Putting a company to sleep - legal person

Scope of application

Any legal entity whose director wishes to cease trading temporarily.

Description

Temporary cessation of activity (mise en sommeil) is a voluntary and temporary cessation of activity, which means that the company is not deregistered or dissolved. A mothballed or temporarily ceased business suspends its activity, but retains its registration and continues to operate for tax and social security purposes.

The period of inactivity is limited to a maximum of 2 years.

During the dormant period, the tax and management consequences are as follows:
exemption from VAT declaration and payment ;
taxation of profits: even if there is no revenue or turnover, the company or sole trader must file an income tax return indicating "nil";
suspension of activity is treated as cessation of activity only after 12 consecutive months. The company remains liable for business property tax (cotisation foncière des entreprises - CFE) for these 12 months and is then exempt from this tax;
where applicable, the director must continue to draw up, approve and file the company's annual financial statements.

At the end of the temporary suspension of activity, the director may :

resume business => reactivate the company ;
cease trading definitively => dissolve the business, with removal from the registers (RCS or RM);
sell the business => sell the company or the business.

In all cases, the company director must file a new amendment with the CFE.

Instructions for mothballing the company:

within one month of the decision to mothball the company (or the general meeting of shareholders, if applicable), the company must file the M2 form with the Chamber of Commerce and Industry (CCI) for the location of the company's registered office.
It should soon be possible to complete this form online via the business formalities desk.

Please note: it is not necessary to publish a legal announcement when a company is mothballed, unless otherwise provided for in the Articles of Association.