Whenever a foreign investor comes to our country with the intention to set up a company in Belgium, it is advisable from him to be informed on the characteristics of all the types of companies in order to make the right decision as far as his interests are concerned.
Belgium offers a quick and easy incorporation procedure and investors have access to our special company formation packages, for complete services related to the incorporation of a company that also includes adequate counseling for choosing the legal business form.
Choosing the appropriate business structure is an essential step and it is also one of the first ones to accomplish, along with choosing and reserving a company name. the Articles of Association will be drawn up in accordance with the chosen business form (if required for that particular entity).
Our company registration experts in Belgium list the main types of companies in the following video:
Types of legal entities in Belgium
The list below includes the main types of companies, along with a description about specific requirements for each one of them:
•Belgian Private Limited Company (BeslotenVennootschap met BeperkteAansprakelijkheid/ Société Privée à Responsabilité Limitée, BVBA/SPRL): Usually, this type of structure is used for small businesses, provided that a minimum share capital of 18,550 is paid up. The capital is divided into shares and at least 20% of each share must be paid up prior to incorporation. At least two shareholders are required for setting up this type of structure, regardless of their citizenship or residence. The liability of the shareholders is limited up to their contribution.
•Belgian Public Limited Company (NaamlozeVennootschap/Société Anonyme, NV/SA): The minimum share capital necessary for this type of company is 61,500 EUR, which can be paid up by at least two shareholders. The company can be formed by individuals or legal entities, no matter what residence or citizenship they have. The liability is still limited for the shareholders.
•Belgian Cooperative Company with Limited Liability (CooperatieveVennootschap met BeperkteAansprakelijkheid /Société Coopérative à Responsabilité Limitée, CVBA/SCRL): At least three members must decide upon establishing this type of structure in Belgium, provided that they have a minimum share capital of 18,500 EUR. However, at least 6,200 EUR must be paid up before the registration of the Belgian company and the rest can be deposited within five years after the incorporation. There is also another type of cooperative, that with unlimited liability.
•Belgian Partnership (Société en nom collectif/Vennootschap onder firma, VOF/SNC): Formed by at least two founders who will run the business together and are both liable for the debts and obligations of the business. There is no mandatory minimum deposit upon incorporation and the management is ensured by the shareholders. It is important to note that in the general partnership the liability of the members is unlimited. In the limited partnership, the general partner is the one who is liable for the business and will handle the actual management while the limited partners will provide the financial means but will not necessarily participate in the management of the business. Another type of limited partnership is the partnership limited by shares which also has a general partner and a limited one but it is constituted according to a notarial deed.
•Belgian sole trader: this is the simplest business form and also the one that bears full liability, like in the case of the general partnership. The business is run by a single individual and there is no separation between his assets and those of the business. It can be suitable for consulting work or for providing other types of services.
•Belgian branch: the branch is an extension of the parent company that engages in the same business activities in Belgium. For taxation purposes, the branch is treated the same way as a resident company and it must follow the local applicable rules for management. The branch is also registered with the Crossroads Bank of Enterprises before it can commence the business activities.
If you need more details about these types of companies or complete support for opening a company, our Belgian company formation agents can help you. They can also assist you in case you need to open a bank account in Belgium for your new company. If you need company formation and legal services in other coutries, such as Luxembourg, we can put you in touch with our local affiliates.
Choosing the business form in Belgium
Choosing between the available business forms is done once the investors know what their main business targets are and know their available share capital as well as the future plans for expansion. In general, the private limited liability company, the SPRL, is the preferred business form by foreign and local investors. It allows the founders to have limited liability, only up to the invested capital, and it requires a lower capital for incorporation, compared to the SA which is generally suited to large corporations.
The reporting requirements differ according to the chosen business form and this is also another matter an investor must keep in mind when choosing the business form in Belgium. The SA/NV will have different, more complex requirements for management and control, for example, observing the special attendance quorum and the special majority quorum in extraordinary meetings.
The legal capacity of the future type of business is another aspect that can be of interest to investors. For example, the SPRL/BVBA has legal personality while the sole trader is not separate from its founder. Likewise, the branch in Belgium is not a separate legal entity from the parent company abroad, making the foreign legal entity liable for the Belgian branch’s actions.
The two types of cooperative societies in Belgium are a particular type of business that have variable capital and a determined number of partners. The formalities for the setup as well as the complexity depend on the chosen type: either limited liability or unlimited liability. Cooperatives that operate according to law must obtain the approval from the Minister of Economy and also comply with other rules.
In case you need more details about these business forms, our incorporation agents are able to help you. They can also provide you with other business related services, such as virtual offices in Belgium or trademark registration services.
General company formation steps in Belgium
The company formation steps for a certain legal entity in Belgium will differ according to company type, however, the list below includes the main steps or formalities for setting up a legal entity in the country:
-the business plan: this is submitted to a notary public in Belgium along with the incorporation deed.
-the company name: this must be a unique one and a preliminary name check is to be performed.
-the registration: all of the company documents, along with the registration form that contains essential details about the legal entity are submitted to the Crossroads Bank for Enterprises.
-the licenses: companies that will provide services in selected business fields, such as financial services or others will need to obtain additional approvals or special permits and licenses, as applicable in that field. For example, companies that provide financial services need to register with the Financial Services and Markets Authority.
The registration steps for a branch in Belgium also include a submission with the Crossroads Bank for Enterprises as well as appointing a legal representative.
Below, our team of company formation agents describes in more detail the need to draw up the constitutive documents – and the information that they contain – for business forms with legal personality in Belgium.
The articles of incorporation for a Belgian company
The deed of incorporation is the main document used to open a company with legal personality in Belgium. It is used for the most common business forms, such as the SRL, and it needs to be finalized in front of Belgian notary. The deed is drawn up in French or in another language, depending on the area in the country where you will incorporate the business and register it with the authorities (it could be in the Flemish region). Our team of company formation agents can help you draw up a deed that will match not only the type of company but also the complexity of the legal structure that will be incorporated. This means that while investors can use a relatively standard form, that will include basic company details, having a tailored deed of incorporation will allow for more management flexibility as the company evolves and other changes may become mandatory.
The information included in the deed of incorporation are the following:
- the company name and type;
- the address of the registered office (this needs to be located in Belgium);
- the object and the duration of the company;
- the management methods, for example, for the administrative body is appointed and its powers;
- the capital, the types of shared and the terms and conditions for reducing or increasing the capital.
The deed of incorporation is registered, ads mentioned above, within 30 days after it is drafted. Electronic filing is possible in some cases and this can help speed up the process (as the company is registered with the Crossroads Bank for Enterprises electronically). Our team can help you with more information on this type of registration. When a private deed is used, the partners will need to register it within four months.
Once the deed of incorporation is registered, it is assigned a specific date from which the company is recognized as a legal entity. Once the deed is filed in the Register of Legal Persons, the registration with the Crossroads Bank for Enterprises follows and once this step is complete, the company will receive its number.
Our team can help you during the drafting and the registration of the deed of incorporation for all the main business forms that have legal personality in Belgium.
The tax regime for the types of companies in Belgium
The main difference in taxation when choosing between the available types of companies in Belgium is that a sole proprietorship is subject to personal income tax while a company is subject to the corporate income tax. Our team of company formation agents list the main tax rates appliable in these two cases in 2021. Please keep in mind that these rates can change and if you wish to find out more about taxation in general, as well as the accounting and reporting requirements, it is advisable to talk to one of our tax experts.
The corporate income tax rate:
- has a standard value of 25% and the same rate also applies to branches in the country;
- small and medium companies are subject to a lower, 20% rate on the first EUR 100,000 (subject to certain conditions).
The personal income tax rate applicable to the income generated by a sole trader in Belgium has progressive values:
- 25% for income of no more than EUR 13,440 or less;
- 40% for income between EUR 13,440.01 and EUR 23,720;
- 45% for income between EUR 23,720.01 and EUR 41,060 and 50% on income over EUR 41,060.
Given the values presented above, investors may consider incorporating a business form with legal personality (also taking into consideration the fact that this allows them to enjoy a convenient level of separation from their business, which is not possible in case of the sole trader).
Investors also need to comply with the requirements for VAT in Belgium once they have selected and registered the business form. In Belgium, the current value-added tax rate is set at a standard rate of 21%, with reduced rates of 12% and 6% for certain types of business activities or services as well as a 0% rate for others. There is no VAT on exports and no minimum registration threshold for this indirect tax. Small companies with an annual turnover below 25,000 EUR are VAT-exempt, however, they still need to register accordingly.
As seen above, each type of company in Belgium has certain characteristics that can make it suitable for different forms of investment. The final choice can depend on the size of the business, the number of founders, the capital as well as the tax regime that will best suit their needs, based on the projected income bracket.
Please feel free to contact our company formation specialists for more information in regards to any of the types of Belgian structures mentioned above.
Call us now at (+32) (0)3 2373426to set up an appointment with our consultants in Brussels, Belgium. Alternatively you can incorporate your company without traveling to Belgium.
As our client, you will beneficiate from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Belgium.