As a branch office is not a separate legal entity and has no share capital.

A Belgian branch office has its own management and is led by a legal representative who is appointed by the parent company.

This proxy has the mandate to represent and manage the branch office in Belgium and within that function can perform all legal acts and bind the parent company in dealings with third parties and in legal proceedings in connection with the activities of the branch. 

Belgian company law does not require the legal representative to be Belgian. Neither does the legal representative need to be a Belgian resident. Proper consideration should be given to work permit regulations.

Since the legal representative is supposed to carry out daily management of the branch office and sign all official documents, it is strongly recommended that he or she is based in Belgium.

Foreign companies are subject to the provisions of the Belgian bookkeeping regulations only with respect to their Belgian branch office.
The books, accounts and accounting documents concerning the branch office are kept in Belgium; this does not mean that registering and processing the data must take place in Beligum, but that the books, accounts and supporting documents of the branch office should be directly accesssible in Belgium.

Every foreign company, which has a branch office in Belgium, is obligated to file its annual accounts (and its consolidated annual accounts if this is mandatory in the country of origin) for the last closed financial year with the National Bank of Belgium within the month following its approval and at the latest seven months after the closing date of the financial year.

This obligation does not apply to foreign parent companies that - if they were governed by Belgian law - would not be obligated to disclose their annual accounts taking into account their legal form and size. Please note that these companies are still obligated to file a social balance sheet. The social balance sheet only relates to the employment in Belgium.

The annual accounts (and if applicable the consolidated annual accounts) must be filed in the form in which they have been prepared in accordance with the law of the state of the parent company and, where appropriate, audited and published. 

The financial statements prepared by the branch office with regard to its activity in Belgium do not need to be filed and published separately.

In principle, a Belgian branch office is taxed in the same ways as a Belgian company.

The standard rate of corporation tax is 25% from 1 January 2020. For SMEs, a reduced rate of 20% applies to the first € 100.000 taxable profit. The part of the profit above € 100.000 is taxed at the standard rate.

In order to benefit from the reduced SME tax rate, a gross remuneration to minimum one legal representative of at least € 45.000 is required, unless the taxable profit is less than € 45.000; then a remuneration equal to at least the amount of the taxable profit is sufficient. The remuneration condition to benefit from the reduced tax rate does not apply to small companies during their first four financial years from their incorporation.

COMPANY SOCIAL SECURITY AFFILIATION

Every foreign company with a Belgian branch office, which is subject to Belgian corporate income tax or non-resident tax, must join a social security fund within three months of opening the branch office in Belgium and pay the annual corporate contribution.

SMEs (including branch offices of foreign companies) registered as a commerical enterprise in the CBE are exempt from the corporate contribution during the first three years from the formation of the branch office if, during the 10-year period prior to the formation, the legal representatives of the branch office have not been self-employed in Belgium for more than 3 years.

DIRECTOR SOCIAL SECURITY AFFILIATION

As a legal representative of a branch office, you are considered self-employed on the day of your appointment and you must joint a social security fund at the latest on the day of the start of your activity. That means in principle before the filing of the directors resolutions regarding the formation of the branch office with the company court. In practice, the affiliation of a legal representative usually takes place within the quarter of the opening of the branch office.

As a self-employed person you pay social security contributions every quarter through a social security fund. This is how you build up the rights to a pension, child benefits, health care, etc.

The social security fund bases the calculation of the social security contributions on the data provided by the tax authorities. This concerns the gross professional income, minus the operating expenses, charges and losses, determined in accordance with the legislation on income tax.

Social security contributions are calculated on the basis of a legal representative's income from three years ago. Afterwards, these contibutions are, if necessary, regularized on the legal representative's income of the current year.

If a legal representative already has a self-employed status and resides in another EU member state, and realizes a minimum of 25% of the turnover, working time and income from the self-employed acitivity of the parent company, there is a good chance that he is not liable for social security in Belgium. He must request form A1 from the authority responsible for the social security of the self-employed in his country. The authority in his country will inform the Belgian social security agency (RSVZ) and the countries will consult each other (within 6 months) to determine to which legislation the legal representative is subject.