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Establish a Subsidiary in Belgium

Establish a Subsidiary in Belgium

A foreign company can choose to establish itself in the Belgian market under several different forms. The options include the branch or the subsidiary and, as an alternative with limited operational options, the representative office.

Out of the three options, the subsidiary is the one that allows the foreign company to enjoy the least responsibility for the debts and actions of its Belgian counterpart.

In this article, our experts in company formation in Belgium list the main considerations when choosing to open an international company in the country, the traits of the subsidiary and the available options for investors.

 Quick Facts  
Why open a subsidiary in Belgium Establishing a subsidiary in Belgium is the option that grants the foreign company the least amount of liability for the debts and actions undertaken by its Belgian counterpart

Main characteristics of a Belgian subsidiary

 It has legal autonomy from its parent company, as it has its own capital and runs under a different administration;

Contact our specialists for the Belgian company formation procedure

Types of subsidiaries

Company limited by shares;

Company with limited liability.

Procedure

Notarizing the documents;

Preparing the business plan for the next two years;

Opening a bank account;

Depositing the minimum share capital required;

Registering the subsidiary in Belgium;

VAT registration.

Bank account required in Belgium (YES/NO)

YES 

Registering the subsidiary in Belgium

The subsidiary must be listed at the centralized registry for Legal Entities and social security

VAT Registration in Belgium 

There is no minimum threshold for VAT registration in Belgium;

All companies, including subsidiaries, that provide services or products subject to VAT tax must include VAT registration as part of the incorporation process

Taxes

Corporate income tax (25%);

VAT;

Social contributions;

Withholding tax on dividends;

Additional taxes (payroll tax, property tax, etc.).

Parent-Subsidiary directive

The Parent-Subsidiary directive aims to provide tax advantages and eliminate double taxation within the EU when it comes to dividend payments between parent and subsidiary companies

Subsidiary limited by shares

Must have at least 2 founders;

Minimum share capital –  61,500 Euros;

The managers' board must have at least 3 members.

Subsidiary with limited liability

Minimum share capital – 6,200 Euros;

The LLC must ensure a future capital of at least 18,550 Euros;

Suitable for small to medium businesses.

Documents required

Deed of incorporation;

Names and addresses of all shareholders;

Articles of Association of the parent company;

Annual accounts of the parent company, etc.

Withholding tax on dividends

The withholding tax on dividends can be reduced by 100%, 30%, 20%, or 15%, depending on the specific circumstances 

Advantages of opening a subsidiary in Belgium 

The subsidiary in Belgium is considered a separate legal entity, providing a level of protection for the foreign company;

It is also recognized as a European company rather than a foreign company;

The subsidiary benefits from many tax advantages.

How can our specialists in company formation in Belgium help you

Offering professional assistance in opening a subsidiary in Belgium;

Guidance on the main steps, ensuring a smooth process;

Help in the registration process;

Support for any post-registration steps or procedures that may be required.

If you are considering starting a new business in Belgium or entering the country as an international firm, our team of agents can help you incorporate and comply with the corporate law matters.

What are the main characteristics of a Belgian subsidiary?

A subsidiary established in Belgium is considered a legal entity separate from its parent company, because of the fact that it has its own capital and separate administration. Even if you have a firm in ItalyFrance, or another European country, you can set up a company in Belgium

Below are presented the main particularities of a subsidiary in Belgium that also apply in 2024. Take a look!

What are the advantages of owning a subsidiary in Belgium?

An advantage of keeping a subsidiary in Belgium in 2024 is that the annual reports are less strict than for a branch, for example, it doesn’t have to present the financial statements of the foreign company. The liability of its actions is not taken by the foreign company. A subsidiary opened in Belgium is regarded as a European company, not as a foreign company, and beneficiate from the specific conditions.

The tax advantages that a company can receive from approaching this type of business are that:

  1. the subsidiary may not pay any withholding tax on the profits paid to the foreign company;
  2. the subsidiary may benefit from the double tax avoidance regulations;
  3. due to the EU Parent Subsidiary Directive, the dividends are not taxed in certain conditions.

Types of subsidiaries in Belgium

There are two forms of establishing a subsidiary in Belgium: as a company limited by shares or as a company with limited liability.

The company limited by shares must be formed by at least two founders with a minimum share capital of 61,500 Euros. The management is assured by a board of managers consisting of at least three members.

The limited liability company is the best form of organization for small and medium businesses. The requirement for a minimum share capital for this business form is no longer in place, however, the founders must make sure that the legal enterprise has sufficient capital to function properly. This type of company is managed by one or more administrators appointed by the incorporators.

The choice between the two available corporate forms can be made on account of the minimum capital requirements, the management requirements as well as other factors. For example, the SPRL/BVBA or the private limited liability company can be preferred to the public type because of the fact that it is subject to lighter requirements in terms of auditing and reporting. We do advise investors who wish to know more about the company types to reach out to our agents specializing in company formation in Belgium.

We invite you to watch the following video on Belgian subsidiaries:

What is the procedure of opening a subsidiary in Belgium in 2024?

Just like in other European countries like Estonia for example, the process of incorporation includes the notarization of certain documents, such as the deed of incorporation (containing the name of the shareholders, their address, and their amount of capital brought to the company’s capital).

If you want to invest in Belgium by opening a subsidiary you should know that a business plan for the subsidiary must also be prepared and must contain the predictions for the future two years of activity, the reasons why the company is incorporated, a marketing research for the approached market segment, a list with the company’s services and products that will be presented to the future clients and a description of the company’s resources (human and financial). The business plan must be signed in front of a notary.

A bank account where the minimum share capital is deposited must be opened.

The next step is registering the subsidiary at the centralized docket for the Register of Legal Entities, and social security.

VAT registration in Belgium is not subject to a minimum threshold, meaning that companies that provide services or products subject to this tax will need to include the registration as part of the incorporation process. Our team can assist foreign companies that set up their Belgian subsidiary with the VAT registration step and will also provide details about its filing and payment. 

As a result , the new formed subsidiary company will receive a unique company number and may begin the commercial activities just like in any other country.

How is a Belgian subsidiary taxed?

In addition to the parent company’s liability (which is an important distinction between the branch and the subsidiary), another issue that is taken into consideration before opening a subsidiary in Belgium is the manner in which it will be taxed for its activities in the country. As any legal entity deriving income from this country, it will be subject to the local tax rules. Moreover, the subsidiary is treated in the same manner as a Belgian company (a Belgian resident company) for taxation purposes. In most cases, the branch is treated as a permanent establishment of a foreign company and, as a result, it will be taxed on its Belgian-source income.

A subsidiary in Belgium is subject to the following taxes:

  • 25%: the corporate income tax rate applicable to subsidiaries (and to branches); for subsidiaries, the worldwide income is taxed under this rate (because it is considered a resident company, not a permanent establishment);
  • 0%: in some cases, the withholding tax on dividends is 100% reduced; in other situations, this can have a value of 30%, 20% or 15%;
  • 21%: the standard value-added tax rate in Belgium; two other reduced rates include the 6% and the 12% rate; certain types of services or goods are exempt or subject to the 0% rate; there is no VAT registration threshold;
  • 30.57%:  the base employer contribution for blue-collar employees and 25% of the gross salary in the case of white-collar employees; for blue-collar employees, an additional annual contribution is due (in the amount of 10.27% on 1.08 times the gross salary); special regimes may apply in the case of small and medium enterprises.

Other taxes for companies in Belgium include the payroll tax, the real property tax (on the rental income of immovable property located in the country, if the subsidiary owns land, buildings, or industrial equipment), the transfer tax, and stamp duty. Our team of agents can not only help you open a company in Belgium in the form of a subsidiary, but they are also able to provide you with detailed information about its taxation, the taxes that apply, the 2024 rates, and any other needed details.

Foreign investors who choose to open a subsidiary in Belgium can talk to our taxation specialists to find out more about the Parent-Subsidiary directive that applies in the EU. For the purpose of this Directive, a parent company is one that has at least a 10% holding in a company in another member state. Individual member states may require that foreign company to have held the minimum capital percentage for no less than 2 years in order to qualify. For the purpose of applying this EU law, the company needs to be considered a tax resident in the said Member State (a subsidiary is considered a tax resident because it is incorporated in the same manner as a Belgian company).

The subsidiary in Belgium is subject to the compliance requirement applicable to resident companies. The tax year is generally the calendar year, although it can be another 12-month period. Companies file the tax return at least one month after the approval of the annual financial statements by the annual general shareholder’s meeting. Electronic filing via a dedicated portal is the norm.

Belgian subsidiaries are required to pay corporate tax on a quarterly basis and advance payments are possible. Companies that do not comply with the rules are subject to penalties (fixed monetary ones as well as criminal sanctions in case of tax fraud).

According to Statistics Belgium, the number of new companies (registered for the first time) was 6,029 in December 2023. At the same time, the number of re-registrations was higher in December 2023, compared to the same month a year prior. The overall year-on-year growth of VAT-registered legal entities in the country in December 2023 had a value of 2.2% (compared to the same month a year before).

If you wish to open a subsidiary in Belgium in 2024, our team can provide complete assistance during the process. We can guide you on the main steps, as well as help you with the name reservation and the drafting of the constitutive documents as part of the pre-registration stage. Our agents are also able to help you with the effective registration and the post-registration steps that may be required.

Please feel free to contact our company formation specialists for more details in regards to Belgian subsidiaries or other company formation issues in other countries, such as Serbia.