Formation of Private Limited Company in Belgium
Basic Company Requirements
Three names must be submitted at the Belgian Register of Companies (KBO/BCE). A name may be rejected if it is considered as similar or lead to confusion with a name of an already registered legal entity. The suffix will depend on the choice of legal entity.
The BVBA/SPRL may have one or more shareholders who need not be nationals or residents of Belgium. Unless otherwise indicated by law, any individual or legal entity in the world has the legal right to invest in Belgium. Initial shareholders are recorded in a public register, and nominees are not allowed under Belgian law. Of course, a parent company can be formed in a jurisdiction allowing nominees and be used as a shareholder of the Belgian company.
The minimum capital is €18,550, half of which has to be paid in at the company’s creation, with a minimum paid in capital of €6200 when there are two or more shareholders and €12,400 when there is only one shareholder. Capital may also be paid in kind, assets however must be valued first by a legal auditor.
A BVBA/SPRL may have one or more directors, however it is highly recommended that at least one director is resident and/or a national from the European Union, but need not live in Belgium. Full details of the identity of the directors will be disclosed. According to the requirements set out, the director must prove professional ability to hold their position, either by passing an examination, or by holding a college degree, or by professional background.
There is currently no requirement to appoint a local corporate secretary.
Any legal entity incorporated in Belgium must have its registered offices in Belgium in order to benefit from the tax treaties. A PO Box or similar is not acceptable, and as the tax administration visits newly formed companies, there is a danger of being sued for termination of the company as being fictitious.
Certain business activities are regulated in Belgium and require a license or special permit in order to start doing business. It is advisable prior proceeding with the purchase to advise the activities in order to comply with the necessary requirements.
At least one meeting of the board of directors must take place (where more than one director is appointed), in order to approve the annual accounts and the management report, whilst written resolutions may not be utilized for a meeting of the board of directors.
It usually takes about two to three weeks to incorporate a BVBA/SPRL company.
Basic Tax Notes
Belgium has a corporate income tax of 33.99% and it includes a 3% called “crisis surcharge”, which was introduced by the Belgian government in 1993, as a crisis complementary tax contributing to social security funding. However, Belgian corporations with a taxable income of under €322,500 are subject to reduced rates, if the company pays an annual taxable income of at least €36,000, the company is not a holding company, nor does 50% of the company belong to one or more companies. Payroll taxes, real property taxes and social security taxes and a transfer tax are also among the taxes for companies in Belgium. Accounting services are needed for new businesses in Belgium, the dividend tax is set at 25%, but a 15% reduced rate applies to residential real estate investment companies.
Belgium is particularly attractive as a location for a holding company because of the possibility of deducting interest expenses (including notional interest expenses), combined with a 95% deduction for dividends received and a tax exemption for capital gains realized on shares.
Based on the dividend received deduction, 95% of the dividends received are deducted from the taxable income. This deduction is only applicable to the extent that there is sufficient taxable income available, from whichever source or nature, from which the deduction can be made. Thus, if the holding company has losses, or insufficient taxable income, all or part of the 95% deduction may be lost. In addition, dividends are not deductible from a number of non-deductible expenses.
Audit And Financial Statements
A BVBA/SPRL company must file tax returns on an annual basis. The said entity may also be subject to corporate tax on its profits, as well as be subject to VAT and other possible taxes (i.e. registration taxes on the purchase of real estate property). The BVBA/SPRL may have to be registered in the Crossroads Bank of Enterprises and VAT administration.
It is mandatory to appoint an auditor for a Belgian company in case two of the following criteria are exceeded:
1. average personnel: 50.
2. Annual turnover before tax: €7,300,000
3. Balance total: €3,650,000.
If the company employs more than 100 persons it will automatically need to appoint an auditor. If a company is part of a group that has the obligation to publish consolidated accounts, these criteria need to be calculated on a consolidated basis. For a company that is to be incorporated, these criteria need to be estimated. It is possible to incorporate the company without an auditor. If the company however estimates that the criteria will be exceeded, the auditor has to be appointed before the end of the first financial year.