Most foreign companies that decide to make investments in Belgium opt for branches or subsidiaries. However, it’s important to note that a Belgian branch is not considered a separate entity from the parent company, whereas the subsidiary does have the status of a separate company in Belgium. The branch simply serves as an extension of the parent company, without having its own stock or a board of directors. The process of opening a branch takes more time, as it implies formal duties and procedures that are more complex then those needed to incorporate a company in Belgium.
Advantages of establishing a subsidiary in Belgium
One of the main advantages of opening a subsidiary in Belgium is that the required annual reports are less strict than in the case of a branch. For example, it is not necessary for the foreign company to present any financial statements. Also, the foreign company is not liable for the actions of the subsidiary.
Another important advantage is that a subsidiary may not pay withholding tax on the profits made by the foreign company and may benefit from double tax regulations, which means that the dividends are not taxed under certain conditions.
Types of subsidiaries in Belgium
At least two founders, with a minimum share capital of 61,500 euros, form the company limited by shares. The management consists of a board of managers with at least three members.
The limited liability company is best suited for small and medium businesses. The required minimum share capital of at least 12,400 euros if there are at least two share holders and 6,200 euros if there is only one share holder.
The preliminary process of registering a subsidiary in Belgium
Before registering a company, some documents need to be prepared beforehand. Recent annual accounts, Articles of Association of the company, an abstract from the Board Meeting’s minutes containing the decision to create a subsidiary of the company in Belgium and the authorization of a person to represent the company, as well as a certificate to confirm the legal existence of the parent company all need to be notarized.
In the case of foreign documents, translations are mandatory, and an official translator in Dutch, French or German must perform them.
How to register a subsidiary in Belgium
A Belgian subsidiary must be registered with the Belgian Register of Legal Entities, in order to be operational and legal. The founders of the company must fill out and submit an application form, together with all the documents that were prepared beforehand. After the registration is completed and approved, an announcement is published in the Official Gazette.
If the subsidiary will have employees, which applies to most cases, they must be registered with the Belgian National Social Security Office. This institution oversees salary administration and forms the necessary connections between other institutions such as family allowance fund, the External Department of Prevention and Protection at Work or work accidents insurer. The employees are registered by submitting an application containing company information, as well as relevant company documents.
Duration of the registering process for subsidiaries in Belgium
Establishing a company subsidiary is no different from opening a company in Belgium in terms of duration. Usually, most of the activities are completed in just a few days, however preparing the necessary documents and their notarization ay take longer, as it depends on the public notary’s schedule. A Belgian subsidiary is usually created in 10 days, but the process may take longer or less, depending on each case.