Obligations towards insurers when closing a business

When you close or suspend your trade licence, it is not enough simply to cancel the authorisation at the trade licensing office (živnostenský úrad). The end of your business also involves contributions and obligations towards the Social Insurance Agency (Sociálna poisťovňa) and your health insurance company, which are often forgotten – and neglecting them leads to unnecessary arrears and penalties. Many entrepreneurs mistakenly believe that cancelling the trade licence automatically ends all their contribution obligations as well, but the opposite is true – without active deregistration, the insurer may continue to record your insurance as open.

Deregistering from the Social Insurance Agency

If you had compulsory social insurance as a self-employed person (SZČO), your insurance ends when you close your business, and you need to deregister within the statutory time limit. Deregistration ensures that your contribution obligations stop accruing and that the agency does not keep an open insurance record on which debt would build up. You also need to deregister if you did not actually carry out any activity in the last months before closing the business – what matters is the legal status, not whether you actually invoiced anything.

• deregister within the statutory time limit after closing the business
• pay the remaining contributions for the last month of business
• check that you have no outstanding arrears

Deregistering from the health insurance company

You must also notify your health insurance company that you have closed your trade licence. At the same time, you must tell the insurer who will pay your contributions after the closure – whether you are starting employment, becoming a person insured by the state (for example as a registered jobseeker) or becoming a self-payer.

Final annual reconciliation

Even after closing your business, you still face the annual health insurance reconciliation for your last year of activity. It may result in an underpayment or an overpayment. It is therefore worth keeping a financial reserve even when you are no longer in business, so that any underpayment does not catch you off guard.

Tax return for the last year

For the year in which you closed your trade licence, you file the tax return in the following year as usual. It is from this return that the insurers determine the final amount of the contributions. Closing your business therefore does not mean that all your obligations are settled immediately – they carry on for several more months.

• tax return for the last year of business
• the final settlement of contributions is based on it
• obligations continue even after the trade licence has been cancelled

Do not forget other institutions

Apart from the two insurers, closing your business also affects the tax office and possibly other registrations. If you were a VAT payer, you deal separately with the cancellation of your VAT registration and your final tax liability. You notify the trade licensing office of the closure or suspension of your trade licence, and your time limits with the insurers also follow from this. It therefore pays to coordinate the whole process so that the individual steps follow on from one another and there are no periods when nobody pays health insurance for you, which would lead to arrears and to being listed as a defaulter.

Suspension vs. closure

The difference is significant. When a trade licence is suspended, insurance obligations are generally paused for the period of suspension, but the trade licence continues to exist and resumes once it is reinstated. When the business is closed completely, the obligations cease. In both cases, however, you must notify the insurers of the change in good time; otherwise the system records the insurance as ongoing.

Summary

Obligations towards insurers when closing a business include deregistration, paying the last contributions and the final annual reconciliation. At Bilvao, we guide our clients through the whole closure process so that they are not left with open arrears or unrecorded obligations. Check the specific time limits for the current period.

Related articles: How the assessment base for contributions is calculated, Contributions on dividends: when health insurance contributions are payable, Sick leave for self-employed persons and sickness benefits.

Frequently asked questions

Is it enough to cancel the trade licence at the trade licensing office when closing a business?

No. In addition to cancelling the authorisation, you must deregister from the Social Insurance Agency (if you were compulsorily insured) and notify your health insurance company of the closure, including who will pay your contributions from then on. Otherwise, your obligations may continue to accrue.

Will I still have to pay any contributions after closing my trade licence?

Yes, you may. You file a tax return for your last year of business, and on the basis of it the health insurance company carries out the annual reconciliation, which may result in an underpayment. It is therefore recommended to keep a reserve even after you have stopped your activity.