Dissolution of a sole proprietor (FIE)
- Submission of application for dissolution by a FIE
- Payment of taxes and transfer of assets to personal use
- Deleting a FIE from the Commercial Register
In general, the dissolution of a sole proprietor (FIE) consists of the following steps:
- Submission of application for dissolution;
- Payment of taxes and transfer of assets to personal use;
- Deletion of the FIE from the Commercial Register.
The process of dissolving a FIE is fast and simple, compared to the process of dissolving a company. For dissolution of a FIE, a relevant application must be submitted to the Commercial Register. There is no need to submit a separate application to the Tax and Customs Board. Before submitting the application to the Commercial Register, the FIEs who are registered as taxable persons for VAT must first apply to the Tax and Customs Board for deletion from the VAT taxpayer register.
In order to be able to transfer assets used in business to personal use, you will first have to pay all of the required taxes and obligations. The most important taxes you must bear in mind upon dissolving a business are the income tax, the social tax and value added tax.
If you are a VAT taxpayer, you must pay VAT on unsold goods upon deletion from the VAT register, after deducting input VAT paid upon acquisition. The taxable value of the goods is the acquisition cost or, in its absence, the cost price. After dissolving the business and paying the obligations and taxes, you have the right to transfer the assets into personal use. Upon dissolving a FIE, the market price of assets, the acquisition cost of which was recognized as a business expense, will be considered business income. You will have to pay income tax on business income upon dissolution. Assets transferred to personal use may be used by you and your family members in your/their personal interests or by third parties to whom you grant the assets for use.
After you have complied with all obligations as a FIE, submit an application for deletion from the Commercial Register to the Commercial Register. The most convenient way to submit an application for a deletion entry is electronically via the e-Commercial Register’s Company Registration Portal. You will need an ID-card and digital signature capability.