How to sell a business in Quebec: the rules that differ
The stages of a sale are the same across Canada, and Quebec adds its own rules, from a second tax return to the language of employment contracts. Each rule is here with what to prepare, gathered in a table at the end.
To sell a business in Quebec you follow the national stages, then meet a set of provincial rules. The capital gains exemption is claimed again on the Quebec return. An asset sale can set GST and QST aside by joint election on FP-2044-V. Employees keep their service with the buyer, and a hypothec on real estate needs a notary.
What changes when you sell a business in Quebec
To sell a business in Quebec, an owner goes through the same stages as anywhere else in Canada, from the first valuation to closing day. How to sell a business in Canada walks through them in order. Quebec then adds a set of provincial rules that a buyer’s lawyer raises in the first weeks, and this page collects them.
The price is set the same way. Buyers value a Quebec company on adjusted earnings, the profit with your own salary and personal costs added back, and the add backs buyers accept are the same in Montreal as in Calgary. The ranges by industry our valuation runs on apply across the country.
Two tax returns, and a Quebec election for family transfers
A Quebec resident files a provincial return with Revenu Québec beside the federal one, so each tax choice on a sale is made twice. The lifetime capital gains exemption, $1,275,000 in 2026, is claimed again on line 292 of the Quebec return with form TP-726.7-V attached.
A sale to your child’s company follows the federal intergenerational transfer rules, set out in selling a business to your children. Quebec had an older relief of its own for family transfers. In Information Bulletin 2023-4, the Ministère des Finances announced that Quebec would take on the federal conditions in full for dispositions after December 31, 2023, and retire its own version.
The joint election between parent and child then has a Quebec twin. It goes to Revenu Québec on a prescribed form by the parent’s filing due date for the year of the sale, together with copies of what was sent to the CRA. The bulletin ties the Quebec election to a valid federal one, so the federal filing comes first.
QST on an asset sale and the joint election
In an asset sale the buyer purchases the company’s assets, goodwill included, rather than your shares. Share sale or asset sale compares the two for tax.
Quebec charges its own sales tax, the QST, at 9.975 percent beside the 5 percent GST. On the taxable assets of a business that is a combined 14.975 percent. Revenu Québec lets the seller and the buyer elect jointly to set both taxes aside on the sale of a business, on form FP-2044-V, when these conditions hold:
- You established or carried on the business yourself, or acquired it after someone else did.
- The buyer is a registrant, or you and the buyer are both non-registrants.
- The buyer acquires 90 percent or more of the property reasonably needed to carry on the business, and can run the same kind of business with it.
A registered buyer sends the form to Revenu Québec. Services supplied to the buyer stay taxable after the election, and so does real property sold to a non-registrant. The federal form for the rest of Canada is covered in the tax implications of selling a business.
Employees keep their service with the new owner
Quebec law carries the employment relationship across a sale. Under section 97 of the Act respecting labour standards, the labour standards continue to apply when the undertaking is sold in whole or in part. Article 2097 of the Civil Code of Québec adds that the contract of employment binds the employer’s successor.
The buyer therefore steps into your place as employer, in an asset sale as well as a share sale. Years of uninterrupted service carry over, and they set each person’s vacation and the notice under section 82, which runs from one week to eight weeks.
Section 96 makes the former and the new employer solidarily liable for any claim under the Act still unpaid at the sale, meaning either one can be made to pay all of it. Expect the buyer to ask for a holdback or an indemnity for wages and vacation pay owing, which holdbacks, escrow and warranties explains. The CNESST administers these standards, and what happens to your employees covers the national picture.
Civil law, notaries and French
Quebec contracts fall under the Civil Code, a civil law system, while the other provinces work under common law. A Quebec lawyer drafts the purchase agreement, and in some transactions the Code gives a notary a set role.
Article 2693 requires an immovable hypothec, the Quebec term for a mortgage on real estate, to be granted by notarial act en minute, a deed whose original the notary keeps. A vendor note secured on the company’s building therefore goes through a notary. Security on movable property such as equipment or shares is granted in writing under article 2696 and published by registration in the register of personal and movable real rights. Vendor financing explains why that security matters when you lend the buyer part of the price.
The Charter of the French language reaches the documents a buyer reviews. Section 41 has written employment contracts drawn up in French, with another language allowed at the express wish of the parties. Section 139 requires an enterprise with 25 or more employees for six months to register with the Office québécois de la langue française.
A buyer will ask for those contracts and the registration certificate during due diligence. Section 55 governs contracts drafted in advance by one party, and Quebec counsel confirms which language rules reach your own purchase agreement.
What differs in Quebec, in one table
| Topic | The Quebec rule | What to prepare |
|---|---|---|
| Income tax | A second return goes to Revenu Québec, and the exemption is claimed on line 292 | Have your accountant model the gain on both returns |
| Sale to a child’s company | The federal conditions apply since 2024, with a separate Quebec election | File the Quebec form by the parent’s filing due date |
| Sales tax in an asset sale | GST at 5 percent and QST at 9.975 percent, with a joint election on FP-2044-V | Confirm the buyer takes 90 percent or more of the business property |
| Employees | Service and labour standards continue with the new employer | List the wages and vacation pay owing at closing |
| Security for a vendor note | A hypothec on real estate requires a notarial act en minute | Bring in a notary early if the building secures the note |
| Language | Written employment contracts in French by default, and OQLF registration from 25 employees | Gather the French contracts and the registration certificate |
Each row sits on top of the national rules, which stay the same for a Quebec seller. Put the right column into the due diligence file before a buyer asks for it.
Comparing provinces, and where to start
Owners in other provinces meet a different list. Selling a business in Ontario has its own guide. The West is covered in selling in British Columbia and selling in Alberta.
The price comes first in every province. The Quick AI valuation gives an early range for a Quebec company in a few minutes, before you give anyone your name.
The provincial tax and regulatory requirements, regions and buyers are set out on selling a business in Quebec.
Questions owners ask
- Do I pay QST when I sell the assets of my Quebec business?
- QST at 9.975 percent and GST at 5 percent apply to the taxable assets, and you and the buyer can set both aside by joint election on Revenu Québec form FP-2044-V. The election is available when the buyer takes 90 percent or more of the property needed to run the business and is a registrant, or when both of you are non-registrants.
- What happens to my employees when I sell a business in Quebec?
- They keep their service with the buyer. Section 97 of the Act respecting labour standards continues the standards through a sale, and article 2097 of the Civil Code binds the successor employer to the contract. Under section 96 the old and new employers are both liable for claims still unpaid at the sale.
- Can I use the capital gains exemption when I sell my Quebec company?
- Yes, on both returns. The federal exemption is $1,275,000 in 2026, and a Quebec resident claims the deduction again on line 292 of the Revenu Québec return, with form TP-726.7-V. The shares must meet the qualified small business corporation tests on the day of the sale.
- Do I need a notary to sell a business in Quebec?
- A Quebec lawyer usually drafts the purchase agreement. A notary becomes necessary where real estate secures part of the price, because article 2693 of the Civil Code requires an immovable hypothec to be granted by notarial act en minute.