France Closing a Business Guide
French business closure and liquidation procedures. The guide covers: the distinction between the dissolution and the liquidation — the dissolution (the "dissolution") is the decision to close the company (the shareholders' vote to dissolve the company); the liquidation (the "liquidation") is the process of realising the assets, paying the creditors, and distributing the remaining assets to the shareholders; the dissolution is the legal death of the company (the "disparition de la personne morale"); the tax consequences of the dissolution — the dissolution triggers the immediate taxation of the company's unrealised capital gains (the "plus-values latentes") and the reserves (the "réserves"); the company must file the final corporate tax return (the "déclaration de résultat de cessation" — form 2031 or 2065) within 60 days of the dissolution; the company must also file the final VAT return (the "déclaration de TVA de cessation") within 30 days; the capital gains on the distribution of assets (the "plus-values de cession") — the distribution of the company's assets to the shareholders in the liquidation is treated as a sale at the market value; the company is subject to the corporate tax (IS) on the capital gains realised on the distribution (the "plus-values de distribution"); the capital gains on the long-term assets (held for more than 2 years) are taxed at the reduced rate of 26.5% (the "taux réduit des plus-values à long terme") for the IS taxpayers; the short-term capital gains are taxed at the standard IS rate (25%); the withholding tax on the liquidation surplus (the "taxe sur le boni de liquidation") — the liquidation surplus (the "boni de liquidation") is the difference between the net assets distributed to the shareholders and the shareholders' contributed capital (the "capital social"); the boni de liquidation is treated as a dividend and is subject to the PFU at 30% (12.8% income tax + 17.2% social charges) for the individual shareholders; the corporate shareholders are subject to the corporate tax (IS) on the boni de liquidation; the closing of the tax period — the company must file the final corporate tax return within 60 days of the dissolution; the company must close the VAT account and file the final VAT return within 30 days; the company must file the final social security declarations (the "DSN de fin de contrat") for the employees; the company must pay the final payroll taxes (the "impôt sur les salaires") within 30 days; the liquidation procedure — the shareholders' meeting votes on the dissolution (the "décision de dissolution") and appoints the liquidator (the "liquidateur"); the liquidator manages the liquidation process (the "période de liquidation"); the liquidator files the annual tax returns during the liquidation period (the "déclarations de résultat de la période de liquidation"); the liquidator convenes the final shareholders' meeting (the "assemblée générale de clôture de liquidation") to approve the final accounts (the "comptes de liquidation") and to decide on the discharge of the liquidator (the "quitus au liquidateur"); the company is struck off the commercial register (the "RCS — Registre du Commerce et des Sociétés") after the final meeting; the unique tax return for the liquidation — the company can opt for the simplified liquidation procedure (the "liquidation simplifiée") if the liquidation period is less than 1 year; the company files a single tax return for the entire liquidation period (the "déclaration unique de résultat de liquidation"). All amounts in Euros (EUR). For related reading, see our Company Forms Guide → and Corporate Tax Guide →.
Dissolution vs Liquidation
- Dissolution: The shareholders' vote to dissolve the company (the "dissolution anticipée" or the "dissolution de plein droit"). The dissolution triggers the commencement of the liquidation period (the "période de liquidation"). The company retains its legal personality for the purposes of the liquidation (the "personnalité morale maintenue pour les besoins de la liquidation").
- Liquidation: The realisation of the assets, the payment of the creditors, and the distribution of the remaining assets to the shareholders. The liquidator is responsible for the management of the liquidation. The liquidator files the annual tax returns for the liquidation period. The liquidation ends with the final shareholders' meeting (the "assemblée générale de clôture") and the striking off the RCS (the "radiation du RCS").
For the legal procedures (the "formalités de dissolution") and the publication requirements (the "annonce légale"), see our Company Forms Guide →.
Tax Filings — Deadlines
- 60 days: The final corporate tax return (form 2031 for the BIC taxpayers or form 2065 for the IS taxpayers) must be filed within 60 days of the dissolution (the "décision de dissolution"). The return covers the period from the end of the last fiscal year to the date of the dissolution (the "période intermédiaire").
- 30 days: The final VAT return (the "déclaration de TVA de cessation") must be filed within 30 days of the dissolution. The company must pay the VAT due and close the VAT account (the "compte TVA").
For the capital gains on the liquidation and the tax treatment of the boni de liquidation, see our Corporate Tax Guide → and Investment Income Tax Guide →.