Duties and Taxes in Business Liquidation: How to Avoid Unnecessary Costs?

Introduction: Liquidating a business is a process that requires not only a decisive decision but also careful consideration of the tax consequences. Both in the context of income tax (PIT) and value-added tax (VAT), there are specific obligations that must be fulfilled to properly close the business.

Income Tax and VAT in Liquidation: During the liquidation of a company, the entrepreneur must perform a physical inventory that includes all goods, materials, and fixed assets. This inventory is the basis for VAT and PIT settlements. For VAT, each good or fixed asset, from which the right to deduct VAT at the purchase was granted, must be included in the inventory and appropriately taxed at the time of liquidation.

Sale of Fixed Assets and Lump Sum Tax: The sale of business assets, such as cars or equipment, after the liquidation of the business may be subject to a flat-rate tax on recorded revenues. The flat rate for the sale of movable components used in business operations is 3% of the revenue obtained, provided that the sale occurs within 6 years of liquidation. Real estate and property rights are taxed at 10% of revenue, which is also subject to the same time conditions.

Optimization of Car Sales: A tax optimization strategy worth considering relates to cars introduced into the company’s fixed assets. The model of gifting the car to a spouse can be tax-efficient, as six months after the date of the donation, the spouse can sell the vehicle without tax obligations. This practice allows for the avoidance of direct tax liabilities associated with the sale of a fixed asset by the company.

Suspension vs. Liquidation: Suspending business activities, as opposed to ending them, allows for the avoidance of the need for tax settlement and is a solution that can offer tax benefits. Deciding to suspend rather than liquidate should be considered an option for those who may want to resume operations in the future or avoid immediate tax liabilities.

Summary: When planning to end a business activity, it is worthwhile to consider all available options, including suspending operations or optimizing the sale of assets, to minimize or avoid tax burdens. For further assistance and advice, our office is at your disposal.