANISMO CONTRACTUAL PARA EVITAR SU PAGO Y NO SE EJERCE (LEGISLACIÓN VIGENTE EN 2013).
The ruling
SAT disallowed the deduction of a contractual penalty paid to CFE for a shortfall in liquefied natural gas supply. The contract allowed the company to claim force majeure, but it did not do so. The Collegiate Circuit Court held that, under article 32, section VI, of the Income Tax Law in force in 2013, failing to use that mechanism makes the penalty attributable to the taxpayer and non-deductible.
Our take
The message for legal and tax teams is the same: whether a penalty is deductible is decided while managing the contract, not when preparing the return. If the contract offers a way to invoke force majeure and it goes unused, the tax authority can argue the payment was voluntary. The court also requires proof that the external event was the efficient cause of the breach and that the company acted diligently; a general alert is not enough. The ruling concerns 2013 law; its attributability logic may cautiously inform the review of current cases.
What to do
- Identify force majeure clauses and their formal notice deadlines in key contracts.
- Formally invoke the contractual excuse whenever an external event occurs, even if a settlement follows.
- Document the cause of the breach and the diligence shown before deducting any penalty.
Details
- Court
- Collegiate Circuit Court
- Type
- Isolated precedent
- Identifier
- I.11o.A.9 A (12a.)
- Digital registry
- 2032562
- Published
- August 28, 2026
- Area
- Tax
- View official source ↗
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Prepared by Artegia for information only; not legal advice. Headings in English are unofficial translations. The official text is the one published in the Semanario Judicial de la Federación or the TFJA journal.