- February 26, 2019
- Posted by: Editorial
- Category: Termination
Pausing your French company
Sometimes, you might want to put the activities of your company on hold, without actually having to close your company. In France, putting your company “to sleep” allows you to do just that.
What exactly does “putting a company to sleep” mean?
Putting a company to sleep effectively means willingly stopping all activity for two years. This break is meant to be temporary, though, and as such, the company remains on the RCS (Commerce and Companies Register).
This isn’t a way to hide the financial difficulties of your company, though! 3 conditions must be met before putting a company to sleep:
- You need to be able to stop the activity of the company about at the time of putting the company to sleep
- The company needs to be able to survive without its activity
- All potential branches of the company need to be closed
It’s worth noting that the legal representative of a company is the only one who can put a company to sleep.
How does the company function when it’s “asleep”?
The company might cease all activity, but it still continues to function on a social and fiscal level. In particular, you have the obligation to do the accounting of your company, and file your tax returns (though, you will not pay any taxes since the company doesn’t make a profit).
However, you do still have to pay social contributions for managers and employees. Of course, this does mean that you get to keep your social benefits.
What happens after the two years of “sleep”?
At the end of the two years, you have two options:
- Definitively close your company
- Reactivating your company
If you don’t choose either option, the Commercial Court will automatically close your company. Though, the legal representative does have 6 months to react, so it’s unlikely that your company will be closed without your consent.