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November 2008 - Corporate & Commercial. Legal Developments by Cruyplants Eloy Wagemans & Partners .

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Foreign companies wishing to establish a presence in Belgium have the choice between setting up a local subsidiary or a branch office. Where it is desirable to ring fence the assets and liabilities involved in the business in Belgium a local company will be the preferred option but where this is not the case setting-up a branch may be the right choice.

The advantage of the branch is that there is no requirement to incorporate before a local notary and no legal requirement to subscribe or pay-in any minimum capital. The legal formalities in operating the branch are also somewhat less burdensome than is the case for a local company. Thus, for instance, there is no requirement to hold directors or shareholders meetings and no requirement to have accounts approved.

In order to set up and register the branch the following documents are required:

(a) An updated copy of the foreign company's articles of incorporation, certified as conform by an authorized officer of the company;

(b) An extract from the company's registration with the companies register in its country of origin;

(c) A copy of a decision of the appropriate body within the foreign company deciding

to open a branch and confirming its location in Belgium and the nature of its activities;

(d) The appointment of a person as branch manger and legal representative of the company in Belgium. The said person does not have to reside in Belgium and there are no nationality requirements.

All the above documents are drawn up in the language of the country where the foreign company is located and have to be translated into French or Dutch by a sworn translator for the purposes of registration of the branch and publication in the Belgian Companies Gazette.

The Belgian branch will be subject to Belgian companies tax in the same way as a local company although the reduced rates for small companies will not be available. Likewise it will not be possible to provide for the payment of dividends or tax deduct royalty, interest or management payments made to the foreign head office company. The branch is required to maintain accounts in the same manner as a local company but there is no requirement to file same. The accounts of the foreign company as a whole must be published in Belgium in their original format but translated into French or Flemish.

Sobrane Gennari Curlo

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