Growing and structuring your company
How can I ensure that my corporate structure is aligned from the outset with the company's future development?
Companies that intend to grow often opt for an NV/SA, given the flexibility of this corporate form and the need to raise capital. The articles of association can allow the board of directors to establish a management committee, appoint a managing director, etc.
In addition, it is important that a clear distinction be made, internally, between the company's various "branches" of activity (or activities which could develop into separate departments, branches or subsidiaries in the future). In the event of a subsequent sale, divestment or funding round, financing can be allocated to the various projects and each "branch of activity" can grow at its own pace.
For tax purposes, depending on future development as well as the exit strategy, it may be advisable to allocate different assets (eg, IP, real property, financing, etc) to different entities in order to optimally benefit from Belgian tax incentives and facilitate, for example, a future takeover.Written by Elke Janssens
What type of corporate form (company) should I opt for to best develop the envisaged activities (eg, an NV/SA with shares or a less flexible BVBA/SPRL)?
In general, corporate forms with limited shareholder liability are preferred (eg, a BVBA/SPRL or an NV/SA). The choice of corporate form will mainly depend on the possibility to freely transfer shares and the desired governance structure. In addition, an NV/SA (Public limited company - naamloze vennootschap/société anonyme) can issue warrants, convertible bonds and profit-sharing certificates and have different classes of shares, which is not possible with a BVBA/SPRL (Private
limited-liability company - besloten vennootschap met beperkte aansprakelijkheid/société privée à responsabilité limitée). Since these types of instruments are often used by YICs, an NV/SA would appear to be the most appropriate choice.
How can my choice of corporate form influence the future development of my company, especially if I would like to open a branch/subsidiary in the US?
From a US perspective, a BVBA/SPRL is often preferred as this type of corporate form allows you to simply "check the box", whereas an NV/SA is a corporation per se. A change of corporate form entails, in principle, a (fictitious) liquidation for tax purposes; however, if certain conditions are met, tax neutrality can often be achieved.
Under Belgian law, no particular corporate form is preferred for the purpose of opening a branch/subsidiary in the US. NautaDutilh has privileged relationships with several US law firms which can assist you in setting up a US branch or subsidiary.Written by Elke Janssens
What are the legal and tax consequences and reporting obligations of a given corporate form and how do I comply with these requirements?
The legal, tax and reporting obligations are practically the same for all types of companies with limited shareholder liability. On the other hand, corporate forms without limited shareholder liability or without legal personality are subject to more limited legal and reporting obligations since creditors have a right of recourse against both the legal entity itself and the natural persons behind it.
From a tax perspective, companies with legal personality are subject to tax in Belgium on their worldwide income and will need to file a corporate tax return annually. On the other hand, companies without legal personality, such as non-stock corporations (maatschap/société de droit commun),are transparent for tax purposes, meaning their profits are taxed solely in the hands of the shareholders or partners and, therefore, only the latter need declare the profits on their personal income tax return. If you choose to operate via a branch or sales office, you will only be taxed in Belgium on Belgian source income. The question of whether a tax return must be filed will in this case depend on the facts, ie the type of income sourced in Belgium. If no tax return need be filed, the tax due in Belgium will be withheld at source.
In addition, various forms may need to be filed for tax purposes, eg, withholding tax returns for dividends or interest, pay slips for wages or commissions, and other specific forms to claim certain tax benefits such as the notional interest deduction (aftrek voor risicokapitaal/déduction fiscale pour le capital à risque) or the patent deduction (aftrek voor octrooi-inkomsten/déduction pour revenus de brevets). Moreover, depending on the nature of your business, you may also be required to register with the VAT authorities and file VAT returns on a monthly or quarterly basis.
If you operate a business in Belgium, you are generally required to keep books of account. The nature of your accounting obligations will depend on the type and size of your business.
Most legal and tax obligations must be fulfilled periodically and can thus be anticipated. It is advisable to compile a chart or table of all deadlines to ensure that none are missed.Written by Elke Janssens
Am I eligible for YIC status and, if so, how do I obtain it?
Each region (Flanders, Brussels and Wallonia) has its own YIC provisions. If the statutory requirements are met, companies can benefit from various employment and R&D subsidies.
In general, companies may be eligible for YIC subsidies if they:
- are considered "small" (fewer than 50 employees, turnover or balance sheet total of less than EUR 10 million);
- have existed for less than 6 years;
- have invested at least 15% of their operating costs in R&D for at least one year within the three-year period preceding the YIC application; and
- can demonstrate, through independent expert reports, that they are likely to develop, in the foreseeable future, goods, services or techniques which are technologically new or represent a substantial improvement compared to existing goods, services or techniques.
The application procedure for YIC subsidies will vary from one region to another and involve regional agencies or authorities (IWT in Flanders, Innoviris in Brussels, and the Gateway to Research and Technologies in Wallonia).Written by Elke Janssens