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Liaison Office in Belgium

Liaison Office in Belgium

As a foreign investor interested in the Belgian business environment, it is recommended that you set up a liaison office in the country that would give you a better insight converning the commercial potential of the market. Also, it can offer the possibility of a better representation of your company’s interests. A liaison office in Belgium acts as a connection between the parent company, situated elsewhere, and the business industries, competitors, and partners in the Belgian market. 

 Quick Facts
 
Characteristics of a liaison office in Belgium
A representative office in Belgium serves as a non-trading, non-commercial entity that represents the interests of the parent company in the Belgian market
Permitted activities
– providing information to potential clients or partners,
– coordinating activities on behalf of the parent company,
– market research,
– advertising,
– lobbying for the parent company,
– organizing travel arrangements, etc.
Interdicted activities
– impose service fees,
– sign contracts (under the name of the parent company),
– import goods,
– purchase properties, etc.
Procedure of opening a representative office in Belgium
In the case of permanent liaison offices, registration is required;
Please contact our Belgian company formation specialists for details.
Representative required (YES/NO)
YES, each office must select an individual to act as its representative
Laws governing representative offices in Belgium
Belgium Corporation Law
Differences from a branch office
Branch offices can engage in commercial activities, and can use a different "commercial name" if desired
 Corporate income tax
 There is no corporate income tax for liaison offices because they do not engage in commercial activities and do not have any income
 VAT
VAT registration in Belgium for representative offices is only mandatory when the office is a permanent establishment in the country
 Additional costs
– rental space (if applicable),
– employees' salaries,
– utilities,
– maintenance costs, etc.
 Accounting
Must provide tax filings and the audited financial statements of its parent company
Liability 
The parent company holds complete legal responsibility for the actions, obligations, and liabilities of the representative office
Incorporation time (approx.)
 3 weeks
 Advantages
 – establishing a presence in the Belgian market,
– brand visibility and awareness, 
– apoint of contact for negotiating and finalizing business partnerships,
– easy registration,
– no taxes
 Assistance
Our team can help you in the process of opening a liaison office or company in Belgium

The main functions of a liaison office in Belgium 

Opening a liaison office in Belgium can offer many advantages to the investors, as it gives the parent company a presence on the market and it also offers the possibility to promote the main activity undertaken by the company and to establish contracts with Belgian companies. If you want to open a representative officeour company formation specialists can help you throughout the process, but you should know that the office doesn’t need registration in Belgium. 

Also, because a representative office is not a separate legal entity, it doesn’t need to follow the same publication or accounting rules that might apply to other legal entities like branches or subsidiaries. These entities often have specific reporting and financial disclosure requirements. Our Belgian company formation specialists can help you in these cases. 

If the office needs to conduct activities like opening a bank account, entering contracts, hiring employees, or renting office space, it can only do so using the name of the parent company abroad or the names of individuals associated with the representative office.

As for liability, the parent company remains fully responsible and liable for any operations, actions, or consequences arising from the activities of the representative office in Belgium. 

If you wish to open a liaison office or a company in Belgium, you can rely on our team for support.

The activities of a Belgian liaison office 

The liaison office is supposed to act on behalf of the parent company to determine market opportunities in the Belgian business environment. As such, only the following activities are regulated by the Belgian law:

  • offering information to the potential clients or partners;
  • providing promotion materials;
  • lobbying for the parent company with local and foreign companies;
  • coordinating the activities imposed by the parent company;
  • surveying the Belgian market;
  • organizing travel arrangements, when needed, for representatives of the parent company or its clients. 

The liaison office is not allowed to engage in the following activities:

  • imposing fees on various services;
  • signing contracts on behalf of the parent company, 
  • buying property;
  • importing goods; 

Also, the office can’t develop commercial activities, as Belgian law states that only non-profit activities, such as market research and lobbying are permitted.

We invite you to watch the following video about the representative office:

Types of companies that can benefit from having a Belgian liaison office

There are no restrictions on the types of foreign companies that can open a representative office in Belgium. Consequently, any foreign company interested in exploring the opportunities it has for doing business in Belgium can benefit from opening a liaison office.

In practice, medium and large companies will be the ones with sufficient resources to set up a representative office in Belgium. What this also means is that the choice to open such an office will be based on the company’s business expansion strategy.

As part of its strategy to enter the European market, a foreign company will benefit from opening a liaison office because this will allow it to conduct valuable market research, explore the existing opportunities, and possible business partnerships, conduct human resources research (to gain insight into the possibilities to hire valuable employees in Belgium), have access to different networking opportunities in the industry, or simply liaison with its target clientele in Belgium.

The differences between a branch and a representative office in Belgium

Branches and representative offices in Belgium are different entities, with a specific scope of activities, legal representation, taxation, registration requirements, and level of business involvement. Our specialists in company formation in Belgium can explain the differences between the two.

A branch is a legally dependent part of the foreign parent company, but it is not a separate legal entity on its own. It operates as an extension of the parent company and conducts business activities, including profit-generating operations. Opening a liaison office in Belgium does not allow you to conduct any sales or sign contracts, it is only a temporary administrative arrangement to facilitate preparatory and auxiliary activities on behalf of the parent company.  The branch is also characterized by the following:

  • it does not have legal capacity or procedural capacity: it cannot enter into agreements in its name, only in the name of the foreign company, and it cannot represent itself in a court of law;
  • its name includes the name of the foreign company, and it will engage in the same types of activities as the foreign legal entity;
  • it will be subject to corporate taxation in Belgium, as well as to certain reporting requirements.

Registration for branches is also different. The branch is required to provide certain documentation, including the company’s Articles of Association, and potentially obtain a special business permit for specific sectors. It might need to draft documents in one of Belgium’s official languages. The temporary representative office in Belgium does not require any registration. 

Taxation is also different. A branch may be subject to various taxation requirements in Belgium, including taxes on profits and capital gains. It is likely to have more extensive accounting and reporting obligations.

Lastly, a branch requires a legal representative who is typically responsible for its operations and acts as the local point of contact.

If you want to open a branch, our specialists in company registration in Belgium can assist you. 

The differences between a subsidiary and a representative office in Belgium

The subsidiary is characterized by the following traits:

  • it is a separate legal entity from the parent company abroad, incorporated according and subject to the Belgian company formation laws;
  • it is subject to taxation in Belgium on its worldwide income, and the Belgian accounting, auditing, and annual reporting standards;
  • the parent company can control its Belgian subsidiary through holding shares; the EU Parent-Subsidiary Directive applies accordingly;
  • it can engage in the same activities as the foreign company, or additional activities; for all of these, it will need to have adequate permits and licenses.

Like the branch, the subsidiary will need to have a registered office located in a Belgian city of choice. For some types of businesses, the use of a virtual office service is appropriate. This is the case for businesses that need to maintain a permanent address for registration and correspondence in Belgium, but only rarely need effective office space. As needed, offices for staff and/or company meetings can be provided when the team needs to meet in person in Belgium.

Accounting and taxation

Since the representative office is not involved in conducting any business activities for profit within Belgium, is exempt from certain requirements.

It does not need to maintain accounting records, register in a commercial register, or submit tax declarations for non-residents in Belgium. It also does not need to pay any corporate taxes and no minimum share capital is required to open a liaison office in Belgium.

In the situation in which the foreign company wishes to change its registered office or liaison office into a permanent establishment in Belgium, it should make the needed adjustments to also follow the steps for tax registration and the payment of value-added tax. Our company formation agents can provide you with further details on the registration procedure. 

If you need company formation services in other countries, such as the Cayman IslandsKazakhstanBahrainwe can put you in contact with our partners. 

Statistical data on Belgium’s economic situation

representative office is a great way for businesses to enter a new market and conduct research, before extending or opening a company in Belgium. The country has great investment potential, considering these statistics:

  • Belgium’s GDP was over 594 billion dollars in 2021;
  • The industrial sector, which encompasses production-related activities, contributed approximately 20.85 percent to Belgium’s GDP in 2021;
  • The services sector, which includes a wide range of activities such as retail, finance, healthcare, education, and more, made up the largest portion of Belgium’s GDP in 2021, about 67.77 percent of the GDP.

According to more recent data from the National Bank of Belgium, the country’s economy grew by 0.1% in the fourth quarter of 2022, compared to the previous year. Moreover:

  • on a year-by-year basis, compared to the fourth quarter of 2021, the GDP growth in the fourth quarter of 2022 was 1.4% higher
  • for the entire 2022, the GDP grew by 3.1%, with the most significant growth per industry being recorded in the services sector, where the growth was 4.2% compared to the previous year.

More forecasts issued by the European Commission seem to maintain a favorable trend for Belgium, indicating that economic growth is expected to reach 1.2% in 2023 and 1.4% in 2024. This growth is expected to be maintained owing to resilient private consumption.

In the context of a gradual recovery of the economic situation, and possibly the receding inflation value that was seen at the start of 2023, foreign companies may be interested in testing their opportunities on the Belgian market. For this purpose, the liaison office is a manner in which a foreign entity can make sure that its prospects in Belgium are secure. This is done before commencing the company formation process and committing to maintaining a permanent establishment in the country, a business entity that will be subject to taxation and also to the processes of hiring and maintaining employees.

Changing a liaison office in Belgium into a new business form

Whether a foreign company decides that it is the right time to move from a representative office to a permanent establishment it is time to consider the entire Belgian company formation process.

All new companies need to be registered with the Crossroads Bank for Enterprises (CBE) and full foreign ownership is permitted in Belgium. This change in business format will be made according to the company registration steps, starting with securing the company name, providing the founder’s details, preparing the company’s constitutive documents, and making the effective submission for registration.

There is no need for a foreign company to appoint a local resident as their representative. From this point of view, company formation in Belgium is attractive to foreign investors.

A liaison office can be changed into a branch (when the parent foreign company wishes to retain the highest level of control, but also of liability, over its Belgian counterpart), or into a locally incorporated company, a subsidiary.

The branch and the subsidiary will need to have a registered office located in a Belgian city of choice. Moreover, the two alternatives to the liaison office in Belgium are subject to the entire scope of taxation, as per the legal entity type, and VAT registration in Belgium. Discussing these requirements is advisable in advance, and our team can give you complete information before you make the decision to transition from the registered office to the branch or the subsidiary.

If you wish to open a representative office in Belgium, or if you are interested in making the transition towards another business type, our team specializing in company formation in Belgium will assist you during the needed processes.

If you need further information on opening a liaison office in Belgium, please contact our company registration consultants, who can offer you customized services and representation.