How to suspend a business registered in KRS

Which companies/partnerships must notify their to KRS

Commercial law companies and partnerships must notify the National Court Register (KRS) of suspension of their business activity. This group includes:

• partnerships: general partnerships (also: registered partnership, in Polish: spółka jawna), professional partnerships (spółka partnerska), limited partnerships (spółka komandytowa), partnerships limited by shares (spółka komandytowo-akcyjna)
• companies: limited liability companies (spółka z ograniczoną odpowiedzialnością), joint-stock companies (spółka akcyjna), simple joint-stock company.

Check what are the different legal forms of running a business in Poland? One-person business activity and companies.

When can you suspend a company/partnership?

To suspend a company/partnership means to make a pause in its business activity.

The greatest advantage of suspension is being exempted from income tax advance payments.

During the suspension period:

• partners in general partnerships, professional partnerships and limited partnerships are not required to make income tax (PIT or CIT) advance payments for the period of suspension in relation to income earned through their suspended partnerships
• companies, partnerships limited by shares and limited partnerships are exempted from the obligation to make income tax (CIT) advance payments for the suspension period

Also, filing statements to ZUS or VAT statements is not required (with some exceptions).

During the suspension period the company/partnership entered in KRS should not perform any actions related to its business activity, except for those aimed at keeping or securing the source of income. Thus, during the suspension period, a company/partnership entered in KRS should perform only those actions that are necessary in order to resume its business activity in the future.

A company/partnership may suspend its business activity:

• for any reason, for instance, if it has temporary problems with running the business, or its revenues are lower than expected
• only if it does not employ any employees
• for a period no shorter than 30 days and no longer than 24 months.

The suspension period starts on the date indicated in the application to suspend business activity submitted to KRS, however, this date may not be earlier than the date of the application.

This means that – unlike in the case of businesses registered in CEIDG – in the event of a partnership/company entered in KRS you may not suspend business activity with a retroactive effect.

The same is true for the date of business resumption – it may not be earlier than the date of the application to resume business activity.

How to suspend a commercial law company/partnership

A commercial law company/partnership is suspended in the National Court Register, through the Court Registers Portal (PL).

KRS will forward the information on suspension to:

• Central Register of Business Entities – National Register of Taxpayers (CRP KEP)
• the official register of national economy entities (i.e. REGON register)
• Social Insurance Institution (ZUS) – Central Register of Contribution Payers

Thus, it is not necessary to file separate notifications to Statistics Poland (GUS), or the tax office, or to cancel the company’s or the partnership’s status of a contribution payer with ZUS.

Please note! If the company/partnership employed employees, upon cancelling the insurance coverage for the last person for whom it had the obligation to file insurance documents, it is also required to file with the relevant tax office an identification notification as regards the supplementary data in the National Court Register (NIP-8 form).

Find out how to submit the NIP-8 form.

In order to effectively suspend business activity in KRS, it is required to:

• adopt a resolution to suspend a company/partnership. The resolution adopted by the management board or the partners (depending on the manner of representation) should include the KRS number, the tax identification number NIP and information on the suspension period.
• submit an application to suspend a company/partnership to KRS. The application must be submitted together with a resolution on the suspension.

There is no court fee for the application to suspend business activity.

Information on the suspension or resumption of business activity is entered in Section 6 of the register of entrepreneurs. It is not announced in the Official Court and Economic Gazette (Monitor Gospodarczy i Sądowy).

Please note!

• Business activity entered in KRS may be suspended and restored through the Court Registers Portal (PRS).
• The suspension period may last no more than 24 months. If you don’t apply to resume your business activity by the end of a 24-month period (counted from the suspension date), your business activity will be restored automatically on the day following the end of such 24-month period, and a relevant note will be entered in the register of entrepreneurs.

If your company/partnership has been suspended for 24 months (the maximum period of suspension) and no application to restore its business activity has been filed, after the end of this period check the entry on your business in KRS, as it might not have been updated, despite the automatic procedure. In such an event, you should contact the Central Information Point for the National Court Register (KRS) to learn about the reasons for this situation and determine whether you need to complete any additional formalities.

Terminating employment contracts

A company/partnership may suspend its business activity provided it has no employees employed based on:

• an employment contract
• nomination, election, appointment
• cooperative employment contract.

Before applying to KRS to suspend the company/partnership, you need to terminate all employment contracts.

You do not have to terminate contracts of mandate (umowa zlecenie) or specific task contracts (umowa o dzieło).

A company/partnership may suspend its business activity also if its employees are on a maternity leave, leave on terms of maternity leave, childcare leave or parental leave, and they do not combine their parental leave with work for the employer granting such leave.

If an employee ends their leave or applies to combine their parental leave with work for the employer granting such leave, they are entitled to remuneration for temporary unemployment, specified in labour law provisions, granted until the end of the suspension period.

Please note! Before suspending the company/partnership, you must cancel the ZUS insurance coverage for all employees (ZUS ZWUA form), and for family members (ZUS ZCNA form). Insurance coverage with ZUS of any dismissed employees must be cancelled within 7 days from the end date of the employment relationship.

Suspension of a company/partnership and ZUS

You do not need to notify ZUS if you are suspending a company/partnership. Its status of a ZUS contribution payer will be cancelled automatically. ZUS will draw up the ZWPA form to cancel the contribution payer status of your company/partnership.

However, partners in partnerships who pay contributions for own insurance must cancel their contribution payer status and insurance coverage with ZUS separately.

A partnership of a suspended limited partnership, general partnership, professional partnership, and a one-person limited liability company must submit the following forms to ZUS:

• ZUS ZWPA (to cancel the contribution payer status)
• ZUS ZWUA (to cancel the insurance coverage)
• ZUS ZCNA (to cancel the insurance coverage for family members)

In the case of a suspended general partnership, professional partnership or limited partnership, partners who are natural persons are not covered with social insurance:

• from the start date of the suspension period
• until the day preceding the date when business activity is resumed

In this period, a partner may register for voluntary retirement pension and disability insurance and pay relevant contributions, provided that they are not subject to compulsory insurance on a different basis (for instance, under an employment contract or a contract of mandate).

To register for such voluntary insurance, submit the ZUS ZUA form.

Check how to do it in the ZUS Handbook on voluntary retirement pension and disability insurance (PL).

A partner may not register for voluntary sickness and accident insurance.

Please note! If as a natural person you are a partner in a partnership that has suspended its business activity and you are not entitled to health insurance on a different basis (such as, for instance, an employment contract), consider paying voluntary health insurance contributions.

Your right to public healthcare services expires 30 days after the end of the period covered with health insurance. Therefore, if you wish to be entitled to healthcare services during the suspension period, you should register for voluntary insurance with the National Health Fund (NFZ) (unless you are entitled to insurance on a different basis, for instance under an employment contract or a contract of mandate).

Please note that when a company/partnership is to resume its business activity, this does not require a new registration for insurance coverage.

More on how to register for voluntary insurance (PL).

Suspending a company/partnership and taxes

Please note that there are differences in taxation depending on the partnership type, and different taxation rules for companies:

• general partnerships and professional partnerships are not income tax payers – any income earned from the partnership’s activity is the income of its partners
• limited partnerships and partnerships limited by shares are payers of corporate income tax (CIT)
• limited liability companies and joint stock companies are payers of corporate income tax (CIT)

Please note! A general partnership may become a corporate income tax payer if its partners are also legal entities and the partnership has not informed the head of the tax office of this fact before the beginning of the tax year or has not updated the information on its partners within 14 days from the change.

Tax advance payments and lump-sum tax

If a general partnership or a professional partnership suspends its business activity, its partners are exempted from tax advance payments for the suspension period. It is important to note that partners in those partnerships are exempted from income tax advance payments on income earned through such partnerships during the suspension period.

This means that if they earn income from other sources they must make tax advance payments on such income according to applicable rules.

Companies, partnerships limited by shares and limited partnerships do not make income tax advance payments for the suspension period.

Taxpayers of lump-sum tax on registered revenues (this form of taxation is available to partners in general partnerships) do not have to calculate and pay such lump-sum tax on registered revenues during the suspension period.

Annual tax return

Please note that suspending business activity does not cancel the obligation to submit an annual tax return, in which the company/partnership must inform the tax office of the suspension period (item L.1.1 of the CIT-8 form).

The CIT-8 tax return must be filed by companies, partnerships limited by shares and limited partnerships.

Find out how to submit the CIT-8 form (PL).

In the case of a general partnership or a professional partnership, their partners must include the information on the suspension period in their annual tax returns for the period during which the suspension period started.

If:

• a partner in a general partnership or a limited partnership is a corporate income tax (CIT) payer, they must submit the CIT-8 form and indicate the suspension period of the partnership in item L.1.2.
• a partner in a partnership is a personal income tax (PIT) payer, they must submit the PIT-36 form (for those who have chosen the tax scale) or PIT-36L form (for those who have chosen the flat rate tax), together with the PIT/B appendix and indicate the suspension period of the partnership in part E of the appendix
• a partner in a general partnership a payer of lump-sum tax on registered revenues, they must submit the PIT-28 form, together with the PIT-28/B appendix and indicate the suspension period of the partnership in part D of the appendix

Please note! During the suspension period those assets which are not used as a result of the suspension period may not be depreciated.

Those assets are not subject to depreciation starting from the month following the month in which the business activity was suspended. The pause in depreciation lasts until the end of the month in which business activity is resumed.

What a company/partnership can do during the suspension period

During the suspension period a company/partnership may not:

• run its business
• earn current revenues

However, it may perform certain actions in order to secure its source of revenues and to run its business after the suspension period ends.

In particular, during the suspension period a company/partnership may:

• accept any payables that arose before the suspension
• receive financial revenues resulting from actions performed before the suspension
• dispose of own fixed assets and equipment
• pay any liabilities that became payable before the suspension
• perform any actions necessary to secure revenues
• secure the source of revenues
• appoint or dismiss a succession manager

During the suspension period a company/partnership is required to:

• take part in any administrative, court or tax proceedings, or any proceedings related to its business
• perform obligations resulting from legal provisions
• take part in inspections
• submit annual financial statements
• keep its accounting books
• pay any amounts due under public law (such as any real property tax, tax on the means of transport, environmental charges)

Read selected individual interpretations of the Minister of Finance on performing specific actions during the period of business suspension (PL).

Suspension of a company/partnership and a cash register

In the event of business suspension it is not required to:

• apply to have the cash register removed from the registry kept by the tax office
• make any periodical technical inspections – provided that you do not keep the register of sales in this period

Please note! If the date of the obligatory technical inspection of the cash register falls within the suspension period, the company/partnership must perform the inspection upon resuming its business activity and before it starts to record sales again.

If during the suspension period you have sold any items of your business property or any fixed assets to an individual or a flat-rate farmer, you must register such transactions with your cash register and prepare a daily report, and a monthly report as well. In the event of sale to other entities, you must issue an invoice.

VAT during the suspension period

VAT statements, JPK VAT form

During the suspension period it is not required to submit the JPK_V7M and JPK_V7K statements.

An exemption from the obligation to submit tax statements applies only to full settlement periods. Therefore, it is necessary to submit a statement for any period (a month or a quarter) in which business activity has been conducted, even if it was just for one day. This means that if a company/partnership has suspended its business during a month/quarter, it must submit a JPK_V7M/JPK_V7K statement for this period.

Example

A partnership performs consultancy services and submits its VAT-7 statement monthly. It suspended its business activity on 30 March 2020 and does not have to submit VAT statements for the suspension period (exemption from the obligation to submit VAT statements applies to a full settlement period). It will submit its last VAT-7 statement (for March) by 25 April.

There are certain situations, however, when the exemption from the obligation to submit JPK_V7M/JPK_V7K statements during the suspension period will not apply. The statements must be submitted if during the suspension period:

• there occurs an intra-Community acquisition of goods, an import of services or a purchase of goods and as a result of such purchases the company/partnership has become a VAT payer
• there occurs the need to make an adjustment of the VAT proportion (this applies to taxpayers who calculate their taxes under the proportion mechanism and are required to adjust the amount of tax deduction given in the statement for the first settlement period of the next tax year)
• the company/partnership wishes to exercise the right to make a tax deduction, for instance as regards the costs of fixed-term agreements, such as for phone services or renting premises – submitting a tax statement is required in order to be entitled to tax deduction
• there occurs the need to correct an earlier tax statement – the exemption from the obligation to submit tax statements does not apply to periods in relation to which it is required to correct any amount of calculated tax
• actions have been performed that give rise to an obligation to settle tax

Example

A professional partnership that had suspended its business activity from March 2020 until the end of the year, in July 2020 sold its computer equipment that was part of its business equipment. The partnership was entitled to perform this transaction since equipment that is not in use is losing its worth and is more prone to failures, which means losses to the business. The partnership calculated VAT on the transaction. As a result of this transaction, which was subject to VAT, the partnership was required to submit a VAT-7 statement for July, by 25 August 2020.

If the partnership does not make any intra-Community transactions during the suspension period, it will not be necessary to submit an EU VAT statement.

Register of VAT payers

Suspension of business for at least 6 months results in removing the company/partnership from the register of VAT payers. After the suspension period the company/partnership is re-entered in the register without the need to submit a registration application.

If during the suspension period the company/partnership is to perform any actions subject to VAT, it is required to notify the head of the relevant tax office, indicating the period in which such actions are to be performed. The notification should be submitted:

• before the start date of the suspension period, or
• before the date of such actions during the suspension period
• indicating the periods in which such actions are to be performed.

If you submit such a notification, you will not be removed from the register of VAT payers or your VAT payer status will be reinstated for the period indicated in the notification.