Dormant Companies: Tax Obligations.

The corporations can cease economic activity without dissolution. The cessation of activity is transmitted to the Tax Office by submitting the 036 form. The company is “sleeping”, but still exists and that fact involves tax obligations.

While not dissolve, the company shall submit an annual income tax (Corporation Tax) and the financial statements in the Companies’ House of the locality where it establishes its registered office. This will make each year have to face the Registry bill, with their corresponding retention for being professional services. And of course if you hire the services of third parties to perform these procedures, also support these spending with the taxes that are applicable (VAT).

VAT paid on those bills is not deductible, because the deduction is subject to the taxpayer is carrying out an economic activity, which does not happen because the tax is levied while the enterprise is “sleeping”. The company has no obligation to keep the invoices books because that requirement is also conditional on the development of a business or professional activity.

However, the obligations regarding deductions are different. Since the company retains its legal personality to extinction, is subject to the withholding obligation, so you have to make the deposit in the regulatory settlement period. The company will be registered in the census duty model 111, corresponding to the retention of professionals and settle the tax. In January will also complete summary model 190.

If the entity obtained a positive tax liability in the last year in which it was active, will also present the corresponding advanced payments of the Corporation Tax.. This situation occurs as society exercises the second option to determine the deposit, Article 45.3 of the Corporations Tax Act. The developed prepayments will be refunded in the absence of activity.

For further details about dormant companies don't hesitate in contact VP Advisers.