3 Reasons for Cessation of Activity
Posted: Thu Dec 05, 2024 10:26 am
The self-employed worker or entity may cease their activity, but they are required to state the reason for the cessation to the tax authorities. When filling out the declaration of cessation of activity, it is possible to choose one of the three legal reasons for closing the activity.
1. Cessation of Activity - Article 34 of the CIVA
Under article 34 of the VAT Code, it is possible to cease activity when:
Cease to perform acts related to activities that determine taxation for a twitter database of two consecutive years;
If the company's assets are exhausted (either through the sale of the goods, their allocation for the owner's own use or their free transfer);
The undivided inheritance of which the establishment or assets used to carry out the activity are part shall be shared;
The transfer of ownership of the establishment is carried out.
2. Cessation of Activity - Article 114 of the CIRS
Article 114 of the CIRS mentions reasons why it is possible to cease activity:
Do not regularly perform acts related to business and professional activities;
Complete the liquidation of stocks and the sale of equipment;
The right to use and enjoy the properties used for the exercise of the activity is extinguished or given another purpose;
The undivided inheritance of which the establishment is part is shared;
If ownership of the establishment is transferred.
3. Cessation of Activity - Article 8 of the CIRC
This reason, described in article 8 of the CIRC , only applies to collective taxpayers :
Entities with headquarters or effective management in Portuguese territory (at the time of cessation of liquidation, merger or division, acceptance of an inheritance in abeyance or without conditions of subjection to tax);
Entities that do not have headquarters or effective management in Portuguese territory (at the time they cease activity or cease to obtain income in Portugal).
What is Cessation of Activity and when should it happen?
Termination occurs when a self-employed worker no longer wants or needs to continue working. There are several reasons for terminating a professional activity:
Experience a reduction in income that does not justify having an open activity;
Receive only a one-off amount, which may be invoiced as an isolated act;
Choosing to work with an employment contract for a company and, for that reason, not needing to have an open activity.
How to Close an Activity on the Tax Portal
The best way to end your activity as a self-employed worker is to access the Tax Portal and follow these steps:
Select Services > Submit > Declarations ;
Click on Activity ;
Choose Cessation of Activity ;
Fill out the declaration, validate and submit the document;
Print the proof of cessation of activity (you must attach the letter sent by the tax authorities).
It is not necessary to communicate the end of the activity to Social Security, as there is a cross-referencing of data between the Tax and Customs Authority and Social Security (Ordinance no. 121/2007, of 25 January).
When submitting your IRS declaration, you must mention the cessation of your activity (appendix B - table 12). After ceasing your activity, you have 30 days to notify the AT or you will be subject to paying a fine.
1. Cessation of Activity - Article 34 of the CIVA
Under article 34 of the VAT Code, it is possible to cease activity when:
Cease to perform acts related to activities that determine taxation for a twitter database of two consecutive years;
If the company's assets are exhausted (either through the sale of the goods, their allocation for the owner's own use or their free transfer);
The undivided inheritance of which the establishment or assets used to carry out the activity are part shall be shared;
The transfer of ownership of the establishment is carried out.
2. Cessation of Activity - Article 114 of the CIRS
Article 114 of the CIRS mentions reasons why it is possible to cease activity:
Do not regularly perform acts related to business and professional activities;
Complete the liquidation of stocks and the sale of equipment;
The right to use and enjoy the properties used for the exercise of the activity is extinguished or given another purpose;
The undivided inheritance of which the establishment is part is shared;
If ownership of the establishment is transferred.
3. Cessation of Activity - Article 8 of the CIRC
This reason, described in article 8 of the CIRC , only applies to collective taxpayers :
Entities with headquarters or effective management in Portuguese territory (at the time of cessation of liquidation, merger or division, acceptance of an inheritance in abeyance or without conditions of subjection to tax);
Entities that do not have headquarters or effective management in Portuguese territory (at the time they cease activity or cease to obtain income in Portugal).
What is Cessation of Activity and when should it happen?
Termination occurs when a self-employed worker no longer wants or needs to continue working. There are several reasons for terminating a professional activity:
Experience a reduction in income that does not justify having an open activity;
Receive only a one-off amount, which may be invoiced as an isolated act;
Choosing to work with an employment contract for a company and, for that reason, not needing to have an open activity.
How to Close an Activity on the Tax Portal
The best way to end your activity as a self-employed worker is to access the Tax Portal and follow these steps:
Select Services > Submit > Declarations ;
Click on Activity ;
Choose Cessation of Activity ;
Fill out the declaration, validate and submit the document;
Print the proof of cessation of activity (you must attach the letter sent by the tax authorities).
It is not necessary to communicate the end of the activity to Social Security, as there is a cross-referencing of data between the Tax and Customs Authority and Social Security (Ordinance no. 121/2007, of 25 January).
When submitting your IRS declaration, you must mention the cessation of your activity (appendix B - table 12). After ceasing your activity, you have 30 days to notify the AT or you will be subject to paying a fine.