Cancelling a trade licence

What it means

Cancelling a trade licence permanently ends the authorisation to trade. The trade licensing office cancels it at the business owner’s request or on its own initiative, for example if the owner no longer meets the conditions, seriously breaches their obligations or has not traded for a long time. The request can now be filed electronically.

Unlike suspension of a trade licence, which is temporary and can be reversed, cancellation is final. To trade again, the person must apply for a new licence. Where someone holds several trades, just some can be cancelled while the rest continue.

Cancelling the licence does not automatically end the business for tax and contribution purposes. The final tax return, adjustments for unpaid receivables and payables, cancellation of VAT registration, deregistration from the insurers and what happens to business assets all still need to be dealt with.

How it works in practice

When a client closes their trade, we prepare a checklist with deadlines. If they are VAT registered, they apply for deregistration and account in the final return for VAT on remaining assets and stock. The health insurer must be notified of the change of payer within the statutory deadline.

In the type B tax return for the year of closure, the tax base must be adjusted. Under cash-basis tax records, unpaid receivables and stock are added and unpaid payables deducted. For assets the owner continues to use privately, their removal from the business is dealt with.

The Social Insurance Agency ends compulsory self-employed insurance based on the cancellation data. It is still wise to check that cover ended on the correct date and that no arrears remain. Final top-ups of self-employed contributions or health insurance can arrive up to a year after closure.

What to watch out for

The most common mistake is cancelling the licence and forgetting the final tax return or base adjustment. The former trader then receives a notice and a penalty for non-filing, or an additional tax assessment. Obligations for the year of closure continue after cancellation.

Cancelling the licence does not cancel business debts. The individual remains liable with all their personal assets for debts to suppliers, the state or banks even after trading stops. It is therefore best to settle liabilities before cancelling or to have a clear plan for repaying them.