How to Put Your French Company Dormant: Steps and Rules

Are you experiencing a temporary drop in business, wishing to focus on another project without liquidating your structure, or facing passing difficulties? Putting your company dormant is a particularly advantageous strategic alternative. Often referred to as "mise en veille" (putting on standby), this legal procedure allows you to suspend a company's commercial activity while maintaining its legal existence. Unlike dissolution-liquidation, which signs the definitive death of the legal entity, putting a company dormant offers a saving grace. However, this freedom is strictly regulated by French law.

Here is the complete guide, written by our experts, to understanding how it works, the steps involved, and the pitfalls to avoid when putting your French company dormant.

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What is the Dormant Status of a Company (Mise en Sommeil)?

The mise en sommeil (dormancy) is a voluntary and temporary cessation of a company's activity. During this period, the company retains its personnalité morale (legal personality, including its legal existence, name, and registered office) but ceases all commercial, industrial, artisanal, or professional activity.

The Legal Framework and Substantive Conditions

This procedure is governed by the provisions of the Code de commerce (French Commercial Code). According to Article R. 123-165 of the Code de commerce, the temporary cessation of activity must be registered as an amending entry in the Registre du Commerce et des Sociétés (RCS - Registry of Commerce and Companies).

To be able to put your company dormant, several substantive conditions must be met:

• The absence of employees: The company must no longer employ any staff. If employees remain, the company must first proceed with their dismissal (on economic or amicable grounds) or wait for their contracts to end.
• The absence of active debts: Although the law does not formally prohibit putting an indebted company dormant, it is strongly discouraged to do so if the company is in a state of cessation des paiements (insolvency/unable to pay its debts). If the company can no longer meet its due liabilities with its available assets, the director has a legal obligation to declare the state of cessation des paiements (file for bankruptcy, known as dépôt de bilan) within 45 days, failing which they may face personal sanctions for management misconduct (faute de gestion).
• The agreement of corporate bodies: Depending on the legal form of the company (SARL, SAS, SCI, SA), the decision is made either unilaterally by the director or after consulting the shareholders in an Assemblée Générale Extraordinaire (AGE - Extraordinary General Meeting) or Assemblée Générale Ordinaire (AGO - Ordinary General Meeting), in accordance with the company's statuts (bylaws).

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Legal, Tax, and Social Security Consequences

Putting your company dormant does not mean it disappears from the administration's radar. Several obligations remain.

1. Legal and Administrative Aspects

The siège social (registered office) of the company must be maintained. If the company leases its offices, it must continue to pay its rent, unless the bail commercial (commercial lease) is terminated (which often requires transferring the registered office to the director's personal home address beforehand).

Furthermore, the director remains obliged to draw up the annual accounts at the close of each financial year, to convene the general meeting to approve the accounts, and to file the accounts with the greffe du tribunal de commerce (registry of the commercial court). However, simplified accounting measures exist for micro-enterprises and small businesses.

2. Tax Aspects

• Corporate Income Tax: The company remains subject to the obligation to file a tax return (liasse fiscale) with the mention "néant" (nil). No tax on profits (IS or IR) will be due since there is no turnover.
• VAT: As the company is no longer active, it no longer collects VAT. It is exempt from filing and paying VAT.
• Cotisation Foncière des Entreprises (CFE): The company remains liable for the CFE (local business tax) for the year it is put dormant. Beyond 12 months of inactivity, it can request a CFE exemption from its Service des Impôts des Entreprises (SIE - Corporate Tax Service).

3. Social Security Aspects

The fate of social security contributions depends on the status of the director:

• *The assimilé-salarié (employee-assimilated) director (President of a SAS/SASU, minority manager of a SARL):* In the absence of remuneration, no minimum social security contributions are due.
• *The Travailleur Non-Salarié (TNS - Non-Salaried Worker) director (Majority manager of a SARL/EURL): They remain liable for minimum social security contributions (health, basic pension, disability-death), even in the absence of income. These contributions generally amount to approximately €1,000* per year.

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Step-by-Step Practical Procedures

Since January 1, 2023, all company formalities must be carried out electronically on the Guichet Unique (Single Window) website managed by the INPI (National Institute of Industrial Property).

Step 1: Making the Decision

The director must formalise the decision. If the statuts require it, the shareholders must be convened to a general meeting. A procès-verbal (PV - minutes) of the decision to put the company dormant (or temporary cessation of activity) must be drafted and signed.

Step 2: Declaration on the INPI Guichet Unique

The legal representative has a period of 30 days from the effective date of cessation of activity to declare the event on the INPI platform.

You must attach the minutes of the general meeting (if applicable) and fill out the online form for the modification of activity.

Step 3: Publication in the BODACC

Once the formality is validated by the registry of the competent Tribunal de commerce (Commercial Court), the registry automatically inserts a notice in the BODACC (Official Gazette of Civil and Commercial Announcements). This publication makes the dormant status opposable to third parties (creditors, partners).

Note: Unlike other structural modifications, publishing a legal notice in a Journal d'Annonces Légales (JAL - Journal of Legal Notices) is not mandatory for putting a company dormant, which limits costs.

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Deadlines, Costs, and Key Figures to Remember

To plan this transition effectively, here are the essential financial and temporal figures:

• Declaration deadline: 30 days maximum after the date of cessation of activity to complete the formality.
• Maximum duration of dormancy: 2 years for a commercial company (SARL, SAS, SA). For an Entreprise Individuelle (EI - Sole Proprietorship), this period is limited to 1 year (renewable once for commercial activities).
• Cost of the dormancy formality at the registry: Approximately €190 (this rate includes registry fees, the INPI tax, and BODACC publication fees).
• Cost of maintaining minimum social security contributions (TNS): Approximately €1,000 per year.

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Concrete and Numerical Examples

To better understand the financial impact of putting a company dormant, let us analyse two distinct situations.

Example 1: Antoine's SASU (Employee-assimilated President)

Antoine is the president of a SASU (single-member simplified joint-stock company) in IT consulting. He decides to put his company dormant for 12 months to accept an employment contract abroad.

• Registry and INPI fees: €190
• Rent of the registered office: €0 (the registered office is at his personal home).
• Antoine's social security contributions: €0 (no remuneration paid, so no social security charges in a SASU).
• Simplified accounting fees: €400 (for the preparation of the nil balance sheet by his chartered accountant).
• Total cost of dormancy over one year: €590. Antoine preserves his company structure at a lower cost for his return.

Example 2: Sarah and Thomas's SARL (TNS Majority Manager)

Sarah is the majority manager of a SARL (limited liability company) in ready-to-wear retail (subject to the TNS status). She puts her company dormant for 2 years due to family restructuring. The registered office is located at a commercial domiciliation company.

• Registry and INPI fees: €190
• Commercial domiciliation fees: €30 per month, i.e., €720 over 2 years.
• Minimum social security contributions (TNS): €1,000 per year, i.e., €2,000 over 2 years.
• Accounting fees: €500 per year, i.e., €1,000 over 2 years.
• Total cost of dormancy over two years: €3,910. Sarah must ensure she has this cash flow available before launching the procedure.

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Mistakes to Avoid

Putting a company dormant appears to be a simple procedure, but it carries major legal and financial pitfalls:

• Exceeding the legal limit of 2 years: If you do not reactivate your company or dissolve it before the end of the 2 years, the clerk of the Tribunal de commerce can order an automatic strike-off (radiation d'office) of the company. You then lose control over the closure of your structure.
• Hiding a state of insolvency: Using dormancy to temporarily escape creditors when the company is insolvent is illegal. Creditors can apply to the court to cancel the dormancy and open a receivership (redressement) or judicial liquidation procedure, with potential liability claims for insufficient assets (insuffisance d'actif) against the director.
• Forgetting to terminate or suspend ongoing contracts: Professional insurance, phone subscriptions, SaaS software... Dormancy does not automatically suspend commercial contracts. You must terminate them individually in compliance with the contractual notice periods.
• Carrying out disguised activity: Issuing even a single sales or purchase invoice during the dormancy period immediately voids the "dormant" status of the business and exposes you to sanctions for undeclared work (travail dissimulé) or tax fraud.

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Frequently Asked Questions (FAQ)

Can I hire an employee while my company is dormant?

No. By definition, a dormant company no longer has any economic activity. Therefore, it cannot recruit new employees, nor can it maintain active employment contracts. Any existing employee must have left the company before the dormancy takes effect.

How do I reactivate a dormant company?

To reactivate your company (referred to as a reprise d'activité or resumption of activity), you must file a new declaration of modification on the INPI Guichet Unique. This process incurs registry fees of approximately €140. You can also take advantage of this resumption to modify the corporate purpose or transfer the registered office.

Is it possible to sell the company's assets during dormancy?

Day-to-day management is suspended, but the director retains the power to perform conservatory acts. The sale of a major asset (such as a fonds de commerce / business assets or real estate) is possible but must be approved by the shareholders. It generally marks the end of the dormancy or the beginning of an amicable liquidation.

What happens to the company's bank account?

The professional bank account must remain open to pay recurring charges (bank fees, minimum contributions, residual taxes). It is advisable to negotiate a reduction in account maintenance fees with your bank, as activity is non-existent.

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Summary

• Definition: Dormancy (mise en sommeil) temporarily suspends a company's activity without closing it down.
• Time limit: It is limited to a maximum duration of 2 years for commercial companies.
• Initial cost: The administrative formality on the INPI Guichet Unique costs approximately €190.
• Maintained obligations: Filing annual accounts with the registry and submitting nil tax returns remain mandatory.
• Social security contributions: TNS directors (majority managers) must continue to pay minimum contributions of approximately €1,000 per year.
• Outcome: At the end of the 2 years, the company must either be reactivated or dissolved, failing which it faces automatic strike-off by the registry.

Legal information for guidance only, not personalised legal advice. For your specific situation, ask your question free of charge on AvocatAI — answers based on French law, in your language.