Suspending a trade licence

What it means

Suspending a trade licence is a temporary break in business under a trade licence without cancelling it. The sole trader notifies the district office of the suspension and may not trade for the chosen period, but keeps the licence and can resume business when the period ends.

Suspension is notified in advance and can be chosen only for a period within the range set by the Trade Licensing Act. A trader who wants to resume earlier can end the suspension with another notification. The suspension is recorded in the trade register.

The most common reasons are maternity or parental leave, long illness, taking up employment or seasonal business. Suspension is simpler than cancelling and notifying a trade again, especially for regulated and craft trades where qualifications would have to be proven anew.

How it works in practice

Suspension is notified at the single contact point, which passes the information on to the Social Insurance Agency, the health insurer and the tax office. Even so, we advise clients to check that the insurers have recorded the change, as any mismatch later shows up as arrears.

During suspension, compulsory social insurance for the self-employed generally ends if the trader had it. For health insurance it must be established who will pay the contributions, for example the state during maternity leave or an employer; otherwise the person pays them themselves.

Tax obligations for the period before suspension remain. For a year in which they traded for at least part of the time, they file a type B tax return. If they are a VAT payer, the registration does not end automatically with the suspension, so returns must continue or deregistration be requested.

What to watch out for

During suspension the trader may not carry on the business or invoice new work. Only what was supplied before the suspension may be invoiced and collected. Trading during suspension counts as trading without a licence.

Suspension does not stop every cost. Premises leases, vehicle leases and other contracts keep running. Before suspending we therefore go through with the client what can be paused and what will have to be paid even with no income.