Learn about the obligations and responsibilities that arise when you deactivate your company
A very common mistake among partners and administrators of inactive companies is to think that with the inactivity of their company, any type of obligation related to it is extinguished or ceases to accrue.
Nothing could be further from the truth. Inactive business operations do not extinguish the company's existing obligations, nor do they prevent new ones from accruing. Similarly, previously established liabilities remain enforceable and may even extend to the company's administrator.
I. Inactivity as an alternative to dissolution and liquidation: In many cases, a company's inactivity is considered a cheaper alternative to dissolution and liquidation. This is because the latter commercial operations involve certain notary and registry costs. However, leaving a company inactive with no employees can be done simply by notifying the Tax Agency.
The choice, however, is not so simple. On the one hand, in the dissolution and liquidation of a company, apart from the costs mentioned, taxes may be incurred that can represent a much more significant cost, whether indirect taxes (Corporate Transactions Tax, VAT, ITP, IIVTNU,…) or direct taxes, e.g., those related to capital gains that may be generated with the allocation of assets to the partners.
On the other hand, as we mentioned, the inactivity of the company does not extinguish all of its formal obligations. The company will still have to: prepare its accounts, file its Corporate Income Tax return, withhold taxes (e.g., for professionals, such as the Mercantile Registry), legalize its books, and file its Annual Accounts. Additionally, it is important to consider the effect this operation has on the VAT incurred from the date of inactivity, as this VAT is not deductible.
II. Inactivity in companies with debts: Additionally, in companies with debts, these problems can be exacerbated because, aswe mentioned, the liabilities incurred by a company are not extinguished by its inactivity. They remain enforceable and can worsen with the accrual of interest or the transfer of these liabilities to the directors.
There are several cases in which such liability can be transferred, making the aforementioned directors jointly and severally liable for the company's debts. The most common are:
– When the company is in bankruptcy proceedings and the measures established by the Bankruptcy Law are not taken in a timely manner.
– The passage of more than a year since the inactivity and the failure to convene the mandatory meeting to dissolve the company.
– When, during the period of inactivity, an imbalance occurs in the Company's Net Worth.
If your company finds itself in any of the situations described in this article, we recommend consulting a professional to determine the best course of action for your specific case. A multidisciplinary approach is essential.
At Àmbit, we can advise you. We specialize in the various tax, labor, and commercial matters that affect these circumstances. Don't hesitate to contact us.
Marc Ivars
Tax Area / Commercial Area
Àmbit Assesor
Do you have any questions about this topic?
Our team of expert advisors will help you resolve any issues related to our services.
Contact us now
A Àmbit Assessor, SL has 40 years dedicated to the tax, comptable and labor consultancy of the Pime.
Latest entries from MGI Àmbit
(see all)
Related
