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Branch or subsidiary: choose the right business entity

Interested in starting operations in Flanders? There are two main types of business entities to choose from, each with its own characteristics. Get the detail scoop below.

Your main options for setting up a business in Flanders

BRANCH                       

A branch is NOT a separate legal entity independent from the foreign company, and:

  • requires the appointment of a legal representative
  • does not require a Belgian notary public nor minimum capital
  • involves stringent requirements for legalization and filing of accounts
  • involves few corporate law requirements
  • its liability extends to the headquarters abroad

SUBSIDIARY

A subsidiary is a separate Belgian company in its own right, and:

  • requires a separate Board of Directors (exceptions apply)
  • requires a Belgian notary public and minimum capital*
  • involves less stringent requirements for legalization and filing of accounts
  • is subject to the provisions of Belgian Company Law
  • has limited liability (exceptions apply)

How to set up a branch in 9 steps

This visual roadmap guides you through the process of setting up a branch in Flanders.

The tax advantages of branches

Even though setting up a branch is often a more demanding process than incorporating a new company, branches do come with a set of interesting tax advantages:

  • no dividend withholding tax on branch profits;
  • losses made by the branch can be immediately offset against the profits of the head office;
  • tax-free transfers of profits from the branch to the foreign head office.

The tax advantages of subsidiaries

From a marketing perspective, subsidiaries are considered a Belgian or European company, and not a foreign entity. They benefit from several tax advantages:

  • little or no dividend withholding tax during repatriation or the distribution of net profits;
  • double tax treaties concluded by Belgium;
  • less-stringent filing requirements.

Types of subsidiaries

For larger enterprises:

Limited liability companies (nv) are selected mainly for larger enterprises in Flanders. Some important characteristics include:

  • the minimum capital must amount to EUR 61,500;
  • the company can issue nominative or dematerialized shares, but not bearer shares since 1 January 2008;
  • you must appoint 3 directors, or 2 if there are no more than 2 founders or shareholders. When a company is a director, a person must act as the company’s permanent representative in the function of director.

For smaller businesses:

Private limited liability companies (bvba) are selected mainly for small and privately-held businesses in Flanders. Characteristics include:

  • less flexible structure; no conversion of bonds, no profit certificates and no possibility of paying interim dividends;
  • minimum capital of EUR 18,550, with requirements for share amounts;
  • all shares are nominative and must be registered;
  • one or more managers must be chosen. A manager can be a company represented by a single person.

For flexible structures:

Co-operative companies (cv) are a very flexible option for corporations with variable numbers of partners and variable contributions. Note that:

  • 3 partners are needed;
  • the minimum capital is in 2 parts: a fixed amount and a variable portion that changes with the entry and exit of partners, capital increases or the takeback of shares;
  • shares are always nominative;
  • the company requires one or more managers.

Interested in doing business in Flanders?

Let us help you!

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  • We assist with all legal aspects of setting up a business
  • We're an official government agency
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  • It's completely free.
  • Get an overview of all incentives relevant to your company.
  • Tax system explained in-depth.
  • Learn how to set up your business quickly.
  • Discover the benefits of Flanders (in addition to the chocolate).

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