Tax consequences of the dissolution of a business (voluntary or involuntary)
Verified 27 November 2024 - Directorate for Legal and Administrative Information (Prime Minister)
The dissolution of a business, either voluntarily or as a result of a judicial liquidation, has consequences for the taxation of its profits, its VAT return and its property taxes.
A business can be dissolved in several ways:
- Voluntary dissolution by partners
- Dissolution provided for by a statutory provision: the business ends (the termination date provided for in the articles of association), the objects of the company are realized or the sole member dies, resulting in the dissolution of the business (EURL: titleContent or SASU: titleContent).
- Dissolution following a judicial liquidation
The dissolution type has no impact on the tax consequences. Only the deadlines can be different.
The rules vary depending on whether the business is a business subject to business tax (IS) or a business subject to income tax (IR).
Business subject to SI
The dissolution of the business results in immediate taxation of its profits.
What are the profits taxable immediately?
Taxable profits are as follows:
- Profits realized since the end of the last tax year ended
- Earnings on tax deferral. These are mainly the provisions which have previously been set up for future losses or charges which have never actually occurred at the time of dissolution
- Capital gains of fixed assets (offices, factory...) which were realized during the dissolution of the business.
When should businesses report profits?
The dissolution of a business is the result of amicable liquidation or judicial.
A liquidator shall be appointed to carry out the winding-up formalities and to draw up settlement accounts.
The date of dissolution of the business is generally the date on which the liquidation accounts are approved by the members. The business has 60 days from this date to send the tax authority its latest income statement.
FYI
In the event of the death of the sole member of an EURL or SASU, resulting in the dissolution of the business, the heirs shall have 6 months to submit the latest results report. This dissolution is not automatic, it must be provided for in the statutes of the business.
How do I report profits?
The reporting of income differs depending on the business taxation regime: the real regime is standard or simplified.
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Normal Actual Speed (RN)
The ordinary effective taxation system shall apply to businesses whose annual turnover before tax is greater than the following:
- For trading and housing supply activities: €840,000
- For services: €254,000
A business subject to the ordinary effective taxation system must report using the form n°2065-SD and the tax book including tables 2050-SD to 2059-G-SD.
It must be done in EDI mode, the business uses the services of a third party to make its declarations. We're talking about EDI partner.
Simplified Real Regime (SIR)
The Simplified Real Income Tax (SIR) regime applies to businesses whose annual turnover excluding tax is between:
- For trading and housing supply activities: between €188,700 and €840,000
- For service provision and furnished rental activities: between €77,700 and €254,000
The company subject to the simplified tax system must make its declaration using the form n°2065-SD and the tax package comprising Tables No 2033-A-SD to 2033-G-SD.
It can be done in mode EDI or EFI :
- In EDI mode, the business uses the services of a third party to make its declarations. We're talking about EDI partner.
- In EFI mode, the business makes its own declarations via its professional account on the website impots.gouv.fr.
Online tax account for professionals (EFI mode)
Please note
It must necessarily be done electronically.
Where the dissolved business was subject to VAT, it must make a VAT declaration with the company Tax Office (SIE) on which it depends. To learn more about the different VAT regimes, you can consult our dedicated card.
The time limit for the declaration varies according to the VAT system to which the business was subject: simplified or standard real scheme.
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Simplified real regime
The business is subject to the standard actual VAT arrangements where its turnover is less than €840,000.
The VAT return must be made in 60 days after dissolution (date on which settlement accounts are approved)with Form CA 12:
Annual VAT Adjustment Declaration - Simplified scheme (No 3517-CA12)
This declaration may be made in mode EDI or EFI :
- In EDI mode, the business uses the services of a third party to make its declarations. We're talking about EDI partner.
- In EFI mode, the business makes its own statements via its professional account on the website impots.gouv.fr:
Normal Actual Speed
The business is subject to the standard actual VAT arrangements where its turnover is greater than €840,000.
The VAT return must be made in 30 days after dissolution (date on which settlement accounts were approved) with Form CA3:
VAT and similar taxes - Form No 3310A
This declaration may be made in mode EDI or EFI :
- In EDI mode, the business uses the services of a third party to make its declarations. We're talking about EDI partner.
- In EFI mode, the business makes its own statements via its professional account on the website impots.gouv.fr:
When a business is dissolved, it is not exempt from paying and reporting its property taxes: the company property tax (CFE) and the company value added tax (VAAC).
Paying the CFE
The amount of the CFE depends on the date on which the business is dissolved (date on which the settlement accounts are approved):
- If dissolution has occurred 31 December, the business must pay the CFE for the whole year
- If dissolution has occurred before 31 December, the business may request the tax authority to calculate the amount of its EAC in proportion to the time of activity. The request must be made before December 31 of the following year via the messaging of the business' professional account on the website impots.gouv.fr.
Online tax account for professionals (EFI mode)
Declare the CVAE
The business subject to the payment of the CVAE must declare the value added and the number of employees in the 60 days following its cessation of activity (the date on which the settlement accounts are approved). This declaration shall be made using the Form No 1330-CVAE-SD.
It must also attach the declaration of liquidation and regularization in the same time limits using the form n°1329-DEF.
Business subject to IR
The dissolution of the business results in immediate taxation profits.
What profits and capital gains are taxable immediately?
Taxable profits are as follows:
- Profits realized since the end of the last tax year ended
- Earnings on tax deferral. These are mainly the provisions which have previously been set up for future losses or charges which have never actually occurred at the time of dissolution
- Capital gains of fixed assets (offices, factory...) which were realized during the dissolution of the business.
When should businesses report profits?
The dissolution of a business is the result of amicable liquidation or judicial.
A liquidator shall be appointed to carry out the winding-up formalities and to draw up settlement accounts.
The date of dissolution of the business is generally the date on which the liquidation accounts are approved by the members. The business has 60 days from this date to send the tax authority its latest income statement.
How do I report my profits?
The tax return is different depending on the profits made by the business partners: industrial and commercial profits (BIC) or non-commercial profits (NTB) or agricultural profits (BA).
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Industrial and Commercial Profits (BIC)
The rules are different depending on the tax regime of the members.
Micro-BIC (micro entrepreneur)
The member's profits shall be subject to the micro-BIC scheme if they are less than €188,700.
The tax return must be filed with the declaration no. 2042. You must also contact the supplementary declaration 2042-C-PRO on which the turnover up to the end of the business activity must be indicated in part ‘ professional industrial and commercial income ”.
The declaration must be made by the partner on his particular area of the website impots.gouv.fr:
Simplified real regime
The simplified real tax (SIR) scheme applies to profits received by the member when they are between €188,700 and €840,000.
The partner must declare his results with the form No. 2031 and the tax package comprising the Annex Tables 2033-A to 2033-G.
The declaration may be made in one of the following ways:
- Either by the partner himself on his professional account on the site impots.gouv.fr (EFI mode)
- Or by using the services of a EDI partner (e.g. accountant)
Normal Actual Speed
The simplified effective taxation system (SIR) applies to a member whose annual turnover excluding tax is greater than €840,000.
The partner must declare his results with the form No. 2031 and the tax book of Annex Tables 2050, 2051, 2052, 2053, 2059-F and 2059-G.
The declaration must be submitted electronically in EDI mode, i.e. via a EDI partner (e.g. accountant, specialized contractor).
Non-Commercial Profits (NTB)
The rules are different depending on the tax regime of the partner.
Micro-BNC speed
Profits received by the micro-BIC plan member if they are less than €77,700.
The tax return must be filed with the declaration no. 2042. You must also contact the supplementary declaration 2042-C-PRO on which the turnover up to the end of the business activity must be indicated in part ‘ non-commercial income ”.
The declaration must be made by the partner on his particular area of the website impots.gouv.fr:
Arrangements for the controlled declaration
Profits received by the member are subject to the controlled declaration regime if they are greater than or equal to €77,700.
The partner must report with the form No 2035 and Annexes No 2035 A and 2035 B.
The declaration may be made in one of the following ways:
- Either by the partner himself on his professional account on the site impots.gouv.fr (EFI mode)
- Or by using the services of a EDI partner (e.g. accountant)
Agricultural Profits (BA)
The rules vary depending on the tax regime applicable to profits.
Micro-BA (agricultural micro-profit)
Profits received by the member are subject to the micro-BA scheme if they are less than €120,000.
The tax return must be filed with the declaration no. 2042. You must also contact the supplementary declaration 2042-C-PRO on which the turnover up to the end of the business activity must be indicated in part ‘ farm income ”.
The declaration must be made by the partner on his particular area of the website impots.gouv.fr:
Simplified real regime
The simplified real tax (SIR) scheme applies to profits received by the member when they are between €120,000 and €391,000.
The partner must declare his results with the form #2039 and the tax package comprising the Annex Tables No 2039-A-SD to 2039-E-SD.
The declaration may be made in one of the following ways:
- Either by the partner himself on his professional account on the site impots.gouv.fr (EFI mode)
- Or by using the services of a EDI partner (e.g. accountant)
Normal Actual Speed
The simplified real tax system (SIR) applies to profits received by the member when they exceed €391,000.
The partner must declare his results with the form #2143 and the fiscal bundle of the annexed tables n°2144-SD, n°2145-SD, n°2146-SD, n°2146-bis-SD, n°2147-SD, n°2148-SD, n°2149-SD, n°2150-SD, n°2151-bis-SD, n°2152-ter-SD, n°211 52-SD, n°2152-bis-SD, n°2153-SD and n°2154-SD.
The declaration must be submitted electronically in EDI mode, i.e. via a EDI partner (e.g. accountant, specialized contractor).
Where the dissolved business was subject to VAT, it must make a VAT declaration with the company Tax Office (SIE) on which it depends. To learn more about the different VAT regimes, you can consult our dedicated card.
The time limit for the declaration varies according to the VAT system to which the business was subject: simplified or standard real scheme.
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Simplified real regime
The business is subject to the standard actual VAT arrangements where its turnover is:
- For a commercial, craft or professional activity: less than €840,000
- For an agricultural activity: greater than €46,000
Commercial, craft or professional activity
The VAT return must be made in 60 days after cessation of activity with Form CA 12:
Annual VAT Adjustment Declaration - Simplified scheme (No 3517-CA12)
It can be transmitted in mode EDI or EFI :
- In EDI mode, the business uses the services of a third party to make its declarations. We're talking about EDI partner.
- In EFI mode, the business makes its own statements via its professional account on the website impots.gouv.fr:
Agricultural activity
The VAT return must be made in 60 days after cessation of activity with form 3517-AGR-SD:
Annual VAT adjustment declaration - Simplified agricultural scheme
It can be transmitted in mode EDI or EFI :
- In EDI mode, the business uses the services of a third party to make its declarations. We're talking about EDI partner.
- In EFI mode, the business makes its own statements via its professional account on the website impots.gouv.fr:
Normal Actual Speed
The business is subject to the standard actual VAT arrangements where its turnover is greater than €840,000.
A business engaged in an agricultural activity is not covered by the actual standard VAT arrangements.
The VAT return must be made in 30 days after cessation of activity with Form CA3:
VAT and similar taxes - Form No 3310A
It can be transmitted in mode EDI or EFI :
- In EDI mode, the business uses the services of a third party to make its declarations. We're talking about EDI partner.
- In EFI mode, the business makes its own statements via its professional account on the website impots.gouv.fr:
When a business is dissolved, it is not exempt from paying and reporting its property taxes: the company property tax (CFE) and the company value added tax (VAAC).
Paying the CFE
The amount of the CFE depends on the date on which the business is dissolved (date on which the settlement accounts are approved):
- If dissolution has occurred 31 December, the business must pay the CFE for the whole year
- If dissolution has occurred before 31 December, the business may request the tax authority to calculate the amount of its EAC in proportion to the time of activity. The request must be made before December 31 of the following year via the messaging of the business' professional account on the website impots.gouv.fr.
Online tax account for professionals (EFI mode)
Declare the CVAE
The business subject to the payment of the CVAE must declare the value added and the number of employees in the 60 days following its cessation of activity (the date on which the settlement accounts are approved). This declaration shall be made using the Form No 1330-CVAE-SD.
It must also attach the declaration of liquidation and regularization in the same time limits using the form n°1329-DEF.
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