Belgium. 

Since the entry into force of the new Companies and Associations Code on 1 May 2019 (for newly incorporated companies) and 1 January 2020 (for all companies existing prior to 1 May 2019), the principal forms of corporate/business organisations in Belgium are:

• the private limited liability company (besloten vennootschap (BV) / société à responsabilité limitée (SRL)); and
• the public limited liability company (naamloze vennootschap (NV) / société anonyme (SA)).

The BV/SRL is the “default” Belgian company form and replaces the BVBA/SPRL which existed under the former Companies Code. Unlike the BVBA/SPRL, the BV/SRL no longer has a statutory (minimum) capital. When incorporating a BV/SRL, its founders are instead required to ensure that the BV/SRL has sufficient financial means (either through a contribution by the founders or through other financial means such as shareholder loans or external debt) in an amount justified by its contemplated activities. For the NV/SA, the existing rules continue to apply and the founders have to make an initial contribution to the share capital of the company of at least EUR 61,500.

The BV/SRL is the most flexible and most easily accessible company type for most businesses, while the NV/SA remains the preferred company type for larger and listed companies.

Finally, Belgium has a cooperative corporation (coöperatieve vennootschap (CV)/société coopérative (SC)) structure that is often used for worker-owned cooperatives (such as worker-owned industrial companies, restaurants, breweries, etc.). We refer to point 6 for a further discussion of this company type.

a. Enterprises seeking financing from investors and that will have multiple owners tend to form either a BV/SRL or an NV/SA.

b. The BV/SRL, as it is the most flexible and most easily accessible company type for most businesses.

For the sake of completeness, it is to be noted that all Enterprises are subject to a profit-sharing objective pursuant to Article 1:1 of the Belgian Companies and Associations Code. It is both a constitutive element for an Enterprise as well as a standard of conduct for an Enterprise. However, Article 1:1 of the Belgian Companies and Associations Code allows Enterprises to have additional objectives which may be social objectives. In this way, the regular Enterprise forms can be used for Social Enterprises.

In principle, the board of directors of any Belgian company should always keep in mind the “corporate interest” (vennootschapsbelang/ l'intérêt de la société) in its actions and decision-making process. The exact scope of this concept has long been debated in legal doctrine, since neither the legislator nor case law had established a clearly framed concept.

A judgment of the Belgian Supreme Court of 28 November 2013 has made it clear that the definition of the corporate interest in Belgium is broader than just the financial interest of the company’s shareholders. The Supreme Court held that the interest of a company is determined by the collective profit interest of its current and future shareholders. With the reference to future shareholders in its definition, the Supreme Court indicates that, in addition to the collective profit interest of the shareholders, this concept is also aimed at the continuity of the company and must therefore be interpreted in a dynamic and forward-looking manner, whereby also the interests of the various parties involved in the corporate affairs must be safeguarded. However, when taking into account the interests of non-shareholder stakeholders, it must be ensured that the interests of the shareholders are also pursued. The interests of non-shareholder stakeholders are therefore (only) taken into account to the extent to which they effectively contribute to the healthy existence and profitability of the company.

No, since the aforementioned entry into force of the new Companies and Associations Code, the organizational form specifically designed for Social Enterprises, namely the company with a social purpose (vennootschap met sociaal oogmerk (VSO)/ société à finalité sociale (SFS)), has been abolished and is therefore no longer a possible separate organizational form for entities with legal personality.

However, the new Companies and Associations Code provides for the possibility for a CV/SC, whose main objective is to achieve a positive social impact on people, the environment or society, in the general interest, to be recognized as a social enterprise (sociale onderneming (SO)/enterprise sociale (ES)) by the Federal Minister responsible for the Economy, provided that the company agrees to a certain dividend ceiling, the liquidation balance is allocated to a social purpose and that the company meets certain conditions laid down by Royal Decree.

Furthermore, as the BV/SRL is very flexible in its organizational form, it is perfectly possible to modulate the organization (structure) of the company as a company that has e.g. specific social or environmental objectives. So with today's possibilities under Belgian corporate law, one can fully achieve and implement the structure of a Social Enterprise under this company form.

For the sake of completeness, it should be noted that the non-profit organization forms under Belgian law, namely

• the non-profit association (vereniging zonder winstoogmerk (VZW)/ association sans but lucratif (ASBL)),
• the foundation (stichting/fondation); and
• the international non-profit association (internationale vereniging zonder winstoogmerk (IVZW)/association internationale sans but lucratif (AISBL)),

can, in principle, also pursue specific social or environmental objectives (see also point 5). These legal persons are also allowed to conduct for-profit business activities, provided that any profits realized are never used to enrich their members or directors (e.g. dividend distributions are not allowed) but are solely used to enhance the association’s non-profit making purpose.

a. Yes. As indicated above, among the various types of legal entities having legal personality under Belgian law, there are no longer separate organizational forms specifically designed for Social Enterprises. It is, however, as indicated under point 4, possible to pursue specific social or environmental objectives under the Nonprofit forms under Belgian law, being the VZW/ASBL, the foundation and the IVZW/AISBL.

b. Given the fact that the BV/SRL is the most flexible and most easily accessible company type for most businesses, most Belgian entities pursuing specific social or environmental objectives are formed under this company form. One benefit of using a Nonprofit form for a Social Enterprise would be that there is no liability for the incorporators if the entity is set up with manifestly insufficient initial funds. If a BV/SRL is declared bankrupt within three years following incorporation and the court finds that that the entity has been set up with manifestly insufficient capital, the incorporators of a BV/SRL may be held personally liable for the debts of the bankrupt BV/SRL. For the incorporators of an (I)VZW /A(I)SBL, this form of liability does not exist.

Non-Profits that are Social Enterprises may find it easier than Nonprofits that are not Social Enterprises to benefit from the Belgian taxation on legal persons, rather than corporation tax.

c. N/A

d. The use of Nonprofits for Social Enterprises is quite frequent.

Yes, we refer to the discussion of the CV/SC under point 2. Forming as a worker-owned CV/SC allows for worker control and management as well as alignment of worker and investor interests.

Note that the scope of the CV/SC has been narrowed in comparison to the former cooperative corporation forms under the “old” Companies Code. From now on, the CV/SC is reserved for “real” cooperation purposes in the sense of the ICA (International Cooperative Alliance) principles. The flexibility that led to the use of the cooperative company with limited liability for all kinds of businesses (such as the liberal professions) that are not cooperative in the sense of the ICA principles (such as "voluntary and open membership" and "democratic control by the members"), will from now on be found in the BV/SRL.

For the sake of completeness and without going into too much detail, it can also be noted that a cooperative can be formed as a European cooperative company (Europese coöperatieve vennootschap/société coopérative européenne) in order to develop cross-border activities and enter into European cooperative ventures.

As indicated above, unique reporting requirements exist for a CV/SC that has been recognised by the federal Belgian Minister responsible for the Economy as a 'social enterprise' (sociale onderneming (SO)/ entreprise sociale (ES)).

Article 6, §2 of the Royal Decree of 28 June 2019 (“the 2019 Recognition Decree”) laying down the conditions of approval as an agricultural and social enterprise requires that the governing body of the recognized CV/SC annually prepares a special report in which it reports, among other things, on the following elements:

• The manner in which the Enterprise supervises the application of the conditions for recognition as set out in Article 6, §1 2019 Recognition Decree;
• The activities the Enterprise has performed in order to realize its object;
• The resources the Enterprise has deployed to realize its object.

This report shall be included in the regular annual report of the Enterprise and, depending on the Enterprise form and its size, the report will be published together with the annual accounts in the Belgian Official Gazette.

The existing case law relates to the old Enterprise form VSO/SFS and there is for the time being no case law on the recognition of CV/SC as social Enterprise. The literature on Social Enterprises is, however, growing.

Yes– For listed companies and in the financial sector Europa started to oblige companies to report on their track record in ESG matters (see below). For unlisted Enterprises, a voluntary corporate governance code exists, referred to as Code Buysse, the most recent edition of which dates from 2017. In their annual accounts, large and very large Belgian Enterprises must attach a so-called social balance sheet, that provides information on the number of staff, the number of hours works, level of education, the number of hours spent on training. Staff rotation.

No – since the entry into force of the 2019 Belgian Companies and Associations Code, the organizational form specifically designed for Social Enterprises VSO/SFS that required companies to pursue a social objective has been abolished.

However, under the new legislation, a cooperative Enterprise (coöperatieve vennootschap (CV)/société coopérative (SC)) as well as a CV/SC recognized as a Social Enterprise must have legal objectives that align with certain ESG factors:

• As stated above, the CV/SC must have real cooperation purposes in the sense of the ICA (International Cooperative Alliance) principles. The legal objective focuses on the satisfaction of shareholder’s or interested third parties’ needs and the development of their economic and social activities.
• The main purpose of the CV/SC recognized as social enterprise must be, in the general interest, to generate a positive societal impact for people, the environment or society; some literature assumes that the concept of general interest is to be understood in a private-law sense, meaning that the objective may not consist primarily in conferring a (direct or indirect) advantage, to the shareholder.
• As stated above, the regular Enterprise forms (especially BV/SRL) can voluntarily incorporate a social objective as an additional objective next to the profit sharing objective which is essential to use the regular Enterprise forms as Social Enterprises.

The law does not set forth mandatory ESG rules that investors are required to comply with as part of the investment decision(s). However, there are a series of codes which investors can voluntarily undertake to abide by, such as the UN Environment Program-Finance Initiative’s “Principles for Responsible Investment” or the “ESG Disclosure Framework for Private Equity”. An interesting trend is that the EU Member States, when providing state aid to loss-making enterprises, start making state aid conditional to climate and environmental objectives of the European Green Deal.

a. No.

b. While there is no requirement imposed by law on investor classes to look at ESG issues when making investment decisions in Belgium, investors do include, to a varying degree, ESG criteria in the investment decision as there is an increasing awareness and interest in the ESG aspect of an investment.  

c. Listed companies in particular do take the ESG aspect of an investment into account when making investment decisions because certain shareholders are very vocal about the Enterprise’s ESG track record. Reduction of a company’s carbon footprint, the sourcing of environmentally friendly products, recycling of waste are factors that are becoming increasingly important for investors when assessing whether a particular company is worthy for investment.

Social Enterprises receive different kinds of philanthropic funding depending on the chosen Enterprise form. A cooperative Enterprise (coöperatieve vennootschap (CV)/société coopérative (SC)) recognized as Social Enterprise as well as the Non-profit Enterprise forms (internationale vereniging zonder winstoogmerk (IVZW)/association internationale sans but lucratif (AISBL)), receive more grants and charitable investments, whereas the regular Enterprise form (besloten vennotschap (BV)/ société à responsabilité limitée (SRL)) are more likely to receive traditional investment.

For-profit (social) impact investments are very varied in Belgium, both in terms of players and impact objectives. ALTERFIN, BIO, BRS, INCOFIN, INPULSE, KAMPANI and KOIS are for example well-known Belgian impact-driven investors which are committed to the economic empowerment of socially deprived populations in developing countries.

The government funding happens on ad hoc basis. There is no support scheme specifically dedicated to Social Enterprises. The government funding framework does entail special supportive measures for small and medium-sized enterprises (See Section IV. Governmental support)

No.

By law, listed companies are required to incorporate non-financial reporting in their annual reporting pursuant to article 3:6, §4, third paragraph, e) of the Companies and Associations Code.

Thus far, there is no single or common reporting standard for non-financial reporting. This means that listed companies may use different reporting standards. Some examples of reporting standards are the following: the Global Reporting Initiative (GRI), Sustainable Development Goals (SDG’s) or the International Integrated Reporting Framework (IR).

Despite the diversity of approaches, a similarity in topics can be observed which are in line with the Non-Financial Reporting Directive (Directive 2014/95/EU) and entail for example talent management, health and safety, responsible supply chain, climate change, human rights etc.

In this regard it is noteworthy to mention a new European Regulation, namely the Taxonomy Regulation of 22 June 2020 which establishes the basis for the EU taxonomy, a classification system that establishes a list of environmentally sustainable economic activities and which might be of significant important for the non-financial reporting.

In addition, listed companies must indicate in their annual reporting which corporate governance code they applied as well as which measures where taken by the Enterprise.

(Social) Impact bonds are appearing more and more in Belgium but represent only a very small fraction of the overall funding raised by debt instruments.

No.

Yes, crowdfunding is legal in Belgium. As a result of legislative reform in 2018, an Enterprise is no longer required to draw up a prospectus for the issuance of securities up to EUR 500,000.

For the issuance of securities between EUR 500,000 and EUR 5,000,000, only an information note (but not a prospectus) is required. The information note must comply with the conditions set out in the prospectus law and Royal Decree of 23 September 2018. The information note must be filed with the Belgian Financial Services and Markets Authority, without prior approval, at the latest at the time when it is made available to the public.

 For the issuance of securities above EUR 5,000,000 a prospectus is still required.

A recent Regulation of the European Union of 7 October 2020 (2020/1503) harmonises requirements for all crowdfunding platforms in the EU, establishing a pan-European framework for crowdfunding operators.

Social Enterprises constituted under the non-profit forms under Belgian law, (VZW/ASBL, private foundation and IVZW/AISBL) are normally not subject to corporate income tax and are only subject to the “tax on legal entities” provided however that they do not carry out profit making operations on a regular basis; The concept of “profit making operations” refers to activities which are carried out frequently enough and which are related to one another in such a way as to become permanent and ordinary economic activities. Whether or not there is a purpose of gain is not important here. This remains, however, a matter of fact. Isolated or ancillary operations, as well as portfolio investment are allowed. However, disqualification to the corporate income tax does not occur easily and generally requires regular business operations.

The scope of the tax legal entities income is limited. Indeed, unlike the corporation tax which is levied at a flat rate on all net income, the tax on legal entities applies only to clearly determined income, which is only subject to a withholding tax or a specific contribution.

Certain non-profit Social Enterprises are not liable to corporate income tax, even if they carry out operations which could be characterized as profit-making operations; for example:

• associations only or mainly aimed at studying, protecting and furthering professional or interprofessional interests of their members;
• associations which, in addition to the above, fulfil in the name and for the account of their members all or part of the members’ obligations with regard to social security, tax or labour law, or assist their members in complying with these obligations;
• associations which for the implementation of social security laws are responsible for the collection, centralization, capitalization and division of funds used for the granting of benefits under those laws;
• associations only or mainly involved in providing or supporting education;
• associations only or mainly involved in organizing commodity exchanges or exhibitions; and
• associations which by the competent institutions of the regions are recognized as services to assist families or elderly people.

Social Enterprises constituted under the regular Enterprise form (besloten vennootschap (BV)/ société à responsabilité limitée (SRL), are in principle subject to Belgian corporate income tax. This means that they are taxable on their entire profits. The ordinary corporate income tax rate is 25% (except for qualifying small companies where the first tranche of EUR 100,000 is subject to a 20% tax rate).

Please note that as an exception to the general rule, the Belgian tax authorities accepted that the company with a social purpose (vennootschap met sociaal oogmerk (VSO)/ société à finalité sociale (SFS)) as known under the old company law rules could be subject to the legal entities tax, instead of the corporate income tax, provided any possibility of a dividend distribution was excluded. Under the new company law rules, however, it is no longer possible to fully exclude this possibility with respect to the cooperative corporation (coöperatieve vennootschap (CV)/société coopérative (SC)) structure, recognized as a social enterprise. Hence, Social Enterprises constituted under such form would be subject to corporate income tax.

Social Enterprises constituted under the non-profit forms under Belgian law, being the VZW/ASBL, the private foundation and the IVZW/AISBL are in principle subject to a yearly tax in lieu of succession duties, at the rate of 0.17%, on the value of the total gross assets. An exemption applies (i) if the assets do not exceed EUR 25,000 as well as (ii) to certain public interest Social Enterprises depending on their specific activities (e.g. nature preservation, education, child allowance etc.).

The so-called “cadastral income” (a form of deemed income) relating to immovable property is tax exempt if such immovable property is used by a non-profit Social Enterprise for a charitable or non-profit purpose, as a church, a school, a hospital, etc.

Certain qualifying -profit Social Enterprises can benefit from an exemption of registration duties on the purchase of immovable property used for education purposes.

Individuals giving donations to certain Social Enterprises that have been recognized by the Belgian government could benefit from a tax reduction equal to 45% of the qualifying donations that cannot exceed 10% of the total net income of the donor (maximum EUR 392,200 per year (for donations made in 2020)) (subject to formalities). In order to qualify for possible approval, the beneficiaries must operate in areas such as, for example, scientific research, dissemination of culture, assistance to certain groups of people (e.g. handicapped, elderly, poor, victims of war, major industrial accidents and natural disasters), nature or environment protection and sustainable development, preservation or protection of monuments and sites, etc.

Corporate donors may deduct the amount of their donations up to a maximum limit of 5% of their gross revenue, with a maximum of EUR 500,000.

No.

No.

No.

Small and medium-sized enterprises (kleine en middelgrote onderneming (KMO)/les petites et moyennes entreprises (PME)) may rely on numerous types of subsidies and funding from various Belgian federal, regional or local authorities and institutions. The categories of support are very broad and cover social projects too. The support does not depend on whether the Enterprise is Social or not but rather on whether it concerns a small or medium sized enterprise (SME) or not.

Some examples of support for SME’s:

• Growth subsidy which is a subsidy tool whereby the Flemish government supports SMEs in achieving their own growth trajectory;
• Subsidies to take part in trade fairs outside the EU;
• SME e-wallet which is a measure whereby an entrepreneur receives financial aid when purchasing services to improve the quality of his/her enterprise.

More information on these (and other) initiatives can be found on www.vlaio.be

No, except for the recognition of a CV/SC as Social Enterprise (See Section I. Enterprise Form – point 7)

No.

No.

In general, setting up a legal entity takes about one week.

A Nonprofit in the form of a Belgian the non-profit association (vereniging zonder winstoogmerk (VZW)/ association sans but lucratif (ASBL)),

 can be set up very rapidly as the incorporation document is a private agreement that is signed by the incorporators and then filed with the Registrar of the Enterprise Court. Legal personality will be acquired from the moment of filing the deed of incorporation with the Enterprise Court. Incorporating a Belgian Nonprofit in the form of an international non-profit association (internationale vereniging zonder winstoogmerk (IVZW)/association internationale sans but lucratif (AISBL)), is far more time consuming, the deed of incorporation must be signed before a notary and that it then takes about three to six months to obtain the Royal Decree that grants legal personality. 

Incorporating an Enterprise is a flexible process: assuming that a bank account has been opened first and that the incorporator has drawn up a financial plan with a business forecast of two years, the Enterprise can be incorporated in about a week’s time. Should the Enterprise be incorporated by means of a contribution in kind, the assistance of an auditor is required and the auditor’s involvement will require more time and resources. For the incorporation of the Enterprise itself, an appointment must be made with a Belgian Notary. As of 1 August 2021, it will even be possible to establish a legal entity digitally. The legal personality exists as of the day an extract from the deed of incorporation is filed with the local court registry.

For the sake of completeness, we note that a CV/SC that wishes to be recognized as a Social Enterprise must submit an application for recognition to the Federal Ministry of Economic Affairs. This is done by post or electronic mail, using a simple application form to which, among other things, a certificate of incorporation and a copy of the coordinated articles of association must be attached.

The minimum costs for incorporating a regular Enterprise can easily amount to several thousand euros. These costs include notary fees for the incorporation deed and articles of association, a fee for publication in the Belgian Official Gazette, the fees of the accountant/auditor for advice and support during the formation and drafting of your financial plan, and so on.

For the recognition of a CV/SC as Social Enterprise: see above Section I. Enterprise From – 4 f). The recognition entails a number of social and fiscal advantages. Some examples of these advantages are:

• Article 21,6° of the Belgian Income Tax Code contains a tax exemption for natural persons-shareholders regarding some dividends of certain recognized cooperative enterprises;
• Article 215 of the Belgian Income Tax Code contains a reduced tax rate in certain circumstances;
• Directors of certain recognized cooperative enterprises fall under the social security of employees.

Furthermore, certain certifications serve as a quality label and thus help bolster the entity’s social impact claims and provide potential investors and stakeholders with immediate information to accurately assess the social impact that the entity makes.

There are a broad variety of (private) product, safety and environmental certifications available to entities pursuing specific social or environmental objectives depending on the industry and purposes of the organization.

Startups and other entrepreneurial Enterprises generally can easily form and flourish in Belgium.

Since the entry into force of the Belgian Companies and Associations Code, the private limited company (besloten vennotschap (BV)/ societé à responsabilité limitée (SRL)) has become much more flexible. The BV/SRL no longer has a mandatory minimum capital, the shares of the BV/SRL may now have a flexible number of voting and dividend rights, the BV/SRL may now issue convertible bonds and warrants, and many other rules have also been relaxed.

In this way, start-ups in Belgium no longer have to bear the cost of a conversion into a public limited company (naamloze vennootschap (NV)/société anonyme (SA)) to be able to issue convertible loans or warrants, which are typical instruments for start-ups.

Also, through variations in the number of voting and dividend rights, the start-up can deal much more flexibly with investors in the various capital rounds.

Social Enterprises can easily form and flourish in Belgium. As stated above (See section I. Enterprise Form – 2), Social Enterprises can take many Enterprise forms. This choice between different company forms allows for a high degree of flexibility.

There are no additional difficulties compared to regular companies. Only the recognition as a Social Enterprise requires a small amount of additional paperwork.

As stated above (see Section I. Enterprise Form – 3), the board of directors of any Belgian Enterprise should always keep in mind the corporate interest which implies that, besides the interests of a non-shareholder, the interests of a shareholder must always be pursued.

No.

1. Allow recognition as a social enterprise for other company forms in such a way that the recognition is not tied to the cooperative Enterprise form.
2. Centralize information on starting and managing Social Enterprises and a one-stop shop for obtaining subsidies.
3. Offering (additional) fiscal and social benefits.

A mandatory reporting on the social and environmental initiatives taken by Enterprises might help to create a better awareness among all types of Enterprises, together with a uniform benchmark that actually permits to compare the performance of Enterprises.

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