‍So you want to start a business in Belgium? One of the most common ways to do this is through branch registration, or by setting up a local entity (The BV). What what are the exact differences between the Belgian Branch Office, and the Belgian BV?

House of Companies in Belgium will inform you about the intricate details of branch registration in Belgium, contrasting it with incorporating a company (like the Belgian BV), and highlighting the benefits of each approach.

Section 1: Introduction to Branch Registration in Belgium

Belgium, a strategic location in the heart of Europe, offers numerous opportunities for businesses looking to expand their footprint. Branch registration in Belgium, specifically, is a popular choice due to its straightforward procedures, lower administrative burdens, and the possibility of maintaining closer control over the branch’s operations.

Understanding the Concept of a Branch

A branch, in the context of business, is an extension of an existing foreign company located within Belgium. Unlike a subsidiary, which is a separate legal entity, a branch isn’t. The foreign parent company holds full responsibility for the actions and liabilities of the Belgian branch.

The Appeal of Branch Registration in Belgium

One of the key appeals of branch registration in Belgium is that there’s no requirement for minimum share capital, an aspect that significantly reduces the initial financial outlay. In addition, branches are only taxed on their Belgian-derived income, a feature that can lead to substantial tax savings. Branch registration in Belgium can be particularly advantageous for specific sectors, like banking and finance.

Section 2: Legal Differences Between a Branch and a Subsidiary

Understanding the legal distinctions between a branch and a subsidiary is crucial when deciding on the most suitable structure for a business expansion in Belgium.

Legal Status

A subsidiary, such as a Besloten Vennootschap (BV) – the private limited company in Belgium, is a separate legal entity from the parent company. In contrast, a branch does not possess a separate legal identity and is seen as an extension of the parent company.

Liability

In the case of a subsidiary, the liability is limited to the investment in the subsidiary. On the other hand, the parent company is fully liable for the branch’s operations, bearing all risks and rewards.

Control and Management

A subsidiary is managed by its own board of directors, having a degree of independence from the parent company. Conversely, a branch is under the direct control of the parent company, often managed by a legal representative appointed by the parent company.

Section 3: The Process of Branch Registration in Belgium

Branch registration in Belgium involves a series of steps, designed to ensure compliance with Belgian regulations.

Documentation

The initial step involves gathering the necessary documents. These typically include the foreign company’s registration certificate, articles of incorporation, a formal decision to open a Belgian branch, and an appointment of the branch’s representative. These documents must be legalized, translated into one of the Belgian official languages (Dutch, French, or German), and submitted to the Registrar office of the Commercial Court and the Crossroads Bank for Enterprises.

Registration Number and VAT

Upon submission of the documents, the Crossroads Bank for Enterprises issues a registration number and a VAT number. Once the branch has received its registration number, it can commence its commercial activities.

Publication

The incorporation of the branch must be published in the Annex to the Belgian Official Gazette, an important step to officially recognize the branch’s presence.

Section 4: Tax Implications

The tax implications of branch registration can vary significantly from those of a subsidiary.

Corporate Tax Rate

The standard corporate tax rate in Belgium is 25%. However, a branch is only taxed on its Belgium-sourced income, unlike a subsidiary which is subject to tax on its worldwide income.

Double Taxation Relief

Branches in Belgium can benefit from the provisions of double tax treaties signed between Belgium and other countries. These treaties prevent the same income from being taxed twice and can often result in tax savings.

Profit Repatriation

When it comes to profit repatriation, branch profits sent back to the parent company are usually exempt from withholding tax, unlike dividends paid by a subsidiary to its parent company.

Section 5: Practical Considerations

There are several practical aspects to consider when deciding to register a branch in Belgium.

Business Activities

The branch must carry out the same business activities as the parent company in its country of origin. This requirement may limit the flexibility of the branch’s operations in Belgium.

Legal Representative

While the legal representative of a branch doesn’t need to be a Belgian national, it’s often beneficial for them to be based in Belgium due to the operational nature of the branch.

Virtual Office

Many businesses opt for a virtual office when registering a branch in Belgium. This option allows companies to maintain a business presence without the need for physical office space.

Section 6: Comparison with Incorporating a Company

Incorporating a company in Belgium, such as a Besloten Vennootschap (Belgian BV), is another option for foreign businesses looking to expand. It’s important to understand the differences between these two approaches.

Legal and Financial Independence

Unlike a branch, a subsidiary like a Belgian BV is a separate legal entity with its own financial independence. This separation can protect the parent company from the subsidiary’s liabilities.

Control and Management

The management of a subsidiary is more complex, requiring a separate board of directors. The parent company has less direct control over the subsidiary’s operations compared to a branch.

Taxation

A subsidiary is subject to Belgian corporate tax on its worldwide income. However, it can also take advantage of numerous tax benefits available to Belgian companies.

Set-up and Administration

Setting up a subsidiary involves higher administrative burdens, including the need for share capital. The process is more complex and time-consuming than branch registration.

Section 7: House of Companies: Your Partner for Business Expansion

Navigating the complexities of branch registration in Belgium can be a daunting task. However, with the right partner, this process can be made significantly smoother. House of Companies is a specialist in this field, offering a self-governance portal that enables non-EU companies to register a branch office in Belgium without a visit, at a fixed yearly fee.

The Vision of House of Companies

House of Companies was founded by Dennis Vermeulen in Cyprus in 2007, with the vision of ‘Globalisation as a Service’. The company is committed to simplifying legal processes, disrupting traditional consultancy practices, and empowering entrepreneurs to expand their businesses overseas.

Services Offered

House of Companies provides a range of services for businesses looking to expand to Belgium, including branch registration, accounting, VAT filing, and corporate tax filing. They also offer a supportive community and educational resources to help entrepreneurs navigate the international business landscape.

Section 8: Conclusion; The Branch office as most efficient manner to start a Belgian Business

Branch registration in Belgium offers a straightforward and cost-effective way for international businesses to expand their operations. While it has its unique benefits, it’s crucial to consider the legal and tax implications, as well as practical aspects such as business activities and representation.

Whether you’re considering branch registration or setting up a Besloten Vennootschap in Belgium, partnering with a knowledgeable service provider like House of Companies can streamline the process and ensure you’re making the most informed decision for your business expansion.

Remember, the world is your oyster, and Belgium could just be the perfect pearl for your business. Start your business in Belgium now!