The most significant benefit of a commercial company suspending its business activities is that the company is exempt from the obligation to pay income tax advances. During the period of suspension of business activities:
- partners in partnerships (general partnerships, professional partnerships and limited partnerships) are exempt from the obligation to pay income tax advances (PIT or CIT) for the period of suspension in respect of income earned through the partnerships that have suspended their operations;
- capital companies, limited joint-stock partnerships and limited partnerships are exempt from the obligation to pay CIT advance payments for the period of suspension of business activity.
There is also no need to submit ZUS or VAT returns (with certain exceptions). During the period of suspension of operations, an entity entered in the National Court Register (KRS) should not undertake any activities related to its business operations, except for actions aimed at preserving or securing its source of income. A company entered in the KRS may therefore, during the period of suspension of operations, undertake only activities designed to enable it to resume business operations.
The first step towards suspending business operations by a company is to adopt an appropriate resolution. In the case of partnerships, such a resolution is adopted by the partners. In the case of limited companies, however, the resolution to suspend business operations is adopted by the company’s management board. The resolution to suspend business operations must specify the date from which the company will be subject to suspension and indicate the period of suspension, which must not be shorter than 30 days nor longer than 24 months. The date specified in the resolution is the date on which the suspension begins, though it may not be earlier than the date of submission of the application to the National Court Register (KRS).
A condition for the suspension of business activities by a company is that it does not employ staff. If a company intends to suspend its business activities, it must first terminate the employment contracts with all employees. This requirement does not apply to persons with whom the company cooperates on the basis of a contract of mandate or a contract for specific work.
The fact that no employees are employed is demonstrated by drawing up an appropriate declaration. In the case of partnerships, such a declaration is signed by the partners, and in the case of limited companies – by the management board.
Once the period of suspension of business activities has expired, the company must submit an application to have the resumption of business activities entered in the register, failing which the registry court may initiate an investigation, impose a fine, or even strike the company off the National Court Register.
Of course, the company may adopt a resolution (by the partners of a partnership or the management board of a corporate entity, as applicable) to resume business operations before the expiry of the suspension period specified in the resolution on the suspension of business operations by the company.
Consideration should be given to a situation where, following the expiry of the 24-month period of suspension of business activities, business activities are not resumed and no application for the resumption of business activities is submitted.
The question arises as to whether, in such a case, an application for the resumption of business activities should be submitted, specifying as the date of resumption the day following the expiry of the 24-month suspension period (and thus a date prior to the date of submission of the application)? Or should one proceed in accordance with the principle that the date of resumption cannot be earlier than the date of submitting the application (and therefore resumption will take place after the expiry of 24 months)?
Answers to the above can be found in the Act of 6 March 2018 – Entrepreneurs’ Law (i.e. Journal of Laws of 2022, item 1570, as amended). Pursuant to Article 24(6) of the Act – Entrepreneurs’ Law, “In the case of an entrepreneur entered in the register of entrepreneurs of the National Court Register, the period of suspension of business activity shall last no longer than until the day preceding the date of automatic entry of information on the resumption of business activity in accordance with the rules laid down in the Act of 20 August 1997 on the National Court Register (Journal of Laws of 2019, items 1500, 1655 and 1798, and of 2020, item 288).”
It follows from this provision that automatic entry in the Register of Entrepreneurs of the National Court Register regarding the resumption of business activity by the Company is an exceptional situation applicable where the entrepreneur has not submitted an application for entry of the resumption of business activity before the expiry of the 24-month period from the date of suspension of business activity. The above is also contained in Article 24(1) of the Entrepreneurs Act, according to which “The suspension of business activities and the resumption of business activities shall take place at the entrepreneur’s request, unless a separate provision provides otherwise.”
Given the provision of Article 23(2), according to which “An entrepreneur entered in the Register of Entrepreneurs of the National Court Register may suspend business operations for a period of between 30 days and 24 months”, it is therefore generally not possible to adopt a resolution on the resumption of business operations once the 24-month period of suspension has been exceeded. Furthermore, it follows from the wording of Article 24(2) that “In the case of an entrepreneur entered in the Register of Entrepreneurs of the National Court Register, the period of suspension of business activity shall commence on the date specified in the application for entry of information regarding the suspension of business activity, not earlier than the date of submission of the application, and shall continue until the date specified in the application for entry of information regarding the resumption of business activity, which may not be earlier than the date of submission of the application.”
This leads to the conclusion that:
- the suspension of the Company’s business activities may not last longer than 24 months, as this is inconsistent with the provisions of Article 23(2) of the Entrepreneurs Law.
- the date of resumption of business activity cannot be earlier than the date of submission of the application.
The above raises doubts, as registration courts rarely automatically enter a note regarding the automatic resumption of business activity in the KRS Register of Entrepreneurs. This leads to a situation where the principle of legal certainty is called into question, as, according to the provisions, the suspension of the Company’s business activity may not last longer than 24 months, and the date of resumption of business activity may not be earlier than the date of submission of the application.
Based on a functional interpretation of the provisions of the Business Law, one may conclude that the purpose of the provisions is to prevent a situation in which the 24-month period of suspension of business activity is exceeded. This is, after all, the maximum period. If the Company has not managed to submit the application before the expiry of the 24-month period of suspension of business activity, it seems reasonable that the entry in the National Court Register should be made with a retroactive date.
He gained his professional experience in one of Lublin's renowned law firms, dealing with civil and business law in its broadest sense. At the law firm Hewelt Wojnowski i Wspólnicy spółka komandytowa, he deals on a daily basis with current counseling in the field of business and the development of corporate documentation of companies, such as. Company agreements, bylaws of company bodies, agreements regulating relations between shareholders, resolutions of company bodies, M&A transactions. In addition to…
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