Legal forms in Belgium

As a sole trader, every extra euro of profit can be taxed at up to 50%, plus municipal surcharges. In a company, profit is taxed at 20% or 25%, then you pay yourself a salary and possibly dividends. Incorporating often becomes worthwhile once profit exceeds what you need to live on: we run the full calculation with you, social contributions included.

To qualify, the company must, among other things, be a small company and pay at least one director a minimum salary set by law. Pay that is too low can cost the reduced rate on the entire profit.

For an SRL, SA or SC, the financial plan is not a formality: it sets out funding sources, an opening balance sheet, profit and cash budgets over at least two years, and the assumptions used. If the company goes bankrupt within three years, it is used to assess the founders' liability.

A company director is, as a rule, self-employed and must join a social insurance fund. The company also pays a separate annual contribution. These costs are part of the choice of legal form.

Choosing the form and drafting the articles, financial plan, opening a bank account and paying in the contributions, notarial deed, filing with the registry and publication in the Belgian Official Gazette, registration with the Crossroads Bank for Enterprises, VAT activation, joining a social insurance fund, and recording beneficial owners in the UBO register.

A business started as a sole trader can be contributed to a company, and a company can be converted. These operations have tax consequences (capital gains, registration duties, VAT) that must be assessed before signing.

Any regular economic activity is in principle subject to VAT. Small businesses with annual turnover of up to €25,000 can opt for the exemption scheme: no VAT charged, but no VAT recovered either. This choice is made at the start and should be reviewed as the business grows.

The company must have its own account, into which contributions are paid before incorporation. Mixing private and business spending creates shareholder current accounts to justify and, sometimes, taxable benefits in kind.

Contributing a vehicle, equipment, a client base or a building instead of cash is possible, but for an SRL or SA it requires a company auditor's report on the value used. The tax consequences of the contribution must be analysed beforehand.

Annual accounts are approved by the general meeting within six months of the year-end, then filed with the National Bank within thirty days, and no later than seven months after the year-end. Late filing triggers an additional charge.

The company's beneficial owners, meaning the people who own or control it, must be recorded in the UBO register within one month of incorporation and confirmed every year. Failure to register exposes the company to administrative fines.

When an SRL's net assets are at risk of becoming negative, or an SA's fall below half of its capital, the board must convene the general meeting within two months to decide whether to continue the business and what recovery measures to take.

A company protects its shareholders' assets, but directors remain liable for management errors, within legal caps that depend on the company's size. Failing to pay payroll withholding tax, VAT or social contributions can make them personally liable.