Dormant or dissolved: what an inactive company still owes

Terms used

• Registro Mercantil — The Registro Mercantil is the public commercial registry where companies are registered, keep their books legalised and deposit their annual accounts.
• ICAC — The ICAC is Spain's accounting and audit authority, which can fine companies that deposit their accounts late.
• Modelo 200 — The Modelo 200 is the annual corporate tax return form.
• En liquidación — En liquidación means "in liquidation", the phrase a dissolved company must add to its name while it winds up.
• Baja provisional — The baja provisional is a provisional removal of the company from the tax census, which stops it issuing invoices.

Key rules

• Dormant is not exempt: A company with no activity still files its accounts and corporate tax return every year.
• Dissolved is not finished: A company in liquidation keeps its books, filings and tax returns until the tax deregistration.
• Fines: Late deposit of accounts can be fined from 1,200 to 60,000 euros, or up to 300,000 euros above 6 million euros of revenue.
• Debts survive: A closure by the registry or tax agency does not clear debts or directors' liability.

Being inactive does not cancel your duties

A company with no activity is still a company. Until it is legally liquidated and removed from the registers, it must keep filing. Skipping filings does not make the company go away. It freezes the company and builds up fines.

What a dormant company must do every year

If the company is not dissolved, do these things each year:

• Prepare the annual accounts within three months of year-end.
• Legalise the books (the accounts and the minute books) at the Registro Mercantil within four months of year-end.
• Have the general meeting approve the accounts within six months of year-end.
• Deposit the approved accounts at the Registro Mercantil within one month of approval.
• File the corporate tax return (Modelo 200) even with no activity.
• File VAT returns and any informative returns that apply, such as Modelos 347 and 390.
• Keep a registered administrator and the tax census data up to date.
• File the beneficial ownership details where they apply.

The timeline below shows the order.

What a dissolved company must still do

Dissolving the company does not end its duties. It keeps its legal personality while it is in liquidation. During that time you must:

• Add "en liquidación" to the company name.
• Keep books, and prepare, approve and deposit annual accounts.
• Keep filing corporate tax, VAT, withholdings and informative returns until the tax deregistration.
• Meet labour and Social Security obligations.
• Have the liquidators report progress to the shareholders, for example at the annual meeting.

Penalties for not filing

If the accounts are not deposited, the Registro Mercantil closes the company's registry sheet to new entries. Appointments, removals, the dissolution entry and the cancellation of the company are still allowed. The sheet stays closed until the accounts are filed.

The ICAC can also fine the company for late deposit. Fines run from 1,200 to 60,000 euros, or up to 300,000 euros if revenue is above 6 million euros. Directors can also be liable for damage caused. Several years without depositing can lead the registry and tax agency to treat the company as inactive.

If the registry or tax agency closes the company

The registry can cancel the sheet of a company that has not deposited accounts for several years, after notifying the company. The tax agency can place it in baja provisional, a provisional tax deregistration. A company in baja provisional cannot issue invoices, and registry entries are blocked.

This does not end the company's debts. Directors and shareholders stay liable, and the tax agency can still pursue directors for tax debts. The only way out is to complete the legal liquidation yourself. Do not wait for an office to close the company for you.

Timeline and deadlines

• Prepare the annual accounts: within 3 months of year-end

• Legalise the books (accounts and minute books) at the Registro Mercantil: within 4 months of year-end

• Have the general meeting approve the accounts: within 6 months of year-end

• Deposit the approved accounts at the Registro Mercantil: within 1 month of approval

Checklist

• Deposit the annual accounts at the Registro Mercantil every year, so the registry sheet stays open to new entries.

• Keep books, approve the annual accounts and deposit them while the company is in liquidation.

• Keep meeting the company's labour and Social Security obligations while it is in liquidation.

• Complete the legal liquidation instead of waiting for the registry or tax agency to cancel the company, because their cancellation does not clear debts or liability.

What to watch out for

• Unfiled accounts freeze the company and bring fines: If you do not deposit the accounts, the Registro Mercantil closes the company's sheet to new registrations, except for appointments, removals, dissolution entries and cancellation of the company. The ICAC can fine the company from 1,200 to 60,000 euros, or up to 300,000 euros above 6 million euros of revenue, and directors can be liable for the damage caused. Deposit the overdue accounts as soon as you can, since the registry stays closed until they are filed.

• Years without filing can lead to the company being treated as inactive: A long failure to deposit can be treated by the registry and tax agency as a sign the company is inactive. The registry can then cancel its sheet after notice, and the tax agency can put it on provisional deregistration (baja provisional), so it cannot issue invoices and registry entries are blocked. Respond to any notice from the registry or tax agency and bring the filings up to date.

• Cancellation does not clear debts: A registry or tax cancellation does not extinguish the company's debts or the liability of directors and shareholders, and the tax agency can still pursue directors for tax debts. Carry out the legal liquidation to close the company properly.

Frequently asked questions

Do I still have to file a corporate tax return if my company has no activity?

Yes, a dormant company that is not dissolved still files its corporate tax return (form 200) every year, even with no activity. VAT returns and any informative returns that apply, such as forms 347 and 390, are also due.

Does the company disappear if the registry or tax agency closes it?

No, a registry cancellation or a tax provisional deregistration (baja provisional) does not end the company's debts or the directors' and shareholders' liability. The company only ends properly through legal liquidation.

Can a company in liquidation stop keeping accounts?

No, a company in liquidation keeps its legal personality and must still keep books, approve its annual accounts and deposit them at the Registro Mercantil.