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Setting up a holding company in Flanders

There are 5 possible scenarios for setting up a business presence in Flanders. One option is to establish a holding company. Discover the different tax incentives your organization may be eligible for.

What it is

A holding company generally:

  • centralizes the dividend streams, power of decision or equity financing of its local subsidiaries.
  • constitutes a separate legal entity in Belgium.

An attractive tax regime for holdings

  • Exemption on capital duties, stamp duties or taxes on net worth.
  • Manageable CFC rules.
  • An excellent Tax Treaty Network.
  • Dividends received as well as capital gains on shares can be exempt.
  • Access to European Directives, such as the Interest and Royalty Directive or the Parent-Subsidiary Directive provided for withholding tax exemptions.
  • Domestic dividend withholding tax exemption to qualifying parent companies in treaty jurisdictions.
  • Domestic interest withholding tax exemption for qualifying holding companies, besides many other exemption possibilities.
  • If certain conditions are met, the interest on the acquisition of shares is generally tax deductible.
  • Foreign functional currency can be used for accounting purposes.
  • Advance ruling is possible to secure the incentives claimed by the holding company.
  • An interesting expatriate regime for individuals.

Indirect tax aspects

  • Passive holding activities are not subject to Belgian VAT and, consequently, do not generate input VAT credit.
  • If other activities subject to input VAT are performed, a Belgian VAT registration might be required. In that case, the financial impact of non-recoverable VAT can be limited if the entity is set up as an active holding company and if the VAT authorities agree with an efficient ‘real use’ methodology for input VAT deduction.

How to establish your HQ, sales or marketing activities in Flanders

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