Updated: May 12
Learn and understand how to close a company in Ireland in a cost effective manner.
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Why Close a Company
Shareholders may look to close their business for a variety of reasons. Generally, a business has ceased trading prior to closure and shareholders would like to liquidate, or extract, the assets from the business. Another more common situation is that an individual no longer wants to trade (or never began trading) as LTD and wishes to close the company to avoid time and fees associated with administration.
In other situations, the CRO may involuntarily strike-off a business for non-compliance with regulations. This is discussed below and has several consequences as a result.
Voluntary Strike-Off & Process
A company that ceases to trade, or has never traded, and has no outstanding creditors can request that the Registrar strike off the company. Under the Companies Act 2014, this procedure has been placed on a formal setting.
The following conditions must be satisfied in order to voluntarily strike-off a company;
- A business has never been carried on or the business has ceased;
- A form H15 has been issued to the CRO and at date of application;
Amount of assets in company does not exceed €150;
Amount of liabilities in company does not exceed €150; and
The company is not part of any ongoing or pending litigation.
- All required returns have been submitted;
- A special resolution passed and filed with the CRO prior to the H15 form;
- A letter of no objection is received from The Revenue Commissioners 3 months prior to H15 form; and
- The company has created an advertisement in at lease one national newspaper 30 dates prior to the H15 application.
After the above steps are complete the CRO will include details of the strike-off within the CRO Gazette which provides the public with 90 days to object to a strike-off. If no valid objections are made, the company will formally be dissolved.
Involuntary Strike-Off & Process
Companies have requirements under the Companies Act 2014, independent of a company's requirements with the Revenue Commissioners, and failure to file annual returns can result in a company being struck off the register.
It is advised to avoid this situation as there are several consequences, as outlined below;
- Any assets left in the company become property of the state;
- Following strike-off, the company is no longer considered a legal entity and any protection that limited liability offered is lost;
- The Director of Corporate Enforcement may make an application to the High Court to disqualify any directors involved with the company. Individuals may be subject to legal fees and disqualified as a Director for a length of time chosen by the courts.
The CRO will issue a strike-off letter prior to the commencement of proceeding. If a letter is received it is advised that a company contacts a professional in order to commence the process of normalising returns.
There are two types of liquidations, a Creditors Voluntary Liquidation (CVL) and a Members Voluntary Liquidation (MVL).
A Creditors’ Voluntary Liquidation is the liquidation of a company that cannot pay its debts as they fall due. The process is instigated by the company itself when the directors realise the company is insolvent, they are obliged by the company’s Act to put the company into liquidation. A liquidator will then go about realising assets and settling debts with various stakeholders in line with legislation.
An MVL is the process whereby a solvent company winds down in an orderly fashion and the assets or cash left in the company are distributed to the shareholders. The MVL route is open to any solvent company that has either discharged its debts or will undertake to discharge those debts within a 12-month period.
An MVL can be a tax efficient method of extracting funds from a company as all proceeds will be liable to Capital Gains Tax (33%) opposed to the marginal rate of Income Tax (52%) that would be liable upon other means of extraction. This form of liquidation can be coupled with Retirement Relief that could reduce your tax liability to nil (Note – there is no actual requirement to retire).
A dormant company is one that doesn’t trade and has no accounting transactions. Despite being dormant the company is still required to submit an annual return to with the Companies Registration Office. There are significant penalties for a company which misses its filing deadline. These include late filing penalties and even involuntary strike-off.
From a Revenue perspective, a form TRCN1 must be filed to ensure that all tax requirements are cancelled, and no future obligations exist.
Summary: How to close a Limited company in Ireland
The closure of a company depends on the company’s circumstances and can be summarised as follows;
How we can help?
MyTax makes closing a Limited Company in Ireland as straightforward as possible for our clients. We manage the process from end-to-end, liasing with CRO, Revenue, newspapers, liquidators and complete all relevant forms. We can help;
Preparing and filing dormant accounts for your business;
Executing a voluntary strike-off for companies;
Arrange and liaise with a liquidator to liquidate your company;
Estimate and mitigate any CGT payable from a liquidation and
Normalise affairs with CRO / Revenue to avoid an involuntary strike-off.