Flanders is the northern, Dutch-speaking region of Belgium, with a population of 6.35 million.
The capital of Flanders is Brussels, which is also the capital of Belgium and home to the headquarters of the EU and NATO. Flanders has its own parliament and government. From a legal perspective, there are three different regulatory levels:
1. The government of Flanders is solely responsible for many of the laws and regulations that concern foreign investors, such as business incentives, environmental regulations, education, culture, scientific research, land zoning, and energy.
2. The Belgian federal government has exclusive authority in critical areas such as most tax and social security issues, as well as defense, justice and internal security, and some aspects of foreign affairs.
3. As a member of the EU, Belgium also is governed by EU legislation, which either applies directly to people and businesses or indirectly once transposed into federal or regional law.
How to start your company in Flanders
1. Select the right type of business entity
Management, accounting, tax system and liability differ accordingly.
2. Open a current account
As a new entrepreneur you must open a business current account in the company’s name with a financial institution that is established in Belgium. The bank account number must be mentioned, together with the name of the financial institution where the account is maintained, on all commercial documents (e.g. letters and invoices).
3. Establish a company
4. Apply for youtr unique business number
In order to carry out a commercial or trade activity, you must register at the Crossroads Bank for Enterprises (Kruisputbank van Ondernemingen，KBO). For that purpose, you should turn to a enterprise counter of your choice. They will verify whether your company meets all requirements. If so, they will register your company at the Crossroads Bank for Enterprises.
Upon registration, you will receive your unique business number, which consists of ten digits and is the same as your VAT number.
Bring the following documents with you for the registration:
5. Activate your VAT number
Anyone who exercises an economic activity on a regular basis and independently supplies goods or provides services that are listed in the VAT Code, is liable to VAT. With the business number you received at the business one-stop-shop you can register with the VAT administration of your region. This can be done both physically and electronically (on payment through the enterprise counter).
6. Register with a social security fund and a health insurance fund
If you establish a company, you must register yourself and your company with a social security fund for self-employed workers.
7. Open for business!
Conditions for starting a business in Flanders
All adults (at least 18 years old) who are entitled to their civil rights, with full capacity to act and are nationals of the EEA (the EU, Liechtenstein, Norway and Iceland) or Switzerland, can set up a business in Flanders in no time.
A starter must enjoy his or her civil rights. During the course of their sentence, convicts are not allowed a self-employed activity.
Unless the commercial court has stated otherwise because of fraud or major faults, someone declared bankrupt is nonetheless entitled to start a new business.
Residence permit and professional card.
Citizens from outside the EEA or Switzerland must have a residence permit and hold a professional card to carry out an independent activity. The professional card is required for:
The professional card is issued for a specific activity, is only valid for the applicant and is attributed for a maximum period of five years, with the possibility of renewal. There is an exemption for some categories from various countries.
If you already live in Belgium, you can apply for a professional card via a chosen enterprise counter. Abroad, you have to apply to the competent Belgian consular or diplomatic representation in your country of residence. A professional card costs 140 euro when applying, and 90 euro for each of the years the card is granted.
Prove your expertise
When registering in the Crossroads Bank for Enterprises, a proof of expertise in general corporate management is required. Only the occupations that are already legally regulated otherwise are exempt.
Certain professions need also proof of professional expertise (e.g. in the building industry, or in food). Specific diplomas and certificates, practical experience or taking an exam for the central examining board deliver these proofs of expertise.
Types of business entities
For a foreign investor interested in launching commercial operations in Flanders, one of the first matters to consider is the type of business entity to establish. Most foreign companies either open a branch office or establish a subsidiary.
Companies are advised to choose carefully the legal form of their foreign entity.
Branch vs Subsidiary
A branch is not a separate legal entity of the parent corporation, whereas a subsidiary is. Practically speaking, a branch is merely an extension of the foreign head office; it does not have its own shares or its own board of directors, and its establishment generally involves fewer corporate formalities. However, in practice, establishing a branch is a rather demanding process that requires the execution of several formalities and the translation of documents, which in some cases may represent a bigger constraint than those applicable to incorporating a company.
The subsidiary has its own stock and articles of association. It must hold shareholders’ meetings and observe other corporate formalities. The subsidiary will be owned and controlled by the parent company Since the subsidiary and the parent company are separate legal entities,
A. In favor of a subsidiary
Since the subsidiary and the parent company are separate legal entities, the parent company is, in principle, not exposed to any of the subsidiary’s liabilities. Indeed, the liability of the subsidiary in Flanders is limited to its own assets. In contrast, a foreign investor remains fully liable for all the commitments of its branch office in Flanders. As a consequence, obligations incurred through a branch can be enforced on the assets of the foreign investor, even if they are situated abroad.
A subsidiary will be regarded as a Belgian or European company, rather than a foreign entity. That can be, from a marketing point of view, a great asset. Finally, annual filing requirements are less stringent for subsidiaries than for branches. A branch’s annual report will reveal financial information about the foreign entity that it may prefer to keep confidential.
B. In favor of a branch
Setting up a branch in Flanders does not require minimum assigned capital, nor is the intervention of a Belgian notary necessary. According to corporate law in Flanders, a branch does not need to have a board of directors and hold shareholders’ meetings. A branch is not subjected to legal requirements with respect to the distribution of profits. However, corporate law in Flanders requires the appointment of a legal representative.