Cessation of activity: requirements for deregistration from the Business Census

Managing census status is a critical aspect for professionals and entrepreneurs. Recently, the Directorate General of Taxes (DGT) has specified the necessary conditions for a request for deregistration from the Census of Entrepreneurs, Professionals, and Withholders to be appropriate, especially in sectors where activity may experience periods without income.

What the DGT has ruled

The query concerned the possibility of requesting deregistration from the census based solely on a lack of sales. The Administration's criteria establish that the census deregistration declaration must only be submitted when there is an effective cessation of all business or professional activities carried out by the taxpayer.

In the specific case analyzed, which involved an agricultural activity, the DGT points out that to determine the appropriateness of deregistration, it is necessary to assess whether a real cessation of the economic activity has occurred. The absence of invoicing or sales is not enough to justify deregistration; the determining factor is the effective interruption of the business operation or professional practice.

What this means for you

If you are a natural person carrying out an economic activity, such as agriculture, you must understand that the mere lack of income does not constitute a cessation of activity. Remaining on the census implies that the structure or the capacity to carry out the activity remains in effect.

The applicable regulations, which include the General Tax Law (LGT), the General Regulation for the Application of Corporate Tax (RGAT), and the VAT Law (LIVA), require consistency between the economic reality and the situation declared to the Administration. A deregistration requested without a real cessation could lead to discrepancies with the tax authority.

What you should do

If you intend to stop paying taxes as an entrepreneur or professional, it is necessary to evaluate the following points:

• Verify the real cessation: Check whether all elements that allow for the development of the economic activity have been interrupted.
• Respect the deadlines: The notification of deregistration must be made within one month from the time the conditions for the cessation of activity are met.
• Document the situation: Have elements that prove the activity has effectively ceased to exist to avoid requests from the Administration.