Closing a limited company in Ireland requires careful planning to ensure you meet all legal obligations and minimise tax liabilities. This comprehensive guide walks you through every step.
Choosing the Right Closure Method
The best method to close your limited company depends on its financial position:
Option 1: Voluntary Strike-Off
Best for dormant companies
- Cheapest option available
- Takes 3-6 months to complete
- Company must have no assets, debts, or employees
- All annual returns must be filed
- Tax affairs must be up to date
Option 2: Members Voluntary Liquidation (MVL)
Best for companies with retained profits
- Tax-efficient way to extract profits (CGT vs income tax)
- Directors must sign Declaration of Solvency
- Licensed liquidator required
- Entrepreneur Relief may apply (10% CGT)
- Best for companies with assets to distribute
Option 3: Creditors Voluntary Liquidation (CVL)
Required for insolvent companies
- Formal insolvency process
- Licensed insolvency practitioner required
- Protects directors from wrongful trading claims
- Costs vary significantly based on complexity
Tax When Closing a Limited Company
Corporation Tax
- • Final Corporation Tax return required
- • Tax on any final profits
- • Capital gains on asset disposals
Extracting Retained Profits
up to 55%
Dividend (Income Tax)
10-33%
MVL (Capital Gains)
Entrepreneur Relief (10% CGT)
The first €1 million of gains may be taxed at just 10%. Requirements:
- • Minimum 5% shareholding
- • Director or employee for 3 continuous years
- • Company is a trading company
Step-by-Step Process
Make the Decision
Hold a board meeting to formally decide to close the company. Document this in the minutes.
Deal with Employees
Follow redundancy procedures, pay statutory redundancy (2 weeks per year), issue P45s, file final payroll returns.
Settle Debts & Collect Money Owed
Pay all outstanding creditors and collect any debts owed to the company.
Deal with Assets
Sell assets, transfer to shareholders, or otherwise dispose of company property.
File Final Tax Returns
Submit final Corporation Tax return, VAT return, deregister for taxes, request tax clearance.
Prepare Final Accounts
Prepare financial statements to the closure date, signed by directors.
Close the Company
Submit Form H15 for strike-off, or commence liquidation with licensed liquidator.
Common Mistakes to Avoid
- • Not obtaining tax clearance before applying for strike-off
- • Forgetting to deal with company assets before strike-off
- • Not properly terminating employee contracts
- • Failing to cancel contracts and subscriptions
- • Not keeping records for the required 6 years
Pro Tip
If your company has more than €25,000 in retained profits, an MVL is almost always more tax-efficient than taking dividends. The savings from Entrepreneur Relief (10% vs 55%) can easily outweigh the liquidator's fees.
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