Doing Business in Belgium - RSM International

In principle, a Belgian branch is treated in the same way as a Belgian tax resident
company. The fact that a Belgian branch is considered to be part of the same legal
entity as the foreign company has the following disadvantages:
• In principle, the tax deduction of payments made by the branch to its foreign head
office (e.g. interest, royalties, management fees etc) is disallowed;
• No per se application of the Belgian tax treaty network. In principle, the tax treaties
of the state of residence of the foreign company apply;
• No per se application of the EU Parent-Subsidiary Directive or EU Interest and
Royalty Directive if the foreign company is a non-EU tax resident company;
• Annual filing requirements are less rigorous for subsidiaries than for branches.
A branch’s annual filing will disclose financial information about the foreign
company that it may prefer to keep confidential.
3.5. Procedures to set up entity
In Belgium a company can be set up within a few days. The following procedure needs
to be followed:
• To open an account in a Belgian bank, to deposit the initial required capital on this
account and to obtain an attestation from the bank confirming that the amount is
held on a blocked bank account;
• To draw up a business plan covering a period of three years. This business plan
presents the planned activities as well as the expected income and budgeted
expenses in this three-year period.
• To hold a meeting of shareholders before a Belgian notary:
• who will validate the deed of incorporation and the business plan;
• who will send an excerpt of the deed of incorporation to the clerk’s office of the
commercial court, which will grant to the company its unique
enterprise number
• who will take care of the registration of the company with the Central Database
for Enterprises. Then the “Enterprise number” of the company is activated.
• The notary sends the deed of incorporation to the Belgian Official Gazette (Belgisch
Staatsblad / Moniteur Belge) for publication.
• If necessary (i.e. if the company performs any economic activity consisting of
supplying goods or services in Belgium), the Belgian company has to be registered
with the local VAT-office.
3.6. Capital contribution - regulation of foreign
investment, debt-equity ratio rule and capital
contribution schedule
3.6.1. Capital contribution
Capital contribution to a company can be made in cash or in kind.
In case where a capital contribution is made in cash, the shareholders must deposit
the amount on a blocked account prior to the execution of the deed of incorporation.
Such capital contribution needs to be certified by a notary public.
As from the 1st of January 2006, the registration duty due on capital contribution
has been abolished (except in certain cases – see below).
In case where a capital contribution is made in assets (other than cash), a report
must be drawn up by an auditor. In addition, the board of directors must establish a
report stating the reasons of the asset contribution (the interest of the company).
Both reports must be delivered to the notary on the date of execution of the deed of
incorporation (or the capital increase). In principle, there is no registration duty on
such contribution.
However, if a physical person contributes a real estate (located in Belgium that is
totally or partially used as a dwelling house) to a Belgian company, this contribution
is subject to a registration duty of 12.5% (in Wallonia and in Brussels-Capital) or
10% (in Flanders).
A contribution of real estate whereby the company takes up part of a contributor’s
debt is called a mixed contribution. This type of contribution is partially subject to
registration duty of 12.5%.
The mixed contribution rule does not apply in case of contributions of a branch of
activity or of a universality of goods. In these cases, the contribution is fully exempt
from registration duty.
3.6.2. Regulation of foreign investment
No restriction specifically applies to foreign investors.
Foreign investment in Belgium generally takes the form of establishing subsidiaries
or establishing a branch. The Belgian governmental authorities actively promote
foreign investment (in particular, with new tax regulations such as the notional
interest deduction, the deduction for patents, etc).
3.6.3. Debt-equity ratio rules
No general thin capitalization rules exist in Belgium. Only in very specific circumstances
the Belgian tax authorities can apply the so-called “7-to-1” or the “1-to-1” rule.
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DOING BUSINESS IN BELGIUM
DOING BUSINESS IN BELGIUM
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