Belgium
Company Formation in Belgium
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Company Formation
Company formation in Belgium is a fairly straightforward 3-stage process:
- 20% of the total subscribed capital must be paid into a Belgian credit institution. A standard certification must be obtained which confirms that the capital is being held in a blocked capital account. This stage takes 1 day.
- A financial plan must be submitted to a notary, along with the deed of incorporation and company bylaws, which must be signed in the presence of the notary. The notary will then authenticate the documents and register the deed of incorporation. This takes a day and costs approximately EUR1140.
- Register with the Register of Legal Persons, VAT and social security. This takes 2 to 3 days, and costs approximately EUR125.
Requirements for establishing a business
- Open a corporate bank account
- Obtain a company number
- Register for VAT
- Register for social security
- Register for a health insurance fund
- Register a business name
It is essential to open a corporate bank (or other financial institution) account. It must be separate from a private account, and reserved for business use. The account number and name of the financial institution where the account was opened must be visible on all commercial documents. This process that must be one of the first priorities before trade begins and other administrative procedures commence.
- In order to obtain a company number, apply to the public business coordination centre. You must submit:
- Personal data of the company founders: full name, gender, occupation, address, place and date of birth, nationality and a residence permit/identity card
- Marriage certificate or contract details: spouse's original last names, marriage date (and date of divorce if applicable), type of marital contract
- Details of commercial activity: company name and logo, address, commercial activity, net surface area devoted to sales (retail business), date of commencement of trading.
- Evidence of a fundamental knowledge of management
- Certified copy of documents which authorise the person wishing to conduct business in Belgium, and documents that validate that person's professional capacity.
- Bank account number
- Registration fee
More detailed information can be found at public business coordination centres
You will be issued with a company number by the public business coordination centre and documents outlining the nature and details of the business. Full details about the business will be published electronically on the Register of Companies. All company documents, such as invoices must visibly show the company number. It must also appear on company vehicles or corporate property used by the company.
The public business coordination provides information about other businesses, so if you require information you will be required to pay a small fee to gain access to this information.
Registration for VAT
You must register with the local VAT inspectorate or a public business coordination centre if your business is subject to VAT. You can find the addresses of VAT offices in the Belgium telephone directory, located under "SPF Finance".
Two certified copies of the memorandum and articles of association are required and it is free to register your company. Once the company has been registered, VAT must be charged on all goods and services it sells to its customers, ensuring that you make quarterly tax returns and also providing a record of the customers registered for VAT numbers annually.
Businesses and self-employed persons must register with a social security fund within 90 days of starting business. These funds can be found on the following link:
http://www.rsvz-inasti.fgov.be/en/contact/list_insurance_companies.htm
It is also necessary to register with a mutual health insurance fund, or with an ancillary health and disability insurance fund. For a list of health insurance funds, visit:
http://www.rsvz-inasti.fgov.be/en/contact/list_health_services.htm
Business name
Types of Commercial Company
- Company limited by shares (S.A./N.V)
- Private Limited Liability Company (S.P.R.L./B.V.B.A.)
- Co-operative Company
- European Economic Interest Grouping
Companies who wish to incorporate in Belgium may decide to conduct business through a subsidiary (incorporated under Belgian law) or a branch (incorporated under the laws of a foreign country).
Subsidiary
A subsidiary, formed under Belgian law, is a separate legal entity from its parent company.
A notarial deed must incorporate a subsidiary that takes the form of a Company Limited by Shares. It is also essential to provide an initial financial plan for a two-year period.
It is necessary to file the articles of association and the documents stating who have been appointed as directors and auditors of the company with the Court of Commerce. These need to be published in the Belgian Official Gazette within fifteen days. The language of the documents will be in either French or Dutch.
Costs involved:
- Notary fees, calculated as a decreasing percentage on the subscribed capital
- Registration tax of 0.5% on the subscribed capital
- Costs of publication in the Official Gazette
It is essential to register the business with the Trade Register and register for a VAT number.
Share capital and organisation
With a Company Limited by Shares, the minimum share capital requirement is 61,500 EUR.
A Company Limited by Shares must have a minimum of two shareholders; they can be individuals or legal entities. The Board of Directors makes decisions and manage the day-to-day operations of the company. One or several auditors must review the annual financial situation of the company, appointed by the Board of Directors.
At least three directors must be appointed at the General Meeting, and they do not necessarily have to be shareholders.
Private Limited Liability Company:
The Private Limited Liability Company is formed by one or more persons who are only liable for the capital they invest in the business. The shares are also, conditionally, transferable. The minimum capital amounts to 18,600 EUR and must be fully paid up to the extent of a third (6,200 EUR). This type of company appoints only one director.
Branch
Unlike a subsidiary, a branch is a part of the legal entity of the (parent) foreign company.
A foreign-registered company must file a copy of its articles of association with the Court of Commerce, in addition to its decision to set up a branch in Belgium and the name of the manager or chief executive of the branch and their authorisation as a legal representative of the company in Belgium.
Costs involved:
- Translation fee for the articles of incorporation and the by-laws of the parent company into either French or Dutch;
- Publication fee in the Belgian Official Gazette;
- The company must file translated financial statements of the foreign company (both annual accounts and consolidated annual accounts) with the National Bank of Belgium;
- Again, the branch must register with the Trade Register and also apply for a VAT number (which doesn't cost anything extra).
Share capital and organisation
No minimum capital is required, but the parent company must invest enough money to conduct the business in Belgium. If a branch has in excess of 100 employees, a qualified statutory auditor must be appointed. Branches of foreign companies in Belgium follow the same rules and regulations as Belgian companies.
Subsidiaries and Branches compared
A subsidiary's liability is limited to its assets, thus this means that the shareholders are not personally liable beyond the amount of invested capital. A branch differs in that way because it is not a legal entity with a legal personality separate to that of the foreign company, so the foreign company will face any obligations that occur as a result through the decisions or actions of the branch, even if their location is abroad. To prevent this from happening, the foreign company may decide to establish an entirely owned subsidiary at home, which will then set up the branch.
Differences between Subsidiaries and Branches
Management
A subsidiary, formed as a Company Limited by Shares, is managed by a board of directors made up of at least two directors. The directors face no nationality or residence stipulations. The board of directors may decide to delegate powers so that one or more persons will be charged with daily management of the company.
A subsidiary under the form of a Private Limited Liability Company only admits one director. In contrast, it is necessary for a branch to appoint a legal representative, who doesn't need to be either a Belgian resident or national. An agreement within the branch can be made regarding the structure and the extent of the powers the representative is given.
Publication of annual accounts
A subsidiary is required to keep accounting records in accordance with the stipulations of Belgian law, and it is essential to publish a record of its annual accounts.
Branches must also keep a record of their accounts in accordance with the Belgian accounting rules, but unlike with a subsidiary, they do not have to publish an annual record. The accounts of the foreign company of which the branch is part of must, however, be published in either French or Dutch (one of the official languages of Belgium). The parent company operates in accordance with its own national system.
Alternative option: the Economic Interest Grouping
These are enterprises that have legal personality, providing companies or businesses with the opportunity to found a legally independent entity, to facilitate and develop their economic activities. The economic activity of the member companies must be taken into account and the collaboration should be a support system.
Foreign companies that are members of a Belgian resident EIG may be liable in Belgium to the non-resident corporate income tax if their business in Belgium is regarded as permanent establishment.
Offshore Companies
By choosing to incorporate an offshore company, business owners and investors can set-up a business outside the jurisdiction of its operations. Offshore companies are traditionally, but not exclusively, incorporated for lower fees and taxes. Business owners must abide the regulations of the offshore jurisdiction, and must not trade within the jurisdiction.
The benefits are vast. As aforesaid, reduced tax and fees are often big factors when considering offshore incorporation. A company may also choose and offshore location to:
- Simplify set-up and maintenance - entrepreneurs may find bureaucracy and red tape less of an obstacle in offshore jurisdictions
- Assume anonymity - the names of owners and directors are not for public record, and references to the company may only be made in its registered agent
- Ensure legal protection - for instance, some jurisdictions favour corporate governance, meaning a company is only liable to offshore laws as opposed to those in its areas of operation
- Protect assets - business owners may opt to arrange their assets and transactions in such a way that protects them from liability
Characteristics of an offshore company:
- Memorandum and Articles of Association
- Certificate of Incorporation
- Registered Office/Agent
- Shareholders / Members
- Directors / Managers
- Company secretary
- Statutory Register
- Bookkeeping
Traditional locations for offshore incorporation are tax havens, such as the British Virgin Islands, Panama and Monaco. Other favoured areas include India, the Bahamas, Dubai, the Cayman Islands, Cyprus, Seychelles, Marshall islands, Delaware, Turks & Caicos Islands, Hong Kong, Jersey, Guernsey and the Isle of Man.
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