Entering the Belgium Market

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Entering the Belgium Market

As a magnet for international expansion and investment there is no doubt Belgium punches above its weight. Belgium may rank only 34th among European nations in area, but is often seen as being at the heart of the European market with direct access to the European Union customer base.

Belgium has more than 140 million consumers within a 500km radius and is home to powerful decision making institutions, including the European Union headquarters in Brussels, the capital, and more than 1,400 governmental and non-governmental international organisations.

Among the attractions are Belgium’s reputation for high quality products and a highly educated and multilingual work force. It has two main cultural regions. Flanders in the north is Dutch speaking and Wallonia, in the south, is French speaking. There is also a smaller German-speaking region in the east. The Brussels-Capital region, is largely multilingual. Belgians do not have a strong connection to a national culture, but rather to the language or region they grew up in and this multi-cultural environment makes it a popular destination for expatriates.

Belgium is a modern industrialised society that depends heavily on foreign trade, especially with its European neighbours. Belgium’s impressive transportation infrastructure provides well-integrated networks linking it to the industrial, commercial and business centres of Europe.

Expansion into a developed economy such as Belgium involves huge challenges – from finding highly-qualified staff to complying with strict employment laws and tax and payroll regulations. These challenges can be overcome working alongside a Professional Employer Organisation (PEO) such as Bradford Jacobs, then using our Employer of Record (EOR) in-country experts to handle every aspect of compliance. Employers can depend on our complete understanding of Belgium, its culture, customs and business practices. Here we have set out some basic summaries of what you need to make the transition into the Belgian market, whichever industry you are in.

Starting a Business in Belgium

Forming a company in Belgium follows a well-structured procedure that nevertheless requires careful adherence to protocols and regulations. Different company types can be formed in Belgium and the steps for formation can vary accordingly. Main company options feature:

  • A company limited by shares, a S.A / N.V.
  • An S.P.R.L. or B.V.B.A., which is a private limited liability company
  • A subsidiary of a foreign company (incorporated under Belgian law
  • A branch of a foreign-based company (incorporated under the law of the country where the parent company is based)

The process begins with drafting the company’s Articles of Association in the presence of a notary, registering them with the Commercial Court for the company to obtain corporate status, publishing the company’s documents in the Belgian Official Gazette and then obtaining an enterprise number from the Central Enterprise Databank (BCE / KBO). Further steps that may apply:

  • Official documents have to be translated into Dutch, French or German depending on the region of incorporation
  • A two-year preliminary financial plan is required
  • When setting up a branch the parent company’s accounts must be filed with National Bank of Belgium
  • Deposit minimum share capital in a Belgian bank account
  • Register with the Belgian Commercial Register
  • Register with tax authorities
  • Obtain any applicable permits and licences
  • Register for insurance and social security

https://www.belgium.be/en/economy/business/creation/company_formats

Expanding Business into Belgium

Expanding into Belgium opens up a market where foreign investors and companies have the same legal rights and obligations as domestic entities. Belgium is a hub of commercial, industrial, business and political activity, with the capital Brussels being home to the European Union.

Among the opportunities are software and computer services, telecoms, chemicals, consumer goods sold straight to the mass market, biotechnology and pharmaceutics, mechanical and electrical engineering.

The Belgium Government is business-friendly, intent on stimulating economic activity both domestically and internationally and boosting investment and entrepreneurship. Belgium is a free-enterprise economy – a key attraction for any company with an eye on international expansion and establishing a foothold in the European market.

Belgian Business Facts

  • Capital city – Brussels
  • Regions – Wallonia (French spoken), Flanders (Dutch spoken), Brussels-Capital
  • Population – 11.5 million
  • Official languages – Dutch, French and German
  • Government – a federal, representative democratic, constitutional monarchy. Host to European Union headquarters and North Atlantic Treaty Organisation
  • Currency – Euro
  • Economy and world ranking – €463 billion. Ranked 48th in the world
  • Leading sectors – metallurgy, steel, textiles, chemicals, glass, paper and food processing
  • Main exports – chemicals, machinery and equipment, finished diamonds, metals and metal products, food and drink
  • Main imports – raw materials, machinery and equipment, chemicals, raw diamonds, pharmaceuticals, transportation equipment and oil products
  • Main trading partners – Germany, France, Netherlands, UK, USA

Benefits and Disadvantages of the Belgian Market

Belgium offers a variety of advantages for international companies looking to expand with a subsidiary in the country.

An open economy:

  • Among the world’s top exporters
  • No trade restrictions
  • Established procedure for setting up new businesses
  • Entrepreneur-friendly business environment

An ideal base to access the European consumer market:

  • More than 500 million consumers within 800km radius
  • Culturally diverse population ideal for testing new products
  • Close to major production centres and sales markets
  • Easy to access from other European nations and globally
  • Excellent infrastructure and transport options with coastal and inland ports, airports, railways, extensive road network
  • First class telecommunications networks
  • International decision-making centre
  • Many European and international institutions
  • Close to 2,000 multinationals

Additional features include:

  • Highly productive and highly qualified multi-lingual workforce
  • Centre for leading universities, research, innovation and development centres
  • Tax benefits
  • High standard of living, exceptional education system, good healthcare and a cultural crossroads

By undertaking detailed research and preparation there are few insurmountable problems or disadvantages to expanding a business into Belgium. However, understanding Belgium’s laws, rules and regulations relating to employment and tax compliance can be challenging. In addition there are other business considerations in Belgium having three official languages, with Dutch, French or, to a lesser extent, German being used for contracts.

Work with an Employer of Record (EOR) provider such as Bradford Jacobs, who are expert in dealing with all these issues. Our in-country teams will ensure a smooth transition with your Belgian expansion.

Why Companies like doing Business in Belgium

Foreign companies are drawn towards investment and setting up subsidiaries in Belgium for a number of reasons.

Belgium hosts countless international institutions and multinationals, while a favourable business and investment climate make it a target for foreign companies. Belgium relies on international trade for its imports and exports, so its geographical location close to Europe’s biggest economies is perfect to exploit the high purchasing power of hundreds of millions of Europeans.

There is also the potential of financial advantages depending on the city and area where the subsidiary is being established.

Flanders offers financial aid to small and medium-sized businesses (SMEs) starting in industrial development zones or in established industrial zones. Also, larger companies can apply for funding, especially if they are in the biotech sector or dealing with environmental control.

In Wallonia, a company can receive help with purchasing land, buildings, equipment and project-related investment costs. Support for product research is also available.

The Brussels-Capital region offers investment grants, initial exemption from withholding taxes in some instances, interest-free loans for industrial research and possible employment grants.

Limited Company, Subsidiary or Branch in Belgium

According to the Belgian Company Code there are nine different types of companies that can be established, with subsidiaries and branches the most popular choices for companies that want to expand their business into Belgium.

Branches established by foreign companies in Belgium have the following features:

  • They are not a distinct or separate entity from the parent company in their home country
  • The branch has no board of directors, but just an appointed representative as it is an extension of the parent company
  • Fewer legalities and formalities are required, e.g. the branch does not need to file Articles of Association
  • A branch can benefit from existing double tax agreements between Belgium and other countries that may provide tax deductions

The characteristics of subsidiaries are significantly different:

  • Subsidiaries are incorporated as independent Belgian entities, normally formed as a limited liability company
  • They are owned by the parent company, but can act on their own initiative and the parent company’s directors have no liabilities for their operations or any losses
  • The subsidiary has its own board of directors, company rules and Articles of Association
  • The subsidiary’s directors must conduct shareholders’ meetings and comply with all corporate management regulations as required by the Companies Code
  • Tax advantages include being able to repatriate or distribute net profits with little or no withholding tax

Assessing the comparative advantages and disadvantages of choosing between a subsidiary and a branch is best done with expert guidance. The best approach to have your business up-and-running in the shortest time possible is to use a global recruitment authority Professional Employer Organisation (PEO) such as Bradford Jacobs to source your staff. Even before they are in place, our Employer of Record (EOR) specialists will have dealt with all the complexities of compliance with the relevant authorities. Your company can have a presence in Belgium within days rather than months.

Legal Structures for Belgian Market Entry

Establishing a subsidiary or opening a branch are the two most popular options for international companies entering Belgium. A subsidiary of a foreign company is incorporated under Belgian law, whereas a branch of a foreign-based company is incorporated under the laws of the parent company’s home country.

The procedure for forming a company in Belgium requires:

  • Incorporation through a notary
  • Articles of Association for a subsidiary limited by shares must be published in the Belgian Official Gazette
  • Official documents have to be translated into Dutch, French or German depending on the region of incorporation
  • A two-year preliminary financial plan
  • When setting up a branch the parent company’s accounts must be filed with National Bank of Belgium

In addition, Belgium sets the following requirements for a company formation:

  • At least one shareholder is required, or two in case of an S.A / N.V (public limited company)
  • One director minimum. An S.A / N.V involves a minimum of three
  • For an S.P.R.L. / B.V.B.A. (private limited liability company) the minimum share capital is €18,600, which varies according to the number of shareholders. In the case of one shareholder, the liability is not limited. If the company has two shareholders, the liability is restricted to the share capital.
  • A financial plan must be submitted, and a degree or high school diploma must be presented for one of the directors of the new Belgian entity.

Belgian Business Taxes

As of tax year 2021 (financial years ending December 31 2020 and later), the standard Corporate Income Tax (CIT) rate is lowered to 25%, without any crisis tax (which will be abolished). Capital gains on qualifying shares realised when meeting all conditions remain fully exempt. Non-qualifying shares will be subject to the 25% rate.

A surcharge is due on the final CIT amount upon assessment. The surcharge can be avoided if sufficient advance tax payments are made. For tax years 2020 and 2021 (financial years ending December 31 2019 and 2020 and later), the surcharge is 6.75%.

Opening a Business Bank Account in Belgium

A corporate bank account is mandatory when opening a company in Belgium. Options include multi-currency accounts and various management solutions. Banks require various documents to open the account including the Articles of Association as well as the founder’s identification documents.

Belgium has a sophisticated banking system. Standardised customer account numbers for all financial intermediaries are widely used, and internet and phone banking are well developed.

There are no restrictions on the free movement of capital and regulatory requirements are minimal. There is a particularly wide and flexible range of loan products offered to companies, with no discrimination as to the nationality of the investor. There are also many options available when it comes to raising risk capital.

Foreign investors may be influenced by whether or not they already run a company in a neighbouring country. For example, when a foreign company plans to open a Belgian subsidiary (for expansion purposes, for example) they may choose the same banking group with which they already have a business account.

Registering a Company in Belgium

Company formation and registration in Belgium follows a well-structured formula, beginning with producing the Articles of Association to a notary public, registering them with the Commercial Court to obtain corporate status, publishing the company’s documents in the Belgian Official Gazette then obtaining an enterprise number from the Central Enterprise Databank. Other steps include:

  • Depositing minimum share capital in a Belgian bank account
  • Enrolling with the Belgian Commercial Register
  • Registering with the tax authorities
  • Obtaining any necessary permits or licences
  • Registering for insurance and social security

Bradford Jacobs can undertake all of the above on behalf of any foreign company looking to establish a commercial presence in Belgium. Make a call to Bradford Jacobs to learn how we will take on board all of the above, plus all of the administration requirements necessary to have your business operating in the shortest time possible.

Finding an Office in Belgium

Belgium has thriving and rapidly-developing ‘business clusters’ featuring Innovative Business Networks (IBN) and ‘spearhead clusters’.

Foreign employers locating offices in the relevant business hubs and clusters can:

  • Find free support helping them to grow on the international stage
  • Access coaching, guidance and networking opportunities
  • Maximise ideas, knowledge, research and development opportunities

Examples of Belgian hubs and prime locations for new companies to establish offices, are:

  • brussels is the Brussels Business Support Agency, firmly focused on innovation and inspiration for city projects and users, as well as supporting businesses and hosting six specialised innovative clusters
  • Smart Hub Flemish Brabant is an initiative including five innovative tech clusters: health, food, logistics, cleantech, media and creative industries. Flemish Brabant encircles Brussels, the capital, and its mission is to stimulate innovation and encourage collaboration
  • Flanders Innovation & Entrepreneurship is a government agency. Its main goals are to unlock unused economic potential and increase competitiveness

An alternative to renting office premises or working from home is to rent space in office units for small enterprises. The advantages are relatively low rent and flexible conditions and notice terms are usually short.

Bradford Jacobs, as part of their international expansion services, can act as office brokers for companies expanding into Belgium. Contact Bradford Jacobs

Finding a Manufacturer in Belgium

Foreign companies may need to partner manufacturers in Belgium. Globally ambitious businesses should ask key questions in their search for a manufacturing partner.

  • Do they hold relevant quality certificates?
  • Can they deliver direct to customers?
  • Can they keep up with demand?
  • Are they financially sound?
  • How will local customs impact production?
  • How will language impact on communication?
  • What is their minimum order quantity?
  • Discuss possible penalties for poor quality or late deliveries.

Explore links to Belgian manufacturers and reach out to local business groups and check local business directories. Multi-sector directories for Belgian manufacturers include:

Belgium’s largest manufacturing sectors are: chemical products (19% of total production); food products and beverages (16%); basic metals (11%); motor vehicles, trailers and semi-trailers (10%); pharmaceuticals (8%); machinery and equipment (5%) and fabricated metal products (5%).

Finding a Distributor in Belgium

A successful move into Belgium will prove wasted without a front line distributor to move the products around the country, or across mainland Europe and farther afield. Finding the perfect match among the distributors is critical to accomplishing your objectives. Treat distributors as long-term partners and work with them to formulate goals and business plans.

Finding an agent or distributor requires a clear offering and to-the-point communication. The decisive part is getting to the right person first by phone, which is still difficult to do in English. In northern Belgium inhabitants speak Flemish (Dutch), in the south they speak French, with German spoken in the eastern part of the country. Because of these cultural differences marketing and advertising should be developed that reflect the populations of each region.

Largely open to foreign trade and home to sophisticated distribution systems and well-developed infrastructure, Belgium has attracted many foreign companies and, in return, developed a highly competitive market.

Explore links to distributors, such as:

Enter new Markets with Bradford Jacobs

Bradford Jacobs open the door for companies like yours seeking to enter new markets in Belgium, farther into mainland Europe and worldwide by recruiting the staff for your expansion plans. Our specialist teams have in-depth global knowledge of how to enter new territories, how to comply with laws relating to employment, registration, taxation and payroll. We provide ongoing consultation on human resources through our experience of individual cultures and customs of every country being targeted for global expansion. Work with Bradford Jacobs to expand into Belgium and put the brightest and most talented staff in place, and find us here