Belgium: Non-profit/For-profit Company Registry Requirements
At this stage, Belgian law contains two kinds of foundations:
- Public utility foundations
- Private foundations
The first one is commonly used for serving a common/general interest in one of the seven categories as mentioned in the law (philanthropic, philosophical, religious, scientific, artistic, pedagogical or cultural nature) and shall be approved by a royal decree and approval of the AoA by the ministry of justice.
The second type, private foundations, are commonly used to support the development of a certain region, maintain cultural/historical heritage or in order to create a study fund for people’s children, etc. Overall, this form of foundations shall serve a purpose in which the founders do not have any interest.
A foundation is formed by means of a notarial deed. The appointment of a board and the articles of association (AoA) shall be part of this deed an include at least the following information:
- Name of the foundation
- Name(s) and place of the founder(s). In case a legal entity is the founder it shall mention the name, the type of entity and the place where it has its seat. In case a legal entity establishes the foundation, it is recommended that the board of this entity describes the reasons for establishing the foundation.
- The place in Belgium where the foundation has its seat
- The purpose of the foundation and how it aims to achieve its goals. Please note that the scope shall be carefully formulated, as it is not allowed to serve a purpose outside the foundation’s scope.
- The way board members are appointed and dismissed
- Decision taking procedures, how status quos are avoided and dispute resolution
- What happens to any equity in case the foundation is dissolved?
- Can be founded by one or more legal or natural persons, regardless its origin or nationality
- Does not have any capital requirements
- A foundation has a board, but does not have members nor shareholders. Board members can be employed by the foundation and receive compensation for this (note this is different than ‘salary’). A Belgian foundation shall at least have three board members
- The foundation can hire employees
- The board has the duty to maintain financial records and keep an administration. Within 6 months from the end of each financial year, the board must prepare a balance sheet, a statement of revenues and expenditures of the foundation as well as the budget for the following year. The financial statements shall be filed with the company registrar.
- Dissolving a foundation can only be done after intervention by a judge
- A foundation can be used for commercial purposes. Note that any profits cannot be distributed to the founders, board members or other third parties and shall be allocated to achieving the goal of the foundation.
- In case a foundation makes profit, it is subject to enterprise income tax (EIT) and VAT:
o EIT: 33.99%
o Lower tariff applies in case the profits are < €322,500
♣ €0 – 25,000: 24.25%
♣ €25,000 – 90,000: 31%
♣ €90,000 – 322,500: 34.5%
o VAT: 21%
B. Limited liability company (Besloten vennootschap met beperkte aansprakelijkheid, BVBA)
A limited is formed by means of a notarial deed that includes the AoA and the following information:
- Type of the entity and its name
- The place where the entity has its seat
- Duration of the company, unless it is for an indefinite period
- A detailed description of the purpose of the entity
- Identity founders/shareholders
- The number of shares and its nominal value
- The way board members (and supervisors) are appointed and dismissed, as well as the scope of their competences
- Description of how shareholders can transfer their shares
- The start and end date of a financial year
- A financial forecast
- Can be founded by one or more legal or natural persons, regardless its origin or nationality. In case of one founder that is a natural person, special rules apply.
- Minimum registered capital of €18,550. Paid-up capital when establishing the company shall be at least €6,200. In case of a higher registered capital, at least 20% shall be paid when the company is established.
- A ltd. has a board and shareholders meeting; a supervisory board is optional
- The ltd. is a legal person. Therefore, the board members are not liable for the debts of the entity, except in case of negligence and/or mismanagement
- Besides the EIT as mentioned before, a limited is also subject to 15% dividend tax in case profits are being distributed to shareholders (natural persons). The tariff is 0% in case the profits are distributed to a legal entity that holds at least 25% of the shares and is located in the European Union
- The board has the duty to maintain financial records and keep an administration. The financial statements shall be filed within 30 days after approval of the shareholders meeting and within 7 months from the end of the financial year.
- The timeframe for setting up a limited is roughly two weeks