Droit Fiscalité belge

Introduction

Luxembourg company law is inspired from Belgian law whilst tax law is inspired from German law.

It incorporates a fundamental law on commercial companies dated 10 August 1915 and regularly amended since then.

As in all jurisdictions members of the European Union changes and amendments to the companies’ regulations have been influenced by European Directives and Regulations.

There exist six different legal forms of commercial companies:

Partnerships:

-          the ‘Société en Nom Collectif’, with unlimited liability of the partners (‘Offene Handelsgesellschaft’);

-          two types of ‘Société en Commandite’ (‘simple’ or ‘par actions’), with a mixed liability regime where financing partners have a limited liability and managing partners face unlimited liability: limited (‘Kommanditsgesellschaft’);

Cooperative company:

-          with a floating share capital in relation with entering or withdrawing of members and where transfer of shares are only possible under strict conditions.

Capital companies:

-          the ‘Société à Responsabilité Limitée’ – ‘S.à R.L.’ (private company by shares);

-          the ‘Société Anonyme’ – ‘S.A.’ (anonymous company or public company by shares).

Summary description of the S.à R.L. and of the S.A.

The ‘Société à Responsabilité Limitée’

-          Dedicated to average (middle) size enterprises which do not require appealing to a significant number of shareholders;

-          Shareholders: may be set up by just one shareholder with a maximum of 40;

-          Minimum share capital of 12.394,68 EUR to be fully subscribed and paid up in full at incorporation;

-          Share capital represented by registered shares only, with or without a nominal value;

-          Transfer of shares is only possible with the agreement of ¾ of the other shareholders; the agreement on the transfer is to be given at a general meeting to be held either before a Notary Public (recommended) or in private. In the latter case, the private deed will not be opposable to the company unless it has been notified to its registered address;

-          The managing body is composed of one or several directors (‘Gérant’), which are appointed for a limited or unlimited period of time;

-          General meeting of shareholders is required for appointing or dismissing directors, amending the articles of association and decisions relating to the structure of the company such as transformation or winding-up. Furthermore, ordinary (annual) general meeting are to be held once in a year for approving annual statements and discharging directors. If the company counts less than 25 shareholders, the annual general meeting may be held in writing;

-          Supervision: required if the company counts more than 25 shareholders; in such case, there is only need of a statutory auditor (‘Commissaire aux Comptes’) which can be a shareholder of the company;

-          Independent auditor is compulsory if two of the following criteria are met over one year:

o        Balance sheet of a minimum of 3.125.000 EUR;

o        Net turnover of a minimum of 6.250.000 EUR;

o        50 employees in average over the concerned financial year.

The ‘Société Anonyme’

-          Designated for enterprises of substantial size with complex management bodies and/ or multiplicity of shareholders;

-          Minimum share capital: 30.986.60 EUR at least a which to be paid up in full at incorporation;

-          Shareholders: it is possible since August 2006 to have just one shareholder; there is no maximum number of shareholders;

-          Equity interests are represented by shares, whether bearers or registered; however, shares remain registered until they are fully paid up;

-          Other titles such as bonds, shares without voting rights, founders’ shares are possible also;

-          Titles are freely transferable unless parties have agreed over specific restrictions in shareholders agreements or in the articles of association;

-          In terms of management body, one-tier or two-tier structures are available:

o        One-tier:

§         Management body of 3 members (directors) minimum;

§         Directors are appointed for a term of maximum 6 years;

§         Day to day management may be delegated to one or more director(s) or manager(s);

o              Two-fold structure:

§         Management Board (‘Directoire’) vested with management powers;

§         Supervisory Board (‘Conseil de surveillance’) supervising the Management Board’s activities.

-          General meeting: classical powers and way of functioning such as described in section over S.à R.L. here above;

-          Supervision is trusted to a ‘Commissaire aux Comptes’ if the company counts more than 25 shareholders. The Commissaire must not necessarily be independent;

-          Independent auditor is compulsory if two of the following criteria are met over one year:

o        Balance sheet of a minimum of 3.125.000 EUR;

o        Net turnover of a minimum of 6.250.000 EUR;

o        50 employees in average over the concerned financial year.

The setting up of a S.à R.L. or a S.A.

Appearing before a Notary Public

-          the act of incorporation must be drafted and signed under the form of act of a notary deed; it shall incorporate the articles of association of the company;

-          the legal personality is acquired as from the signature of the deed;

-          language of the act of incorporation is French, German or Luxembourg but foreign languages are accepted if there is a translated version in one of the three official languages mentioned above; the foreign language version may prevail;

-          it is not prohibited to express the share capital in a foreign currency as long as the converted amount in EUR matches the minimum capital amount required by law; such choice may however lead to difficulties in the setting up of financial statements which have then to be expressed in the same currency.

Opening of a Bank account

-          if contribution in cash, funds will have to be deposited in advance on a bank account opened at a Luxembourg bank who shall deliver a Capital custody Certificate to be delivered to the notary at the latest when signing the act of incorporation;

-          please pay attention that opening an account may be less easy than in other jurisdictions due to the very strict application of Money Laundering and KYC rules by Luxembourg banks;

Two issues shall be carefully reviewed:

-          origin of the funds;

-          ultimate beneficial owners.

Intervention of an Auditor

-          in case of contributions in kind, an independent auditor has to be appointed in order to check the estimation of value of the contributed assets; his conclusions are to be set out in a report to be handed over to the Notary at the latest on the date of signature of the act of incorporation;

-          founders are entitled not to follow the auditor’s opinion about the value of the contribution but shall be personally liable in case of overestimation.

Tax and Registration

-          it is the Notary’s responsibility to register the act within 15 days to the Registration Administration;

-          stamp duties are of 1% of the share capital amount only (whether contributed in cash and/or in kind).

Official Gazette (Memorial C) - Registry of Commerce

-          filing of the act of incorporation and of the minutes incorporating the appointment of directors at the Registry of Commerce is dealt with by the Notary;

-          publication in the Memorial C of the Official Gazette within additional 15 days as from the filing of the act of incorporation in the Registry of Commerce; this is taken in charge by the Registry itself.

Additional formalities

-          “autorisation d’établissement” (establishment authorization) is required for all commercial and/or industrial activity as well as certain civil activities such as accounting services, architecture, etc.

-          prudential authority (CSSF) agreement is compulsory for banking, financial activities and related activities as to process of financial institution information and data (“PSF status”, applies to software as well as hardware companies).

Conclusion

The process of incorporating a company in Luxembourg is straightforward but can reveal somehow cumbersome in case of difficulties in opening up the bank account and wiring the share capital funds. In case no major issue is encountered, the process can be estimated to a 15 days delay and cost of 3.000 to 3.500 EUR including lawyer’s fees for assisting the client as to legal aspects of the incorporation.

Last words over domiciliation

Domiciliation in Luxembourg is mainly attractive for holding companies although it is frequently used, under more complex formulas, also for operating companies being part of international structures having been set up for tax driven purposes.

In its simplest version, domiciliation shall solely incorporate the providing, by the domiciliator, of a registered address and eventually corporate book housekeeping with thereto related filing duties.

Domiciliation companies however are frequently able in a measure to add accounting services and the carrying out of tax formalities see payroll calculation and process.

In some cases, the domiciliator may even provide premises, secretary or call center services, see personnel (shared or not).

Dec. 2007