Suspension of business activity and VAT

Service-Tax

The Entrepreneurs' Law Act gives the possibility to suspend business activities. If the entrepreneur decides to suspend his activity, he must submit a CEIDG-1 application. Through it, CEIDG immediately sends information by electronic means about the suspension of economic activity by the entrepreneur to the competent institutions. Do you know what obligations are generated by a VAT suspension?

Suspension of activities

The application for the suspension of business activity should contain the following data (listed in Article 5 (1) points 1-4 of the Act on the Central Register and Information on Economic Activity and the Information Point for Entrepreneurs):

  • name and surname of the entrepreneur, PESEL number, if he has one, and date of birth, if he does not have a PESEL number;
  • additional terms that the entrepreneur includes in the company, if the entrepreneur uses such;
  • REGON identification number of the entrepreneur, if he has one;
  • the entrepreneur's tax identification number (NIP), if any, and information on its annulment or revocation.

The entrepreneur may suspend the activity for a definite or indefinite period, but not shorter than 30 days. However, in the case of entrepreneurs entered in the National Court Register, it is possible to suspend the performance of business activities for a period from 30 days to 24 months. With the introduction of the Act - Entrepreneurs' Law, from April 30, 2018, there is no restriction on the possibility of suspending activities before the date of submitting the application (except for entrepreneurs entered in the National Court Register). In order to suspend the activity, the entrepreneur must submit the CEIDG-1 application to the commune office. After receiving the application for the suspension of activity to CEIDG, information about this fact is sent to the competent head of the tax office, the Central Statistical Office and the Social Insurance Institution or KRUS.

Suspension of activity and VAT

The period of suspension of business activity does not affect the status of the taxpayer as an active VAT taxpayer. Entrepreneurs taxed with VAT who have suspended the business activity, do not submit JPK_7V for the settlement periods regarding the time of suspension of activity, in accordance with art. 99 sec. 7a of the Value Added Tax Act.

The exemption from submitting JPK_7V during the suspension period does not apply to entrepreneurs who perform:

  • intra-Community acquisition of goods,
  • importing services or purchasing goods for which they are taxpayers,

as well as billing periods:

  • in which the suspension of business activity did not apply to the full settlement period,
  • for which the taxpayer is obliged to settle the tax for the performance of taxable activities and for which he is obliged to correct the input tax.

Therefore, if the entrepreneur performs activities permitted during the period of suspension of activity, resulting in the payment of output tax (e.g. sale of fixed assets and equipment), then he is obliged to pay VAT and correct the input tax. In the event that the entrepreneur receives a VAT invoice during the suspension period, which relates to the purchase before the suspension of business activity, he may deduct the input tax and submit JPK_V7. The paid VAT during the suspension period can be used only when the business is resumed.