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Company in Belgium

General information

29%

Tax rate

5 weeks

Time of establishment of the company

18550 Euro

Minimum capital

Belgium is the political heart of the European Union and is one of the most cosmopolitan countries in Europe. It imposes relatively few restrictions on foreign companies. Belgium is one of the most developed countries in Europe, thanks to its strategic location, it has developed a dynamic economy that is “outward-looking”, attracting many foreign investors. Belgium’s economy is dominated by services.

Types of companies

There are several types of companies for foreign investors:

  • Limited liability company (SPRL / BVBA)

The minimum share capital is EUR 18550, however, at least EUR 6200 must be paid upon incorporation of the company. Private limited liability company (S.P.R.L.) may be established by several natural or legal persons (min. 2). It may also be established by one natural person, in which case we are dealing with a one-member limited liability company. (S.P.R.L.U., E.B.V.B.A.). The founding act must be in the form of a notarial deed. The shareholders are liable up to the amount of their contributions.

  • Public limited company (SA/NV)

It is a joint stock company formed by at least 2 shareholders (natural or legal persons). If the joint-stock company is formed by spouses, they contribute their own assets to it. When establishing a joint-stock company, the shareholders undertake to contribute EUR 61500 to the initial capital. The shares of a joint-stock company are registered or bearer shares (the latter may be freely disposed of, provided that the articles of association do not impose any restrictions in this respect). Each share paid in cash must correspond to a payment of at least ¼ of its total amount when the company is incorporated. Contributions in kind must be made in full when the company is established. Liability for the company’s obligations is shaped as in the case of a limited liability company.

  • European Economic Interest Grouping (GEIE)

It is a corporate structure based on European Union law. It corresponds to a limited partnership, but the founders must come from at least two different EU countries. This form of economic activity is particularly attractive for small and medium-sized enterprises, because the structure of the company is simple and does not require share capital. It is possible to relocate a company within the framework of the single European market.

  • Limited Liability Cooperative (SCRL)

The company’s share capital amounts to EUR 18550 and EUR 6200 must be paid in within 5 years of the formation of the company. A limited liability cooperative can be established by at least 3 legal or natural persons. In order to establish a cooperative it is necessary to draw up a deed of incorporation before a notary public.

Company registration procedure

Registration of the company:

  • It is necessary to register and sign the articles of association of the company with a notary and deposit with him a financial plan of expenses for the first 2 years of operation adjusted to the needs of the company,
  • Opening a bank account and obtaining a certificate of capital deposit.
  • The next step is to submit, within 15 days from the preparation of the notarial deed: the excerpt from the founding act, power of attorney and the auditor’s report (if the capital is in kind) to the Law Firm of the Commercial Court.
  • The company acquires legal personality when the documents are submitted to the Commercial Court.
  • The company must be registered with Crossroads Bank for Enterprises where it will receive a registration number that is also a VAT number. This number must be used to communicate with other companies or persons.

Shareholders:

At least one shareholder. There are no nomination services.

Management Board:

The management of the company is held by shareholders and directors. The company should be managed from the territory of Belgium – i.e. it should have fulfilled the pronouncements of effective management and control in Belgium. The functions of shareholder and director may be combined.

Registered office:

The company must have a registration address. You can rely on the registration address, but most contractors decide to rent office space from their contractors.

Deadline:

The time to set up a company is about 5 weeks.

Capital:

Minimum capital: EUR 18550. A minimum of €6200 must be paid into an account during the registration of the company (if the company has one shareholder, this amount is €12,400).

Taxes and finances

Tax residence of the company

A company is resident if its main establishment is located in Belgium or is managed and controlled from Belgium. The place of registration is irrelevant. Residents pay tax on income from both domestic and non-resident activities. Non-residents only pay tax on income earned in Belgium. It is levied on the company’s revenues from its activities, passive income and capital gains.

CIT rate

29% 1 January 2018 the rate was reduced from 33%, another reduction to 25% is planned (from 1 January 2020). For small and medium-sized companies the rate for the first EUR 100,000 profit is 20%.  A surcharge of 2% is levied on the tax. All business expenses can be deducted from the tax. Depreciation is usually carried out on a straight-line basis. In order to use the declining balance method, approval from the tax authorities is required. Losses can be deducted at any time in the future, up to a maximum of one million Euros per year + 70% of the revenue for the year. Retrospective deduction is not permitted. Capital profits are taxed in the same way as income.

Double taxation

Belgium provides relief from double taxation of foreign profits. Its form depends on the type of income.

Counteracting tax avoidance

The transfer pricing system implemented by Belgium reproduces the regulations issued by the OECD. The arm’s length principle applies. There are no thin capitalisation rules as such, but there are rules that determine the debt-to-equity ratio for specific situations. Transactions with entities registered in tax havens must be disclosed in an annex to the tax return.

Accounting

Tax year is a calendar year. A different model of the year may be adopted if the tax authorities give their consent, but it must always be 12 months. Tax returns should be submitted at least one month after the approval of finances by shareholders, within a maximum of 6 months from the end of the tax year. With the consent of the tax authorities, this period may be extended. The tax is paid quarterly. The limitations is 3 years (in case of tax fraud it is extended to 7 years).

Withholding taxes

Dividends, Interest, Royalties – the basic rate is 30%, but in many cases a reduced rate will apply or no tax will be levied at all.

VAT

The standard rate is 21% (reduced by 12%, 6%, 0%). Registration is compulsory. Tax returns are submitted monthly or quarterly. You may be required to pay tax in advance.

Other taxes

  • Real estate tax is levied on the annual nominal rental income. It is a percentage of the rental value and varies from region to region. Rates usually range from 1.25% to 2.5%.
  • There is generally no stamp duty, except in some cases related to stock exchange transactions.
  • Customs duty is levied on products originating outside the EU. Excise duty is levied on tobacco, alcohol, fuels, electricity, coffee and certain soft drinks.

Local labor law

Other information

Belgium is very popular among Polish investors mainly due to the demand for Polish builders on the local labour market.

 

The posting of an employee to a contractor in Belgium is sometimes difficult, which makes it popular to open companies in Belgium in order to delegate staff to customers in Belgium.