Saying that a company is inactive is simply a formal way of indicating that it is no longer carrying out any economic activity. However, it remains registered as a company, even though it has not been liquidated or dissolved.
For this situation to be legal, it must be formally reported to the tax authorities using form 036.
Even if the company is not operational and does not generate income, it still exists as a legal entity and has certain tax and accounting obligations to fulfill.
Obligations of an Inactive Company
Even if your company is not generating a single euro, its obligations do not disappear. The main ones include:
- Annual Accounts:
Even if the company is not active, you are required to submit annual accounts to the Commercial Registry. This obligation is established in Article 279 of the Consolidated Text of the Capital Companies Act (TRLSC). It is a mandatory procedure, and even if the accounts have no transactions, you must comply with this obligation every year - Accounting Records:
Even if you are no longer invoicing or incurring expenses, you must maintain accounting records such as the Daily Journal and the Inventory and Annual Accounts Book, following the rules of the General Accounting Plan (PGC). This ensures that everything is in order in case you decide to reactivate the company or liquidate it in the future - Taxation:
- Corporate Income Tax: Filing the Corporate Income Tax return remains mandatory, although you will simply declare the absence of activity
- Other tax forms: Depending on the case, you may also need to submit informational forms such as form 390 (annual VAT summary) or form 347 (transactions with third parties)
- Social Security contributions:
If your company has registered employees, it is essential to stay up to date with Social Security contributions. If you have no employees, make sure you have properly processed their deregistration.
Ignoring the obligations of an inactive company is not a good idea. For example:
- Failing to file annual accounts can result in fines ranging from €1,200 to €60,000, according to the Commercial Registry Regulations
- Non-compliance with the tax authorities could lead to surcharges, late payment interest, and additional penalties.
Moreover, if you are an administrator, you could be personally liable if the company incurs debts or if economic damage occurs due to your mismanagement.
Responsibilities of administrators
Even if the company is on hold, administrators remain responsible. They are in charge of ensuring that everything related to the company is in compliance with the law:
- Asset protection:
If the company has assets, administrators must protect and manage them properly. Neglecting them could result in personal liability if negligence is proven, as stated in Article 236 of the TRLSC - Compliance with legal obligations:
Failure to submit accounts or meet tax requirements can lead to serious legal issues. Investing a little time and effort in keeping everything in order is better than facing penalties later.
When is it best to dissolve the company?
Keeping a company inactive may make sense for a while, but if there are no plans to reactivate it, it might be time to consider dissolving it. This not only saves you paperwork and annual costs but also eliminates any future liabilities.
According to Article 363 of the TRLSC, a company must be dissolved if it has ceased its activity for a prolonged period. The process may seem technical, but in simple terms, it consists of:
- Calling a shareholders’ meeting to decide on dissolution
- Appointing liquidators
- Liquidating assets, if any, and formalizing the company’s extinction in the Commercial Registry.