Setting Up a Foreign Company in Belgium: Branch or Subsidiary?

Belgium, at the heart of Europe and home to numerous international institutions, attracts thousands of foreign companies wanting to establish a presence there every year. Whether you run a French, Dutch, British, American or other company, you have several options for setting up in Belgium. Choosing between a branch or subsidiary — or simple domiciliation — has major legal, tax and operational consequences. This comprehensive guide helps you make the right choice.

The three ways to establish a presence in Belgium

Foreign companies typically choose between a branch or subsidiary, or the lighter option of simple domiciliation.

Option 1: The branch (permanent establishment)

A branch is an extension of the foreign company in Belgium. It has no separate legal personality: it is the foreign parent company that acts in Belgium through its branch. In tax law, this is also known as a "permanent establishment".

Legal framework: Articles 2:183 to 2:193 of the CSA (provisions on branches of foreign companies)

Characteristics:

• No separate legal personality: the branch is a component of the parent company
• No share capital of its own: the branch's assets belong to the parent company
• A permanent representative must be appointed in Belgium (an individual or a legal entity)
• Liability for the branch's actions rests with the parent company
• The branch must be registered with the BCE and receive a Belgian company number

Formalities for opening:

1. Filing a file with the registry of the enterprise court, comprising:

   • The parent company's articles of association (translated into French, Dutch or German, depending on the region)
   • An extract from the foreign trade register
   • The appointment of the permanent representative in Belgium
   • The branch's address in Belgium
   • A description of the activities carried out in Belgium

2. Publication in the Belgian Official Gazette — cost: around EUR 262

3. Registration with the BCE — the company number is assigned automatically

4. Belgian VAT registration with the relevant control office

5. NSSO (ONSS) registration if the branch employs staff in Belgium

Estimated opening costs:

Option 2: The subsidiary (a company under Belgian law)

A subsidiary is a fully-fledged company under Belgian law, set up by the foreign company, which holds all or part of its capital. The subsidiary has its own legal personality, its own assets, and is entirely governed by Belgian law.

Common legal forms:

• SRL (private limited company): the most commonly used form, with no minimum capital required by the CSA (though sufficient opening equity is required, article 5:3 of the CSA)
• SA (public limited company): for larger businesses, with a minimum capital of EUR 61,500 (article 7:2 of the CSA)
• SC (cooperative company): for cooperative projects

Formalities for setting up:

1. Drafting the articles of association with a Belgian notary (a notarial deed is mandatory for SRLs and SAs)
2. A financial plan must be submitted to the notary (article 5:4 of the CSA for the SRL). It must cover at least the first two financial years and demonstrate that the opening equity is sufficient
3. Opening a bank account in the name of the company being formed, with a Belgian bank
4. Depositing the funds into the bank account (no minimum amount is required for the SRL, but the notary and the financial plan assess whether it is sufficient)
5. Notarial deed of incorporation: the notary executes the deed and handles publication in the Belgian Official Gazette and registration with the BCE
6. VAT registration with the relevant control office
7. NSSO registration if the subsidiary employs staff

Estimated costs of setting up an SRL:

Option 3: Simple domiciliation (representative office)

A foreign company can establish a minimal presence in Belgium simply by using a commercial domiciliation service, without setting up a branch or a subsidiary. This is sometimes called a "representative office" or "liaison office".

Warning: this option is only legally viable if the company carries out no commercial activity in Belgium. A representative office is limited to:

• Sales prospecting (without concluding contracts)
• Gathering information about the Belgian market
• Advertising and public relations
• Storing goods for display purposes only

If the company concludes contracts, invoices Belgian customers or employs staff in Belgium, it creates a permanent establishment for tax purposes and must open a branch or set up a subsidiary.

Branch or subsidiary: a detailed comparison

The table below summarises the practical differences between a branch or subsidiary in Belgium.

Detailed tax aspects

Tax treatment differs significantly depending on whether you choose a branch or subsidiary.

Corporate income tax (ISoc)

Belgium applies a 25% corporate income tax rate (article 215 of the CIR 1992). A reduced rate of 20% applies to the first EUR 100,000 of profit for small companies (article 215, paragraph 3 of the CIR 1992), under certain conditions:

• The company is a "small company" within the meaning of article 1:24 of the CSA
• At least one director receives minimum remuneration of EUR 45,000 a year (or equal to the taxable profit if this is lower than EUR 45,000)
• The company is not a financial company, or a company linked to financial companies
• The company distributes dividends below 13% of its paid-up capital

For a branch:

Belgian corporate tax applies only to profits attributable to the branch (the permanent establishment principle). Double taxation treaties (CPDI) concluded by Belgium with numerous countries (more than 95 currently in force) prevent double taxation.

For a subsidiary:

Belgian corporate tax applies to the subsidiary's worldwide profits. Dividends paid by the subsidiary to the foreign parent company are subject to 30% withholding tax, but this rate can be reduced by:

• The EU Parent-Subsidiary Directive (0% if the parent company holds at least 10% of the capital for at least one year)
• Bilateral double taxation treaties (reduced rates of 5%, 10% or 15% depending on the treaty)

VAT

Both branches and subsidiaries are subject to Belgian VAT for their transactions in Belgium:

• Standard rate: 21%
• Reduced rate: 6% (basic foodstuffs, books, press, water, etc.)
• Intermediate rate: 12% (catering, social housing, margarine, etc.)

VAT registration is done with the relevant VAT control office (determined by the address of the registered office/branch).

Double taxation treaties

Belgium has concluded double taxation treaties with more than 95 countries, including:

• France, the Netherlands, Germany, Luxembourg (neighbouring countries)
• The United Kingdom, the United States, Canada
• China, India, Japan
• Morocco, Tunisia, the DR Congo

These treaties allocate taxing rights between the two countries and set out mechanisms to avoid double taxation (tax credit, exemption with progression, etc.).

The notional interest deduction (risk capital allowance)

Belgium offers a unique tax benefit: the risk capital allowance (formerly known as "notional interest deduction"), set out in article 205bis of the CIR 1992. This regime allows a company to deduct from its taxable base an amount calculated on its risk capital (equity). The deduction rate is linked to the yield on 10-year OLOs (Belgian government bonds).

This regime is particularly attractive for subsidiaries with substantial equity.

The innovation income deduction (patent box)

Net income from patents, copyright-protected software, plant variety rights and other intellectual property rights benefits from an 85% deduction (article 205/1 of the CIR 1992). This brings the effective tax rate on such income down to around 3.75%.

Domiciling a foreign company: practical aspects

Choosing the domiciliation address

For a foreign company setting up in Belgium, the choice of address is strategic:

Brussels: the preferred choice for international visibility, proximity to the European institutions and a multilingual talent pool. Ideal for companies active in lobbying, consulting, European affairs and technology.

Antwerp: a major port, ideal for logistics companies, international trade, and the chemical and diamond industries.

Ghent / Leuven: close to universities and research centres. Ideal for tech and biotech companies.

Liège: a cargo airport (Liège Airport is Europe's 7th-largest cargo airport), logistics, industry.

Wallonia: lower property costs, regional investment grants (under the economic expansion law).

Domiciliation services for foreign companies

Domiciliation providers in Belgium offer specific packages for foreign companies:

"Light setup" package (EUR 100 – 250/month):

• A professional address in Belgium
• Mail reception and management
• A Belgian phone number
• Assistance with BCE formalities

"Full setup" package (EUR 300 – 600/month):

• Everything above
• Access to a meeting room
• Legal support (setting up the branch or subsidiary)
• Introductions to a Belgian accountant and lawyer
• Assistance opening a Belgian bank account

Opening a Belgian bank account

Whether you operate a branch or subsidiary, this is often the most complex step for foreign companies. Belgian banks apply enhanced verification procedures (KYC/AML):

Documents generally required:

• The parent company's articles of association (translated and apostilled)
• An extract from the foreign trade register (less than 3 months old)
• Proof of identity for the legal representative
• A business plan for the activity in Belgium
• Proof of the domiciliation address in Belgium
• UBO register (ultimate beneficial owners)

Banks most open to foreign companies:

• ING Belgium: international experience, tailored procedures
• KBC: a strong presence in Belgium and Central Europe
• BNP Paribas Fortis: an international network (BNP Paribas group)
• Belfius: a Belgian bank, sometimes more demanding for non-residents

Opening time: between 2 and 8 weeks, depending on the complexity of the file and the bank chosen.

The UBO register: an essential obligation

Since 2018, Belgium has operated a register of ultimate beneficial owners (UBO), in line with the EU anti-money-laundering directive. Every company, branch or non-profit registered in Belgium must declare its beneficial owners in the UBO register managed by FPS Finance.

Who counts as a UBO?

• Any individual who directly or indirectly holds more than 25% of the voting rights or capital of the company
• Any individual who controls the company by other means
• Failing that, the company's director(s)

Obligations:

• Initial declaration within one month of registration with the BCE
• An update within one month of any change
• Annual confirmation that the data are accurate
• Administrative fine of EUR 250 to 50,000 for non-compliance

For a foreign company, the control chain can be complex (intermediate holding companies in different countries). It is advisable to use a specialist lawyer or accountant.

Grants and support for setting up in Belgium

At federal level

• Tax ruling: the possibility of obtaining an advance decision from FPS Finance's Advance Rulings Service (SDA) on the tax treatment of your set-up
• Regime for foreign executives: an advantageous tax regime for foreign executives and directors posted to Belgium (a reform in force since 1 January 2022, articles 32/1 et seq. of the CIR 1992). Up to 30% of remuneration (capped at EUR 90,000) can be exempted as employer's own costs

At regional level

Brussels (hub.brussels):

• Free support for foreign companies
• Information on the Brussels market
• Help finding premises and partners
• Organisation of trade missions

Wallonia (AWEX – the Walloon export and foreign investment agency):

• Investment grants (employment grant, investment grant)
• Personalised support for setting up
• Land and buildings available in business parks

Flanders (FIT – Flanders Investment & Trade):

• Support for foreign investors
• Employment and training grants
• Introductions to the Flemish business ecosystem

Common mistakes to avoid

1. Carrying out commercial activity without setting up a structure: if you conclude contracts or invoice customers from Belgium, you create a permanent establishment with tax and social security obligations

2. Confusing domiciliation with a genuine set-up: a simple domiciliation address is not enough if you have employees or customers in Belgium

3. Neglecting the UBO register: the fines are significant, and checks are becoming stricter

4. Underestimating banking timelines: allow 2 to 3 months to open a Belgian bank account

5. Ignoring tax treaties: the double taxation treaty between your home country and Belgium can have a major impact on how you structure your set-up

6. Not seeking local advice: Belgian law, with its three regions, three communities and federal structure, is complex. Get support from a Belgian lawyer and accountant from the outset

Conclusion

Setting up a foreign company in Belgium offers many advantages: a strategic position in Europe, a competitive tax regime, a skilled multilingual workforce, and political stability. The choice between a branch or subsidiary depends on your strategic goals, how long you plan to stay, the expected volume of activity, and tax considerations. A branch is quicker and cheaper to set up, while a subsidiary offers separate legal personality and limited liability. In every case, get support from Belgian professionals (notary, lawyer, accountant), and do not hesitate to approach the regional investment agencies (hub.brussels, AWEX, FIT), which offer free, high-quality support.

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This article was written by the Espero-Soft team for the blog dedicated to entrepreneurs in Belgium. For personalised advice, do not hesitate to consult a professional.