Shelf Companies in Belgium
Shelf Companies in BelgiumUpdated on Monday 14th March 2022
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A shelf company in Belgium is a company that has been incorporated but has not had any business activity. These types of companies are convenient for entrepreneurs who want to open a business in Belgium but do not want to go through the lengthier procedures required for company registration. By purchasing an already made company they can begin their business activity faster.
The main traits that are characteristic of a shelf corporation are the following:
- The type of company is already chosen: investors can purchase a company type that suits their needs, such as the private limited company, SPRL/BVBA.
- It has its Articles drawn up: the company’s constitutive documents, the Articles of Association, are drawn up and specify the type of company and its purpose.
- The name is already chosen: the name of the company is already chosen from the ones available for registration so the investor will not need to worry about company name infringement in Belgium.
- It is registered: the company is registered with the Belgian authorities, namely the Banque-Carrefour des Entreprises (BCE).
These four traits are also part of the steps for opening a company in Belgium, starting with choosing a company type of name, verifying the name, drawing up the documents and following through with the registration process. The fact that the company is already established is important for those future business owners who wish to start trading as soon as possible.
Our law firm in Belgium can make all the necessary arrangements so that you can buy a Belgian shelf company. Our lawyers in Belgium recommend you to be cautious when doing such a business transaction, to avoid any costly schemes. Legal assistance can be of great importance when buying an aged company and our Belgian lawyers have the necessary experience to help you make the right choice.
The advantages of a shelf company
- Perhaps the greatest advantage of a shelf company, and the reason why many foreign investors choose to buy such a company, is the fact that the company can begin performing business activities right away.
- The shelf company will have all its documents in order, all its payments up to date and the investors will see no setback when engaging in business activities.
- Another advantage, one that seems to be of great importance to some entrepreneurs, is that these Belgian companies have more credibility for credit companies, especially when wanting to obtain corporate credit.
- The shelf company has no bad payments history, no creditors that claim liabilities and is in no danger of liquidation or dissolution.
- One last advantage is the fact that some business partners may prefer to engage in business activities with a company that has longevity. Customers or other will also be more likely to trust a company that has been established for a longer time.
The shelf company in Belgium can have its particularities changed soon after the sale transfer is complete. The new owner has the liberty to change the company name (provided that the newly selected one is available for registration), can change the registered address as well as add additional secondary objects of activity.
The shareholding structure of the company is automatically changed upon purchase. This means that the articles of association are altered to reflect the new ownership.
Our team can assist you throughout any required particulars changes. Any of these need to be reported immediately to the Belgian authorities in order to ensure the continued functioning of the business and, more importantly, in order to allow the company to start trading in a lawful manner.
Shelf company taxation and management
The shelf company in Belgium is a locally registered company, therefore it complies with the entirety of Belgian laws regarding taxation, control, annual accounting and reporting.
Because shelf companies are not used for trading before they are purchased (in most cases), the VAT registration can become the responsibility of the new owner. There is no minimum VAT registration threshold in Belgium and companies are required to register before they commence any VAT-taxable activities.
Therefore, if the shelf company in Belgium has not been used for activities that fall under the scope of the value-added tax, the new owner will need to register it with the VAT office in its area before starting any commercial activities that are subject to this tax. Our team can assist with the registration.
Our team of company formation agents presents the main issues regarding corporate taxation:
- the corporate income tax rate is 25% and it applies on the worldwide income of a Belgian resident company, such as a shelf company;
- a dividend reduction of 100% in some cases applies to dividends received by a Belgian company from another domestic or foreign legal entity; certain criteria apply, such as for the shareholder o hold at least 10% of the share capital of the company making the dividend payment, among others;
- in all other cases, the standard withholding tax on dividend payments to resident companies is 30%; this can also be reduced under a double tax treaty;
- the Belgian value added tax has a standard rate of 21% and two reduced rated of 6% and 12%; in addition to this, the supply of certain types of goods and services is zero-rated.
Entrepreneurs who purchase a shelf company and start trading will need to observe the requirements for tax compliance. This also means filing the annual tax return and making the quarterly corporate tax payments.
Companies use the generally accepted accounting practices in Belgium and the IFRS for the consolidated accounts of listed companies (the IFRS cannot be used for the annual accounts).
The shelf company will submit annual financial statements and, for VAT payers, the returns will be filed monthly or quarterly. The due VAT tax is paid when the returns are filed.
Failure to comply with the conditions for annual tax reporting and the monthly/quarterly VAT payments results in penalties.
Companies in selected business fields are subject to additional licensing and control. Financial service providers can be subject to control from the National Bank of Belgium and/or the Financial Services and Markets Authority.
If you want to purchase a company that will activate in regulated business fields, our team can give you details about the post-purchase licensing.
Buy a shelf company in Belgium
If you decide to buy a shelf company in Belgium, rather than incorporate a new one like a branch or a subsidiary, our Belgian law firm will see that all the steps for purchasing the company are completed and that everything is in order.
The sale/purchase transaction usually takes place once a complete due diligence process is complete. Some of the most important issues that are checked during this verification include the following:
- the articles of incorporation of the company;
- the organizational chart;
- certificate of good standing;
- any financial records, if applicable, and any relevant reports;
- copies of any signed agreements, if any;
- an inventory of any physical assets owned by the company;
- the active business locations, if more than one is in place;
- intellectual property: patent applications, copyrights and others.
As most shelf companies were incorporated as not used for trading, not all of the issues above will be verified. In many cases, information about employees will be nonexistent, as the company was not used to engage in business operations and did not have employees for this purpose.
Once the verification is complete, our team will help you finalize the purchase of the company
Our Belgian lawyers can help you sign any necessary contracts and draw-up any other necessary documents for the company. We will make sure that the purchase is legitimate and risk-free.
For more information about the legislation for investments in Belgium, please do not hesitate to contact our attorneys in Brussels.