Accounting obligations and reporting in Belgium

As an international entrepreneur, it is important to know which rules apply in Belgium with regard to accounting obligations, reporting rules and the obligation to appoint a registered auditor. After all, being properly informed about the applicable legislation is crucial for doing business internationally. In this article, we are happy to inform you about these rules and obligations.

First, we will take a closer look at the accounting obligations and reporting rules in Belgium. We will then explain the role that the registered auditor can play in this, before finally drawing a conclusion.

CORE PRINCIPLES OF ACCOUNTING LAW

Belgian accounting law is based on a number of core principles that form the legal framework within which all companies must conduct and report their financial administration.

The most important starting point is the principle of double-entry bookkeeping, which is mandatory for all companies. In short, this means that every transaction must be recorded at least twice, once on the debit side and once on the credit side. Thanks to this system, a complete and accurate picture of the company’s financial position can be provided at any time.

In addition, simplified accounting is also possible, but this is only permitted for self-employed persons and some non-profit organisations. We will not go into this in more detail here.

The law stipulates that the accounts must be kept accurately, clearly and systematically at all times. All transactions must be recorded in a timely and chronological manner so that third parties – such as shareholders, the tax authorities or lenders – can form a reliable picture of the company’s assets and results at any time.

VAT OBLIGATION

In Belgium, every company, self-employed person or organisation that regularly supplies goods or services in exchange for payment is, in principle, liable for VAT. This means that you must in principle charge Belgian VAT on your sales and pay it to the Belgian tax authorities.

However, if your annual turnover is less than €25.000 excluding VAT, in some cases you can opt for the “small business exemption scheme”. In this case, you do not have to charge VAT on your sales, you do not have to submit periodic VAT returns, but of course you are also not entitled to deduct any VAT.

In addition, some activities are also exempt from VAT (certain medical professions, education, socio-cultural organisations, etc.). They are therefore completely not subject to these obligations.

If you are liable for VAT, you must submit a VAT return periodically. This return includes the VAT payable on turnover and the VAT recoverable on costs. The difference determines whether you have to pay Belgian VAT or can claim it back.

Depending on your turnover (less than or greater than €2.500.000 excluding VAT on an annual basis), you are required to submit a quarterly or monthly VAT return.

In addition to the periodic VAT return, there is also an obligation to submit an intra-Community declaration as soon as intra-Community transactions are carried out.

Finally, there is also an obligation to submit an annual VAT customer listing, even if you fall under the VAT exemption scheme for small businesses.

ANNUAL ACCOUNTS

Every company with legal personality and limited liability that falls under the Belgian Companies and Associations Code (WVV) is obliged to prepare annual accounts and file them with the National Bank of Belgium (NBB).

Annual accounts must include at least:

– Balance sheet: an overview of assets and liabilities at the end of the financial year;

– Profit and loss account: a summary of income and expenses;

– Notes: additional information about valuation rules and important financial items.

Depending on the size of the company (micro, small or large), there are different formats, from the simplified micro format to the full format for large companies. In principle, the financial statements must be filed within seven months of the end of the financial year and no later than thirty days after approval by the general meeting.

In addition to filing the annual accounts, every company, including those without legal personality, must submit an annual corporate tax return to the Ministry of Finance.

Failure to comply with these obligations may result in administrative fines, late payment interest and, in serious cases, criminal prosecution.

RETENTION PERIODS

Companies are legally obliged to retain their accounting documents for at least seven years, starting from 1 January of the year following the financial year to which the documents relate.

These documents include:

• incoming and outgoing invoices;
• bank statements;
• journals and ledgers;
• contracts and other accounting documents.

The retention obligation can be complied with in both paper and electronic form, provided that the authenticity, integrity and legibility of the documents are permanently guaranteed. In addition, the documents must be available for presentation to the competent control services upon simple request.

ROLE OF THE REGISTERED AUDITOR

The role of the registered auditor is to increase the reliability of the financial figures and to serve the public interest. This is achieved by independently verifying that the annual figures give a true and fair view and by reporting on this to the general meeting.

The registered auditor is appointed by the general meeting and after approval by the works council, if one exists. This appointment must be published in the annexes to the Belgian Official Gazette. A registered auditor is always appointed for a period of three years, which can be renewed upon expiry. The appointment of a registered auditor is mandatory based on the size of the company, which is determined by either its statutory figures or its consolidated figures.

STATUTORY OBLIGATION

Every company that is considered large in Belgium is legally obliged to appoint a registered auditor. A company is considered large if it exceeds more than one of the following criteria:

• Annual average number of employees: 50;
• Annual turnover excluding VAT: €11.250.000;
• A balance sheet total of €6.000.000.

These criteria are assessed on the date of the closure of the company’s statutory annual accounts, based on the company’s most recent and penultimate annual accounts. Exceeding more than one of the criteria, or no longer exceeding more than one of the criteria, only has consequences if this occurs during two consecutive financial years. In that case, the consequences only take effect from the financial year following the financial year in which more than one of the criteria was exceeded or no longer exceeded.

CONSOLIDATED OBLIGATION

Companies that are part of a group that is required to prepare consolidated financial statements must appoint a registered auditor. This obligation is of a cross-border nature. It applies not only to companies in a group that belong to a group of companies that is required to consolidate under Belgian law, but also to entities that are part of a foreign group. It is sufficient for the group to have a consolidation obligation. A small Belgian subsidiary of an international group must therefore also appoint a registered auditor. The obligation also remains in force if the subsidiary falls or remains outside the scope of consolidation.

Criteria

A company together with its subsidiaries, or companies in a group that together form a consortium, are required to prepare consolidated financial statements when these companies together, on a consolidated basis, exceed more than one of the following criteria:

• Annual average number of employees: 250
• Annual turnover excluding VAT: €42.500.000
• Balance sheet total: €21.250.000

These criteria are assessed on the date of the closing of the financial statements of the consolidating company, based on the last and penultimate financial statements of the companies to be consolidated within the group. Exceeding more than one of the criteria, or no longer exceeding more than one of the criteria, only has consequences if this occurs during two consecutive financial years. In that case, the consequences only take effect from the financial year following the financial year in which more than one of the criteria was exceeded or no longer exceeded.

IMPORTANCE OF APPOINTING A REGISTERED AUDITOR

As an entrepreneur, it is in your interest to appoint a registered auditor. First and foremost, this increases the financial reliability and transparency of the annual figures. The registered auditor is also an independent expert whom you, as an entrepreneur, can call upon to test certain ideas. In addition, the registered auditor assesses the company’s internal processes and can propose optimizations.

Furthermore, every certified accountant or registered auditor will refrain from accepting or continuing any assignment to certify or approve accounts, annual accounts, balance sheets and profit and loss accounts or consolidated annual accounts prepared by any entity that refuses to appoint a registered auditor when it is legally obliged to do so. For example, no contribution in kind will be certified for a company that is required to appoint a registered auditor and has failed to do so.

SANCTIONS

Have you wrongfully failed to appoint a registered auditor? If so, you may face a number of sanctions:

• Judicial appointment of an auditor: any concerned party may, by simple petition, enforce an appointment through the courts. The president of the commercial court will determine the auditor’s duties and remuneration in summary proceedings.
• Nullity of the decision of the general meeting to approve the annual accounts: Due to the absence of the audit report, a claimant could invoke the nullity of the approval of the annual accounts if the claimant can demonstrate that this had an influence on the decision-making of the meeting.
• Director liability: Directors are in breach of the Companies Act (Art. 3:97, §1 WVV) if they fail to take the necessary steps to appoint a registered auditor when this is required by law.

CONCLUSION

Belgian legislation on accounting and reporting is clear and strict. Companies are required to keep accurate records of their financial transactions using a single or double-entry accounting system, which ensures transparency and reliable figures. This is crucial for internal decisions, but also for external parties such as shareholders, banks and the tax authorities.

The preparation and filing of annual accounts is a key obligation. These annual accounts provide an overview of the company’s financial situation and strengthen the confidence of third parties in the company. Equally essential is the timely and correct compliance with tax reporting obligations; failure to comply can result in fines and reputational damage.

In the case of larger companies, a registered auditor is often appointed. This independent expert ensures that the accounting and financial reporting are fully compliant with the law. This not only enhances transparency, but also the credibility of the company in the market.

In short, Belgian regulations not only impose obligations, but also promote professional and reliable financial management. For companies, this means responsibility, but also an opportunity to demonstrate that they carry out their financial reporting in a correct and transparent manner.

Do you have any questions about Belgian regulations on accounting law and, by extension, the appointment of a registered auditor? Or would you like to know more about this? Feel free to contact our experts, who are always there to offer professional advice.