Tax consequences of the cessation of activity of an individual entrepreneur (voluntary or involuntary)
Verified 24 October 2024 - Directorate for Legal and Administrative Information (Prime Minister)
Individual business The cessation of activity of a company (EI), whether voluntary or not, has consequences for the taxation of profits, its VAT return and its property taxes.
Individual business The cessation of activity of an enterprise may occur in various ways:
- Decided voluntarily by the leader
- As a result of judicial liquidation
- Following the death of the contractor
The cause of the discontinuance does not affect the tax consequences. Only the deadlines can be different.
Individual business The cessation of activity of the 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 established for future losses or expenses which have never materialized at the time of cessation of business.
- Capital gains of fixed assets individual business (offices, factory...) which were realized at the time of the cessation of activity of the
Individual business A person who has been in business for at least 5 years may benefit from a capital gains exemption depending on his turnover (CA). Turnover thresholds vary according to the company's activity.
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Sales Activity (BIC)
The exemption is total where the company's turnover does not exceed €250,000 included.
The exemption is partial where the company's turnover is between €250,000 excluded and €350,000 excluded.
FYI
The amount of CA taken into account corresponds to the average annual CA for the last 2 financial years ended in the 2 calendar years preceding the year-end of the financial year in which the capital gain was realized.
Service Delivery Activity (BIC and BNC)
The exemption is total where the company's turnover does not exceed €90,000 included.
The exemption is partial where the company's turnover is between €90,000 excluded and €126,000 excluded.
FYI
The amount of CA taken into account corresponds to the average annual CA for the last 2 financial years ended in the 2 calendar years preceding the year-end of the financial year in which the capital gain was realized.
When should the sole trader report profits?
Individual business The date of cessation of activity of a contractor is the date on which the contractor decides to cease its activity or the date on which the court pronounces the judicial liquidation. He then 60 days from this date to file your last tax return with the tax authority.
FYI
In the event of the death of the sole trader, the heirs have 6 months from the date of deathto file a return of income that has not yet been reported before death.
How do I report my profits?
The tax return is different depending on the profits made by the company: industrial and commercial profits (BIC) or non-commercial profits (NTB)
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Industrial and Commercial Profits (BIC)
Individual business The rules are different depending on the tax regime of the company.
Micro-BIC (micro entrepreneur)
Individual business The person concerned shall be subject to the micro-BIC scheme if his turnover is 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 entrepreneur on his particular area of the site impots.gouv.fr:
Simplified real regime
The Simplified Real Income Tax (SIR) scheme applies to individual companies whose annual turnover excluding tax is between €188,700 and €840,000.
The individual entrepreneur must report 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 entrepreneur 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 Income Tax (SIR) scheme applies to individual companies whose annual turnover excluding tax is greater than €840,000.
The individual entrepreneur must report 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)
Individual business The rules are different depending on the tax regime of the company.
Micro-BNC speed
Individual business The person concerned shall be subject to the micro-BIC scheme if his turnover is 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 entrepreneur on his particular area of the site impots.gouv.fr:
Arrangements for the controlled declaration
The sole trader is subject to the micro-BIC scheme if his turnover is greater than or equal to €77,700.
The contractor must file his return 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 entrepreneur 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)
Individual business When a person subject to VAT ceases to operate, he or she must make a VAT declaration with the companies' tax department (SIE) on which he or she depends. To learn more about the different VAT regimes, you can consult our dedicated card.
The date of cessation corresponds to the date on which the entrepreneur decided to cease his activity or the date on which the court declared the judicial liquidation.
Individual business The time limit for reporting depends on the VAT regime to which the person was subject: simplified or normal real regime.
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Simplified real regime
Individual business The person concerned is subject to the normal real VAT arrangements where his turnover is less than €840,000.
The VAT return must be made in 30 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:
Normal Actual Speed
The company 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 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:
Individual business When a company ceases its activity, it is not exempt from paying its property taxes: the companies' property levy (CFE) and the company value added tax (VAAC).
Paying the CFE
Individual business The rules concerning the payment of the EWC depend on the tax regime of the person concerned: real or micro-tax regime.
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Actual speed
The amount of the CFE depends on the date of cessation of activity (the date on which the entrepreneur decided to cease his activity or the date on which the court declared the judicial liquidation):
- If dissolution has occurred 31 Decemberindividual business , the EDC must pay the EDC for the whole year
- If dissolution has occurred before 31 Decemberindividual business , the person concerned may ask the tax authorities to calculate the amount of his or her FTC in proportion to the length of his or her working time. The application must be made before December 31 of the following year. This request is made on his professional account of the website impots.gouv.fr.
Micro-tax system (micro-entrepreneur)
The amount of the CFE depends on the date of cessation of activity (the date on which the micro-entrepreneur decided to cease his activity or the date on which the court declared the judicial liquidation):
- If dissolution has occurred 31 December, the micro-entrepreneur must pay the CFE for the whole year
- If dissolution has occurred before 31 December, the micro-entrepreneur may ask the tax authorities to calculate the amount of his or her CFE in proportion to the time of activity. The application must be made before December 31 of the following year. This request is made on its particular area of the website impots.gouv.fr.
Declare the CVAE
The sole trader subject to payment of the CVAE must declare the value added and the number of employees in the 60 days following its cessation of activity (date on which the entrepreneur decided to cease his activity or the date on which the court declared the judicial liquidation). This declaration must be made using the Form No 1330-CVAE-SD.
The declaration of liquidation and regularization must also be attached in the same time limits using the form No 1329-DEF.
NBC: controlled declaration
Micro-BNC
Micro BIC and Micro BNC
BNC Declaration
Declaration of results
Simplified VAT arrangements
Online service
General Directorate of Public Finance