Considering Expanding Your Business to Belgium? Choose the right legal structure

If you’re an international entrepreneur looking to expand your business to the Belgian market, understanding the various structural options is essential. You may opt to incorporate a Belgian (subsidiary) company, open a branch office, set up a representative office, or register an establishment unit. We’ve put together a brief overview to guide you through these options in order to enable you to select the option which is most suited to your needs.

1. Establishing a Belgian (subsidiary) company

As an international entrepreneur, you may choose to establish a fully-fledged Belgian (subsidiary) company, such as a BV (Private Limited Company) or NV (Public Limited Company). In this case, the company’s registered office is located in Belgium. The newly established company becomes a Belgian legal entity and is subject to Belgian (corporate, social, tax,…) legislation. It is therefore required to file annual financial statements with theBelgian government and Belgian corporate income tax is applicable (standard rate: 25%).

The foreign parent company will generally not be liable for the obligations and debts of the Belgian subsidiary company, except to the extent of the capital the foreign parent company has invested in the subsidiary. The subsidiary will also be managed as an independent legal entity, with its own board of directors.

The company is incorporated through a notarial deed and requires i.a. registration with the Crossroads Bank for Enterprises (in Dutch abbreviated as “KBO”), registration of the beneficial owners in the UBO register and activation of the VAT number.

A. Choosing the legal form

The two most commonly chosen legal structures for a Belgian company are:

• BV (Besloten Vennootschap/Private Limited Company): A flexible structure with limited liability, ideal for SMEs and startups. There is no minimum capital requirement, but the capital must be “sufficient” to support the planned activities of the company. Due to its flexibility, this legal form has become very popular in Belgium and is also suited for larger companies with a more complex structure;
• NV (Naamloze Vennootschap/Public Limited Company): Subject to stricter requirements such as a minimum capital of €61.500,00, and therefore suitable for larger companies with multiple shareholders or for listed companies.

Your choice should align with the desired shareholder model, capital structure, and growth ambitions. Other legal structures are possible as well in Belgium., Our legal advisors are happy to provide more information if required.

B. Requirements for incorporation to consider

Founders/shareholders and directors

• At least one founder/shareholder (individual or legal entity) is required, regardless of nationality or residence/registered office.
• Directors are not required to reside in Belgium, but local representation is often recommended for operational efficiency.
• Additional sector-specific requirements may apply (e.g., licenses, professional qualifications).
• As soon as your company has multiple shareholders, it becomes essential to establish a shareholders’ agreement. This helps prevent potential governance issues in unexpected situations, such as the death or incapacity of a shareholder. Ideally, the agreement includes tailor-made restrictions on the free transfer of shares, or provides you with a right of first refusal.

Bank certificate

• The initial capital must be transferred to a blocked bank account in the name of the company being established with a financial entity registered in the EU.
• As proof of deposit, the bank or the client must provide a bank certificate to the notary.

Financial plan

• A financial plan must be drafted. Our accountants at Van Havermaet can assist you when drafting this financial plan.
• The initial capital must be justified in relation to the company’s intended activities over a period of at least two years. This plan plays a crucial role in the context of founders’ liability if the company goes bankrupt within three years of incorporation.
• The financial plan is kept confidential by the notary.

Articles of association

• The articles define a.o. the company’s name, object (intended activities), power of representation and internal governance rules, the financial year and date of the general assembly as well as the applicable rules on the transfer of shares.
• The articles are drafted in collaboration with a notary and formalized in the deed of incorporation.

Establishing a Belgian subsidiary company enhances credibility with Belgian customers, suppliers, and partners, as it is a Belgian incorporated entity with its own legal identity. This can significantly facilitate business relationships and market entry. It can also mitigate (debt) risks for the foreign parent company, since the Belgian company constitutes a separate legal entity.

On average, the setup of a Belgian subsidiary takes 3 to 4 weeks once all required documentation is complete and available.

2. A Belgian Branch Office

A branch office is an extension of a foreign parent company. It is not a separate legal entity, but an operational establishment in Belgium. Therefore, all of its assets and liabilities belong directly to the foreign company. Any agreements made by the branch office will be considered as agreements made by the foreign company, for which it will bear legal responsibility.

Branch offices don’t require a notarial deed of incorporation, have no founders’ liability and no minimum initial capital is required. However, the branch office still needs to be registered in the Belgian Official Gazette, obtain a Belgian company number and VAT-registration number to operate legally in Belgium and also requires registration with the Crossroads Bank for Enterprises. This includes submitting notarized and legalized documents (often with apostilles), such as the parent company’s articles of association and a power of attorney for the branch representative. On average, the setup of a Belgian branch takes 3 to 4 weeks once all required documentation is complete and available.

Furthermore, there are some formal filing and publication obligations to fulfil. The parent company’s financial statements must be filed in Belgium, and the branch office is required to report specific financial information about the foreign company on an annual basis. Legal representation of the branch office is handled by a permanent local representative, who is appointed by the foreign company, acts on its behalf and can bind the foreign company towards third parties.

A branch office is treated as a ‘permanent establishment’ for tax purposes, meaning you are required to file an annual tax return under the non-resident tax regime. The profits generated in Belgium and attributable to your Belgian branch will be taxed in Belgium. The standard corporate tax rate is 25%. To avoid double taxation, the Belgian tax can be exempted in the country of the foreign entity. Additionally, a Belgian branch has specific local accounting and VAT obligations.

It can be concluded that this structure offers a flexible way to operate in Belgium without the need to establish an entirely separate legal entity.

3. A Belgian Representative Office (RO)

A representative office is a flexible business structure that allows companies to establish a presence in another country without creating a full-fledged Belgian subsidiary company or branch office. It is a type of “virtual office” that enables businesses to operate in Belgium while avoiding the legal complexities and administrative obligations of setting up an entire company. The RO can serve as a bridge between the foreign office and potential clients, competitors, and business partners in Belgium.

A representative office does not need to be registered in the Crossroads Bank for Enterprises, unless they have personnel active in Belgium. In general the activities will be limited to non-profit making activities, such as market research and business networking, but it cannot engage in profit-making operations.

A RO is not a separate legal entity, but fully operates under the foreign company, meaning it is not subject to the same requirements as a branch office or a subsidiary company. It rather serves as a temporary administrative setup. The foreign parent company retains full liability for the operations of the RO. Unlike a branch office, a RO does not have a legal representative of its own.

The RO’s presence is generally considered to be non-taxable. The RO will in general not be treated as a permanent establishment for income tax purposes, unless commercial activities will be performed throughout the RO.

A RO in general does not have output transactions and therefore does not have to register for VAT. However, it can recover Belgian input VAT provided the foreign head office is entitled to VAT refund.

Essentially, a RO is a more temporary, flexible way to establish a presence in Belgium without the full commitments of a subsidiary company or a branch office. It can be useful for companies that want to test whether the Belgian market is suitable for expansion before setting up a full business structure.

4. A Belgian Establishment Unit (BEU)

To conclude,  the least intrusive option is to register an establishment unit (BEU) in Belgium, without setting up a branch office or a subsidiary company. A BEU carries out its activities in Belgium from an establishment unit (e.g. warehouse, factory, shop, office, etc.), but is not a separate legal entity.

In contrast to a branch office, a BEU in Belgium cannot be represented by a legal representative who can bind the foreign parent company to third parties. Therefore, all contracts entered into by the BEU will be deemed to have been entered into by the foreign company.

A BEU is registered through a unique identification number in the Crossroads Bank for Enterprises, a process that typically takes about one week. The activation of the enterprise number as a VAT ID generally requires an additional few weeks.

Foreign companies that plan to carry out temporary or occasional projects in Belgium do not always need to register an establishment unit. This depends on the nature, duration, and scope of the project.

The establishment unit does not automatically trigger corporate income tax obligations in Belgium. The key consideration is whether this Belgian EU qualifies as a “permanent establishment”. If the BEU merely performs preparatory or auxiliary activities (e.g. liaison functions, marketing research, support services), and does not carry out core business operations (such as concluding contracts or generating revenue locally), then the foreign company is not liable to Belgian corporate income tax.

However, if the BEU has a fixed place of business in Belgium, and engages in commercial activities such as negotiating or signing contracts, delivering services, or selling products, then it may be treated as a permanent establishment. In this case, the foreign company would be required to pay corporate income tax in Belgium on the profits attributable to that local activity. The standard corporate tax rate is 25%. To avoid double taxation, the Belgian tax can be exempted in the country of the foreign entity.

Even without local establishment, a Belgian VAT number may be required if the foreign company performs VAT-taxable services or supplies in Belgium. In such cases, a fiscal representative may be optional (for EU companies) or necessary (for non-EU companies).

5. How can we help you?

As your trusted partner, Van Havermaet can guide you through every step of the process of expanding your business to the Belgian market. From providing advice on the most suitable structure for your business to assisting you with the actual incorporation, representing you at the notary public as your proxy holder, taking care of administrative requirements and corporate governance of your business, we provide the support to ensure the successful establishment of your operations in Belgium. Please don’t hesitate to reach out to us for further information.