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Within the development of economic activities related to its commercial traffic, a company or a self-employed individual may face decisions that involve the cessation of such activities or their definitive extinction.

Cessation as self-employed

The cessation of activity for a self-employed individual refers to the temporary or definitive suspension of the work related to the activity being carried out. It is necessary to deregister, that is, process the cessation, both with the Tax Agency and the General Social Security Treasury. This process can be carried out through the CIRCE system.

If the self-employed individual has employees and ceases their activity, they must terminate the employment in the corresponding Social Security scheme. This process cannot be done through CIRCE.

Self-employed individuals who have ceased their activity and wish to resume it must register again in the Special Regime for Self-Employed Workers (RETA). This process can be carried out through the CIRCE system.

Termination of a commercial company

Regarding a business corporation, such as an LLC for example, it is important to differentiate between the cessation of activity, understood as the temporary suspension of business activities, and the definitive extinction, which involves the termination of all types of activity. In other words, there is a significant difference between the cessation of activity and the liquidation of the company.

In this case, the cessation of activity for an LLC can be done through CIRCE. The liquidation of the company cannot.

  • The cessation of activity refers to the temporary suspension, without implying that the company ceases to exist.
  • Obligations when temporarily suspending business activities:

    • Cease business or professional activities.
    • Retain legal personality.
    • Cannot issue invoices.
    • Must continue to prepare accounting according to the Commercial Code and General Accounting Plan.
    • The company must continue legalizing books and depositing annual accounts with the Commercial Registry.
    • Still obligated to file the Corporate Income Tax.
    • Contracts of hired personnel in the company must be terminated.
  • The extinction or liquidation of a company is the process by which the company is closed, usually by resolution of the General Meeting.
  • Steps for the dissolution and liquidation of a company:

    1. Agreement for dissolution with distribution of assets among shareholders.
    2. Preparation of the liquidation balance.
    3. Appointment of persons in charge of the liquidation.
    4. Public recording of the agreement before a Notary.
    5. Filing of the deed of dissolution and liquidation with the commercial registry.
    6. Effective distribution of assets once debts are paid.
    7. Payment of the Property Transfer Tax (ITP), at 1% of the net worth of the liquidation balance.
    8. Deregistration with the Tax Office and appointment of successors.
    9. Deregistration with Social Security.
    10. Distribution of assets among the shareholders.

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