SUBSIDIARY ENTITY SET UP IN BELGIUM

Corporations planning to extend operations in Northwestern Europe have the option of a subsidiary entity set up in Belgium to test the market. This can be a risky business venture, costly in time and money, with no guarantee of success from the effort and financial investment. A subsidiary established in Belgium is considered a legal entity separate from its parent company due to having its capital and independent administration. Foreign companies typically choose a limited liability company, an SRL in French or a BV in Dutch.

The Belgian Companies and Associations Code (BCAC) simplified the number of company structures to four. The SRL/BV is the default option, flexible for both large and small companies and especially suitable for foreign-owned subsidiaries. But setting up a subsidiary in Belgium is complex for foreign companies determined to handle the process themselves. Belgium has three legislative regions, each offering different potential and challenges and three official languages.

Expanding overseas is a significant step. If the move fails, companies face the added costs and bureaucracy of closing their operation, selling property and paying off employees. The sensible alternative is to use a Professional Employer Organisation (PEO) and Employer of Record (EOR), such as Bradford Jacobs, to find the best local talent and administer your payroll in Belgium. Your company will be up-and-running in days rather than weeks or months without any risks.

How to Set Up a Belgian Subsidiary?

Before taking the first steps into the Belgian economy, foreign companies must decide which business structure best suits their plans. The Belgian Companies and Associations Code (BCAC) simplified the number of company structures to four. The limited liability company SRL, in French, or a BV in Dutch, is the default option. This corporate structure has flexibility for both large and small companies and is especially suitable for foreign-owned subsidiaries.

Belgium has three legislative regions, Flanders, Wallonia and Brussels-Capital, and although specific differences may apply to each, there are general requirements. These include notarising certain documents such as the deed of incorporation, providing a business plan projecting activity for the next two years, offering goods and services, and proposing human and financial resources. The program must be signed in the presence of a notary.

Other incorporation formalities include:

  • Incorporation takes place at an ‘incorporation meeting’ with a notary public who passes the Incorporation Deed, including the Articles of Association. Shareholders must be present.
  • Open a ‘blocked’ corporate bank account in the company’s name with a financial institution established in Belgium or the European Union. Obtain a bank certificate confirming the capital has been deposited in the account according to the business plan.
  • The capital will be released once the notarial deed is signed.
  • The limited company must lodge its company registration number with the Crossroads Bank for Enterprises for the Articles of Association to be published in the Belgian Official Gazette.
  • The language used in official documents depends on the region of incorporation—Brussels-Capital – Dutch and French; Flanders – Dutch; Walloon – French; East Belgium – German.
  • The finalised and notarised Incorporation Deed must be filed with the appropriate Enterprise Court. The company must be affiliated with a Belgian social insurance fund, which can take up to three months.
  • Nominate a company officer to deal with employment documents and official correspondence with the National Social Security Office and the General Administration of Taxation (FPS).

Benefits of Setting Up a Belgian Subsidiary

Generally, a limited liability subsidiary protects the foreign parent company and the shareholders from liabilities. The subsidiary can ‘test the market’ by following its business ideas and entering into different areas of operation for the owning company. The subsidiary can also draw up its contracts and agreements with clients.

Potential direct benefits depend on where the subsidiary is established. Flanders offers financial aid to small and medium-sized businesses (SMEs) starting in development or established industrial zones. Also, larger companies can apply for funding in the biotech and environmental control sectors.

In Wallonia, a company can receive support for purchasing land, buildings, and equipment and with project-related investment costs and product research. The Brussels-Capital region offers investment grants, initial exemption from withholding taxes in some instances, interest-free loans for industrial research and possible employment grants.

Other benefits for a subsidiary:

  • Easier to obtain potential benefits and incentives and enter into contracts with other Belgian and European Union companies.
  • Subsidiaries will significantly impact clients and suppliers, as they imply more permanency than branches.
  • Employees feel there is more stability and job security than from being with a branch.

Subsidiary Laws in Belgium

The Belgian Companies and Associations Code (BCAC) simplified the number of company structures to four – the partnership, the limited liability company, the cooperative company and the public liability company. The limited liability company is the preferred option for foreign companies opening a subsidiary. 

Belgium has three legislative regions, Flanders, Wallonia and Brussels-Capital, and although specific differences may apply, there are general considerations between the three. These include providing a business plan projecting activity for the next two years, the goods and services to be offered and proposed human and financial resources. The plan must be signed in the presence of a notary.

Other requirements, responsibilities and formalities apply.

Registration and Documentation:

  • An ‘incorporation meeting’ is held with a notary public, who passes the Incorporation Deed, including the Articles of Association. Shareholders must be present.
  • Articles of Association must include: business name and registered office; net equity and issued shares, directors’ names; financial year and dates of planned annual shareholders’ meeting.
  • A corporate bank account in the company’s name is opened in a ‘blocked account’ with a financial institution established in Belgium or the European Union, which supplies a bank certificate confirming the capital deposited in the account according to the business plan. There is no minimum legal requirement.
  • The limited company must lodge its company registration number with the Crossroads Bank for Enterprises for the Articles of Association to be published in the Belgian Official Gazette.
  • The finalized and notarized Incorporation Deed must be filed with the appropriate Enterprise Court.
  • The language used in official documents depends on the region of incorporation: Brussels-Capital – Dutch and/or French; Flanders – Dutch; Walloon – French; East Belgium – German.

Accounts and Taxation:

  • The resident limited company is subject to a corporate tax of 25% on its profits. A rate of 20% applies to the first €100,000 (US$99,580) of Small and Medium Enterprises that meet specified conditions.
  • Accounts must be filed annually with the revenue authority and the Belgian National Bank; Value Added Tax accounts are filed monthly or quarterly.

Management:

  • A minimum of one shareholder who can be an individual or entity.
  • The shareholders have protection against liability beyond their contribution, except incorporators during the first three years in case of misrepresenting the financial plan.
  • The Board of directors meet once a year to prepare annual accounts; shareholders meet once annually to approve accounts and financial statement.

LOOKING TO EXPAND INTO BELGIUM?

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