Suspension of economic activity and EU VAT

Service-Tax

When a person wants to suspend business activities, he must first of all not employ any employees. The suspension of business activity may last from 30 days to 24 months.

Suspension of business activity generates specific rights and obligations on the part of the entrepreneur:

  • performing all activities necessary to maintain or secure the source of income,
  • accepting receivables or settling liabilities arising before the date of suspension of business activity,
  • sale of own fixed assets and equipment,
  • participation in court, tax and administrative proceedings related to business activities performed before the suspension of business activities,
  • earning financial revenues, also from activities conducted before the suspension of business activities,
  • undergoing inspection on the terms provided for entrepreneurs conducting business activity,
  • performing all obligations prescribed by law.

In addition, during the suspension of business activity, entrepreneurs do not have to submit VAT returns for the settlement periods related to the suspension period. However, if the trader purchases goods and services in the EU, he must register for EU VAT intra-community transactions. VAT taxpayers who make intra-Community supplies of goods, intra-Community supplies of services or intra-Community acquisitions of goods, are required to register EU VAT. The EU VAT taxpayer must submit summary declarations only for the months in which the tax obligation arose. As a rule, he is not obliged to submit tax declarations for the settlement periods to which the suspension applies, provided that during this period they have not made transactions indicated on VAT_UE. This is what Art. 99 sec. 7a of the Act of March 11, 2004 on tax on goods and services (Journal of Laws of 2011, No. 177, item 1054).