Establishing a business in Belgium is subject to certain legal requirements. If you are interested in establishing a company in Belgium, it is advisable to consult a Belgian corporate lawyer. This may also be useful should you wish to set up a branch or a subsidiary in Belgium.
The choice of the form of establishment has an impact on the administrative steps of the formation process as well as the formation costs. For the establishment of subsidiaries or independent companies, investors in Belgium can choose between various forms of corporations and partnerships.
We offer active support for the establishment of your legal entity in Belgium. We prepare all the necessary documents for you and carry out all the necessary formalities on site, starting with the drafting of the articles of association or the shareholders’ agreement (see also the section on corporate law) to the entry in the commercial register and the application for a tax number.
When foreign companies decide to establish a Belgian foothold, they usually then have to choose between setting up a subsidiary or opening a branch. Which of these two options is best for your enterprise depends on a number of factors.
1. Branch in Belgium
The branch is an expansion of a company’s export department to the foreign market, whose activities are mainly focused on the initiation of business and the marketing of goods and services. From a tax point of view, the branch office is generally classified as a permanent establishment and is therefore subject to income tax in Belgium.
The branch is therefore a kind of extended arm of the parent company, which bears liability for the branch’s business activities. The branch has no independent legal personality and therefore no capital contribution is required.
A flexible organisational structure, the free arrangement of capital as well as the close ties to the business policy of the parent company speak in favour of the branch.
However, the formalities that precede the establishment of a branch in Belgium should not be underestimated. Among other things, documents including the articles of association must be legalised, the required information must be published in the Belgian Official Gazette and the parent company’s annual accounts must be filed with the National Bank of Belgium. Overall, the formalities to be fulfilled when setting up a branch are more difficult than when setting up a subsidiary.
Another disadvantage of the branch is the lack of limited liability. Since the branch does not have its own legal personality, the foreign parent company has unlimited liability for the engagements of the Belgian branch. The lack of legal personality can also sometimes prove to be an obstacle in building trust with clients and contractors.
The branch office can be particularly interesting for projects of limited duration.
2. Subsidiary in Belgium
The subsidiary is an independent company with a separate capital and is subject to Belgian corporate income tax on its profits (see corporate tax). The subsidiary is usually created through the establishment of a new company, but sometimes also through the takeover of an existing company.