How to close an ApS or IVS
In order to close an ApS or IVS, you first need to decide on a strategy.
The strategy you choose will mainly depend on the financial situation of the company.
Finally, there can be a situation, where action to close the company is initiated by the court, and then the decision, of course, is not yours to make anymore.
There are 5 important types of closures and proceedings to know:
1: Voluntary liquidation (decided by the shareholders);
2: Compulsory dissolution (ordered by the court);
4: Bankruptcy (petition filed by the company or a creditor);
5: Liquidation using a statement from the shareholders (decided by the shareholders).
1: Voluntary liquidation (decided by the shareholders)
In order for the company to close through voluntary liquidation, the company has to be solvent.
Being solvent means that the company has more assets than debts.
When closing the company through voluntary liquidation, then the company will announce publicly that it has decided to liquidate.
It gives the company creditors 3 months to submit their claims.
When the company is liquidated, the shareholders are protected against future claims.
A liquidator handles the liquidation process.
Often this will be a lawyer.
2: Compulsory dissolution (ordered by the court)
A compulsory dissolution can be ordered by the court if a company f.ex.:
Fails to submit the annual report on time;
The Managing Director resigns;
If the company have an audit requirement and the auditor resigns without a new auditor being appointed.
During a compulsory dissolution, a liquidator is appointed by the court.
The liquidator will review the financial situation of the company.
If it turns out that the company is insolvent, the company will be taken under a bankruptcy proceeding.
Should the company turn out to be solvent, it will be dissolved insteads.
If a company is able to restructure its activities and finances, to avoid a bankruptcy proceeding, then a company can submit a request to the court to be restructured.
In this case, a restructurer will be appointed by the court, which will oversee the process.
4: Bankruptcy (petition filed by the company or a creditor)
If a company is insolvent it will always be closed through bankruptcy.
5: Liquidation using a statement from the shareholders (decided by the shareholders)
In order for the company to close through a liquidation using a statement from the shareholders, all debts in the company have to be paid.
At the time of closure, the shareholders will sign a statement that all debts have been paid.
It also will mean, that shareholders are personally liable later on, in case debts was not paid after all.
Or if new debts would arise later on. So it is not smart just to pretend, that everything has been paid in order to close the company.
Should something pop up later, you will need to pay yourself.
It also goes for potential lawsuits and future obligations, that you might try to avoid by making the closure.
So think carefully before choosing the §216 statement method of closure.
There should be no potential lawsuits or claims on the horizon.
The first step
The first step to close a company using a statement from the shareholders is getting all the accounting done, up until the day, where you want to close the company.
The second step
When the accounting is done, then the VAT can be declared for the last period. And after this, the VAT registration needs to be deregistered.
If the company have employees, that last salary needs to be done as well, and you need to make sure that all employee taxes has been declared for all periods. The company employer registration also needs to be deregistered. If the company are registered for other duties/obligations (f.ex. import/export/duties), then these also will need to be deregistered and all declarations need to be submitted.
Tax closure date
We then will inform the tax office from what day, the company will deregister for paying company income tax.
This day is usually not the same day, as the day the company will close.
First, we need to declare the company income tax up until the last “taxpaying day”.
After the company income tax has been declared, we then can retrieve a final statement from the tax office, stating that all tax and VAT has been settled (once of course, you have paid all due tax and VAT).
This statement from the tax office can usually take 3-6 months to get after we submit the request.
So the whole closing process is quite long.
However, this waiting time is the same for voluntary liquidation – and when using a statement from the shareholders, you do not have to wait 3 months for the creditors to submit their claims.
Statement from shareholders
Once we have the statement from the tax office that all debts are paid, we then will make a statement that the shareholders need to sign, stating that all current and future debts have been paid.
When this is signed by everyone, we can submit the final request to close the company at the Danish Business Authority.
The closure is usually a reality 1-2 weeks after we submit the request.
9 Important steps when closing a company using a statement from the shareholders
Here are the steps for a closure:
Step 1: Check that you have all invoices and bank statement until the day of closure.
Step 2: Finish the accounting up until the closure date.
Step 3: Declare VAT for all open periods.
Step 4: Check that employee taxes are declared – if you see any estimated amounts on the “Skattekonto” these needs to be solved.
Step 5: Deregister the company for VAT and as an employer (all duties/obligations).
Step 6: Submit the tax declaration for the previous tax year on SKAT Erhverv. And for the current year (the closing year) you need to make a special manual tax declaration in PDF (called “ophørende selvangivelse”). If the company has any estimated company income tax payable in the future these need to be zeroed (estimated income tax instalments are made 20.3 and 20.11 each year and can be changed on SKAT Erhverv). Also make sure to adjust the tax payment for the current year, so that it corresponds to the actual company income tax for the closing year, and then remember to pay the remaining tax.
Step 7: Apply for the statement from the tax office (“betalingserklæring”).
Step 8: Prepare the statement from the shareholders (“betalingserklæring”).
Step 9: Close the company on VIRK once you have both the statement from the tax office and from the shareholders.