If you would like to cease the economic activity of your French company temporarily, there’s a procedure known as “mise en sommeil”.
This action consists on pausing your activity with the aim of reactivating it in time. The period can last for a maximum of two years.
Before considering it, you must know that the process is only applicable to the head office. For your secondary establishments, if any, the only possible procedure is their closure.
The process is called “mise en sommeil” if your company is integrated by more than one member (Ltd, Inc...) or “cessation d’activités” for an individual company. Although essentially the same, there are some slight administrative differences.
WHY PAUSE YOUR PROFESSIONAL ACTIVITY?
There may be several reason for which a company decides to take a break in its activity, such as getting involved in a different project, personal or family issues, a decrease in the popularity of the business… Whatever the situation of the company, this decision is generally made when the director doesn’t wish to terminate permanently the activity of the company and wants to take some time to determine the future of the company.
However, it’s indeed important to consider two points:
- A “mise en sommeil” can’t be made in case of a lack of liquidity or even bankruptcy. In that case, the company has to be either sold or terminated. If the process is used in an attempt to hide the lack of funds, the director has to respond for it personally.
- The status can’t last longer than two years (1 year for an individual company, with the possibility to renew it for one more year). If exceeded, the Commercial Court will prodeed to the dissolution of your headquarters after having informed the director by certified mail.
HOW TO REQUEST THE “MISE EN SOMMEIL”
The director himself can choose this status for the company unless otherwise specified in the statutes of the enterprise. However, it's recommended to hold an extraordinary general assembly to agree on the temporary cease of your economic activity.
The following step is to declare it in the “Centre de formalités des entreprises” or CFE, so that the modification is registered in the Commercial Court. Nevertheless, the petition can be made directly to the Commercial Court.
From an administrative point of view, it’s necessary to present a ‘M2’ form, used for any modification of the company, to declare this pause. Such form must be signed and ideally registered by the director of the company or, by default, by an entitled party. Once it's registered, the Commercial Court will automatically publish the update in the French bulletin for commercial and civil advertisements (known as BODACC). The cost of this procedure is € 190,24 if the company has more than one member or € 104,34 in case of being an individual company.
While it’s not necessary from a legal point of view to publish an ad in a journal of legal announcements, it may be useful to inform your potential costumers about your new status. However, it implies an extra cost.
WHAT ARE YOUR OBLIGATIONS?
While the obligations of a company with the status “mise en sommeil” are less than those of a fully operative one, there are few procedures you will still need to do:
- For the first year of “mise en sommeil”, you must pay the CFE rates.
- You must pay the VAT corresponding to the company.
- In case of being an individual company, you will need to renew the “mise en sommeil” after the first year if you want to prolong it.
- When declaring your taxes, you must add the mention “néant” (non-being) for your company to indicate that no professional activity is carried out.
- The accounts of your company must be declared and approved every business year without exception.
- The new status appears has to be reflected in your k-bis extract in the form of “not operative since DATE, followed by the number of your company.
The "mise en sommeil" must conclude after a two years period, after which it's necessary to resume your professional activity or liquidate the company.