Closing a business

If you're planning to close a business in the EU, whether as a voluntary decision or due to financial difficulties, it's important to understand which rules apply at EU and national level, and where to find help and advice.

Voluntary closure

If your business is solvent and you are choosing to close it, the procedure will largely depend on the national rules of the country where your business is registered. Typically, you will need to notify the relevant business registry, settle any outstanding debts and tax obligations, file final accounts, and formally deregister from social security and tax systems. These steps, including the required documents and timelines, are determined by each EU country.

Closure due to financial stress or insolvency

If your business is struggling to pay its debts — for example, you can’t meet payroll, settle invoices, or keep up with tax payments — you may need to enter insolvency proceedings or consider early restructuring options. The exact steps and consequences depend on the national rules in your country, but EU-wide rules also provide important rights, especially if you do business across borders.

Options to save your business

If you are experiencing financial difficulty, EU rules give you the right to access early restructuring measures designed to help you act before becoming formally insolvent and keep your business running if it is still viable.

You may be able to:

• Pause debt recovery temporarily: Request a freeze on enforcement actions for up to four months (extendable in some cases) while you negotiate a restructuring plan
• Negotiate a restructuring plan: Work with your creditors to reduce or reschedule debts under a plan that must be approved by a court or administrative authority. You can usually stay in control of daily operations during this process
• Use early warning tools: Many countries offer automatic alerts for missed payments, public advisory services, or support from accountants and chambers of commerce to help you act early

Applications for restructuring are handled by your national court, insolvency authority, or business registry, often with the help of a lawyer or accountant. Free or low-cost help may be available through national early warning or advisory services. You can find links to national procedures via the EU e-Justice Portal.

Getting a second chance

If your business cannot be saved and you’re personally liable — for example, as a sole trader — EU rules give you the right to a second chance. This means you can apply to have your remaining unpaid debts cleared.

The full discharge must take place within three years from the start of the process. This allows honest entrepreneurs to start again without long-term debt.

Applications are usually handled by national insolvency authorities or courts. You can find guidance and contacts via the EU e-Justice Portal.

Cross-border insolvency

If you have operations, assets, or creditors in more than one EU country, EU rules determine which country's insolvency law applies. The key factor is where your business has its main centre of interests — usually where your head office and day-to-day management are located. That country will normally lead the case, and its rules will apply to most of the process.

Other EU countries must recognise and cooperate with the main insolvency case. In some situations, national authorities in another country may deal with local assets or creditors, but only to a limited extent.

Obligations to employees

When closing your business, you must comply with national rules on terminating employment contracts and informing and consulting employees.
If your business becomes insolvent and cannot pay wages or other entitlements, national guarantee institutions — required under EU law — will cover employees’ unpaid pay and certain benefits for a limited period. This protection applies in every EU country.

Tax, accounting and deregistration

Most steps related to tax, accounting, and deregistration are set at national level. However, if your business was VAT-registered for cross-border trade, you must complete final VAT returns and notify tax authorities about closing your EU VAT registrations. If you operated in more than one EU country, you may also need to inform the business registries and tax offices in each country where you were active to properly close your presence there.

Get access to national information on insolvency and other questions related to closing your business below.