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Legal aspects of doing business in Belgium


Editor Geert Bogaert

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1loyens & loeff Legal aspects of doing business in Belgium


Editor: Geert Bogaert

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Preface

A legal guide to the broad spectrum of issues related to doing business is bound to be incomplete: what has been attempted is to provide a condensed inventory of the most commonly encountered issues. An attempt is made to be sufficiently specific and detailed, but each factual situation may have particular aspects not covered in the text.

This publication is the product of a large team. Each is a specialist in the area covered. The purpose of the guide is to respond to the increased need for instant information on various legal aspects of doing business. It is a product of the firm’s continued effort to invest in knowledge and to share this result with its clients.

The present information hopefully allows for a better understanding of the legal business environment, and should allow the reader to more easily identify detailed issues as well as assist in raising focused questions. It is our belief that a law firm should, in the first place, create added value and this starts with making sure the basics are readily available.

The law changes constantly. We have taken account of the law, as it stands at 31 January 2013. Readers are, therefore, well advised to always seek up to date or more detailed specialised advice.

Marc Vermylen and Xavier Clarebout Geert BogaertManagement Team Editor

© Loyens & Loeff, 2013

Although the Legal aspects of doing business in Belgium booklet has been compiled with great care, Loyens & Loeff cannot

accept any responsibility for the consequences of making use of this publication without its cooperation. The contributions to this

book contain personal views of the authors and therefore do not reflect the opinion of Loyens & Loeff.

All rights reserved. No publications may be duplicated, saved in an automated database or made public, in any form or in any

way, whether electronically, mechanically, by photocopying, recording or in any other manner, without the prior written consent

of Loyens & Loeff.


2. Miscellaneous corporate issues: liability of directors and shareholders 322.1 Introduction 322.2 Directors’ liability 322.2.1 General 322.2.2 Civil liability 322.2.3 Criminal liability 392.3 Shareholders’ liability 402.3.1 General principle: limited liability for shareholders of an NV/SA and a BVBA/SPRL 402.3.2 Exceptions: statutory and judicial limitations to the principle of limited liability 412.3.3 Shareholders’ liability in tort 43

3. Financial law 443.1 Secured lending 443.1.1 General introduction 443.1.2 Licences 443.1.3 Corporate resolutions 443.1.4 Financial assistance 443.1.5 Corporate interest 463.1.6 Security in accordance with Belgian law 473.1.7 Security agents and trustees 503.2 Securitisation 513.2.1 Optional regime 513.2.2 Regulated securitisation 513.2.3 Contractual securitisation 523.2.4 Mobilization Act 533.3 Euroclear 543.3.1 The Euroclear System 543.3.2 Taking collateral in Euroclear 543.4 Future legislation 55

4. Competition law 564.1 Introduction: Competition rules modelled on their European counterparts 564.2 Agreements restricting competition 574.3 Abuse of dominance 574.4 Merger control 584.5 Enforcement of the prohibition on restrictive agreements and abuse of dominance 594.6 Review of the Belgian Competition Act 61

Index

Preface 31. The legal framework for one’s business 131.1 Introduction 131.2 Summary of Main differences between the NV/SA and the BVBA/SPRL 131.3 Establishing an NV/SA or BVBA/SPRL 141.3.1 No governmental control 141.3.2 Founders 151.3.3 Incorporation procedure – contribution – financial plan 151.3.4 Capital tax 161.3.5 Pre-incorporation transactions 171.3.6 Corporate books 171.3.7 Filing with the Commercial Court and publication 171.3.8 Registration with the Crossroads Database for Enterprises 171.3.9 Other filing requirements 181.3.10 Registration with the VAT authorities 181.3.11 Registration with the social security administration 191.4 Articles of association 191.4.1 General 191.4.2 Corporate name 201.4.3 Registered office 201.4.4 Corporate purpose 201.4.5 Corporate capital 201.5 Shares 211.5.1 Types of shares 211.5.2 Transfer of shares 221.6 Mandatory internal bodies 231.6.1 General 231.6.2 Board of directors – (Board of) managers 241.6.3 General meeting of shareholders 261.6.4 Management Committee (optional body within an NV/SA) 271.6.5 Daily management 281.7 Annual accounts 281.8 Dissolution and liquidation 291.8.1 General 291.8.2 Standard procedure for liquidation of an NV/SA or BVBA/SPRL 29


7.2.1 International sources 837.2.2 National sources 847.3 Union representation 847.3.1 Trade unions 847.3.2 Works Council (plant/company level) 857.3.3 Committee for Prevention and Protection at Work 857.3.4 Social elections 867.3.5 Union Delegation 867.3.6 Employer’s federations 867.4 Strikes and plant closures 867.5 Employment contracts 877.5.1 Characteristics 877.5.2 Form 877.5.3 Contracts for an indefinite term 887.5.4 Contracts for a fixed term or a specific task 887.5.5 Part-time employment 887.5.6 Particular employment contracts 887.6 Clauses 897.6.1 Probation period 897.6.2 Non-compete clauses 897.6.3 Invention and copyrights 917.7 Salary 927.7.1 Fixed salary 927.7.2 Variable salary 937.7.3 Fringe benefits 937.8 Suspension 947.9 Termination 947.9.1 Termination of indefinite term contracts 957.9.2 Termination of fixed-term contracts 987.9.3 Termination for serious cause 987.10 Protected employees 987.10.1 Candidates and members of the Works Council or Committee for Prevention and Protection 987.10.2 Members of the Union Delegation 997.11 Work regulations 997.11.1 Working hours 997.11.2 Overtime work 1007.11.3 Annual holidays 1007.11.4 National holidays 1007.11.5 Time credit (career break) 100

5. Tax aspects 625.1 Introduction 625.2 Individual income tax 625.2.1 General 625.2.2 Stock options 645.2.3 Special taxation regime for foreign executives 655.3 Corporate income tax 665.3.1 General 665.3.2 Participation exemption 675.3.3 Deductibility of costs in the acquisition of a participation 695.3.4 Ruling policy 695.3.5 Incentive regulations 705.3.6 Non-resident companies 725.4 Withholding taxes 735.4.1 Dividend withholding tax 735.4.2 Withholding tax on interest and royalties 745.5 Capital tax 745.6 Other taxes 745.6.1 Transfer tax 745.6.2 Tax on stock exchange transactions 745.7 Tax treaty network 75

6. VAT and import duties 776.1 Value added tax 776.1.1 General 776.1.2 Taxable persons 776.1.3 Tax base 786.1.4 Exemptions 786.1.5 Tax rates 786.1.6 VAT on imported goods 786.1.7 Formalities 796.2 Import duties 796.2.1 General 796.2.2 Key elements to establish whether an imported good is dutiable 796.2.3 The Modernized Customs Code and its Implementing provisions 816.2.4 Introduction of the Authorised Economic Operator (AEO) 82

7. Employment law & social security 837.1 Introduction 837.2 Sources of employment law 83


8.3.3 Scope 1208.3.4 Formation 1218.3.5 Duration 1218.3.6 Termination 1228.3.7 Repurchase of inventory 1278.3.8 Sub-distributors 1278.3.9 Statute of limitations 1278.3.10 Jurisdiction (courts/arbitration), governing law and conflicts of laws 1288.4 Franchising 1298.4.1 General 1298.4.2 Definition 1298.4.3 Different categories of franchise agreements 1308.4.4 Formation 1318.4.5 Pre-contractual relationship: the Act of 19 December 2005 regarding pre-contractual information within the framework of commercial co-operation agreements the ‘Act’) 1318.4.6 Contractual relationship 1348.4.7 Jurisdiction (courts/arbitration), governing law and conflicts of laws 134

9. Intellectual property rights 1369.1 Introduction 1369.2 Patents 1369.2.1 Registration under Belgian law 1369.2.2 Registration under the European Patent Convention (EPC) 1389.2.3 Registration as Unitary Patent (UP) 1399.2.4 Registration under the Patent Cooperation Treaty 1409.2.5 Competition/EC Treaty 1419.3 Trademarks 1419.3.1 Benelux registration 1419.3.2 International trademarks 1449.3.3 Community trademarks 1459.4 Copyright (or author’s right) 1459.4.1 Legal framework 1459.4.2 Protectability 1469.4.3 Duration 1479.4.4 Assignment and license 1479.4.5 Employees’ works – commissioned work 1479.4.6 Miscellaneous 1489.5 Protection for (industrial) designs 1489.5.1 Benelux registration 148

7.12 Use of language 1017.13 Discrimination 1017.14 Social documents 1017.15 Employee liability 1027.16 Posting 1027.17 Health and safety 1027.18 Violence and moral or sexual harassment at work 1037.19 Privacy 1037.20 Social security 1037.20.1 General 1037.20.2 Unemployment 1047.20.3 Health insurance 1047.20.4 Family allowance 1057.20.5 Retirement 1057.20.6 Occupational illnesses 1057.20.7 Self-employed 1067.21 Regulatory 1067.21.1 Work permits 1067.21.2 Professional cards 1077.21.3 Residence permits 107

8. Commercial agency, distributorship and franchising 1088.1 Introduction 1088.2 Commercial agency 1088.2.1 Definition of the agency agreement/Scope 1088.2.2 Commercial agent vs. sales representative (handelsvertegenwoordiger/représentant de commerce) 1098.2.3 Formation of the commercial agency agreement 1108.2.4 Duration 1118.2.5 Remuneration 1118.2.6 Termination 1138.2.7 Clientele and goodwill indemnity 1158.2.8 Supplementary indemnity 1168.2.9 Non-compete clause 1178.2.10 ‘Delcredere’ clause 1188.2.11 Statute of limitations 1188.2.12 Jurisdiction (courts/arbitration), governing law and conflicts of laws 1198.3 Distribution 1198.3.1 General 1198.3.2 Definition 120


12.4.3 Bankruptcy proceedings 17812.4.4 Creditors’ rights 18012.4.5 Claw-back provisions 181

13. Arbitration and mediation in Belgium 18313.1 Introduction 18313.2 Mediation 18313.2.1 Legislation and General Principles 18313.2.2 Conditions and characteristics of a mediation 18413.2.3 Different types of mediations 18513.2.4 Conclusion about mediation 18713.3 Arbitration 18713.3.1 General Principles 18713.3.2 Different types of arbitrations 18813.3.3 Conditions for a valid arbitration 19013.3.4 Importance and effects of the arbitration agreement 19413.3.5 Proceedings 19913.3.6 Arbitral Awards 19713.3.7 Enforcement 19813.3.8 Annulment 19913.3.9 Conclusion about arbitration 200

14. Useful addresses 20114.1 Official authorities 20114.1.1 Europe 20114.1.2 Belgium 20114.1.3 Flemish Community in Belgium and Flemish Region 20114.1.4 Walloon Region 20114.1.5 French Community in Belgium 20114.1.6 German-speaking Community in Belgium 20114.1.7 Brussels-Capital Region 20214.2 Legal 20214.3 Business and Trade 20214.4 Corporate 20314.5 Financial 20314.6 Taxation 20414.7 Labour and Social Security 20414.7.1 Labour 20414.7.2 Social security 20414.7.3 Employer organisations 205

9.5.2 Protectability 1489.5.3 Duration 1499.5.4 Assignment and license 1499.5.5 Employee rules 1499.5.6 Copyright (or author’s rights) 1499.5.7 Community designs 1499.6 Databases 150

10. Data protection 15110.1 Introduction 15110.2 General principles for lawful data processing 15210.3 Rights of the data subject: right of access, rectification and opposition 15310.4 Confidentiality and security of processing 15310.5 Prior notification and public nature of the processing 15410.6 Transfer of personal data 15410.7 Rules regarding the use of cookies 154

11. Real Estate, Town Planning and Environment 15611.1 Investing in Real estate 15611.2 Entitlements to real estate 15611.2.1 Immovable property 15611.2.2 Rights in rem 15711.2.3 Public and private domain 16111.3 Town planning and environment 16211.3.1 Town planning: building permits and zoning plans 16211.3.2 Environmental permits 16411.3.3 Soil contamination 16611.3.4 Energy performance of buildings (EPB) 168

12. Companies in distress 17112.1 Introduction 17112.2 Amicable arrangement outside judicial reorganisation 17112.3 Judicial reorganisation 17212.3.1 Purpose of the judicial reorganisation proceedings 17212.3.2 Conditions for judicial reorganisation 17212.3.3 Judicial reorganisation proceedings 17212.3.4 Creditors’ rights 17612.4 Bankruptcy 17712.4.1 Purpose of bankruptcy proceedings 17712.4.2 Conditions for bankruptcy 178


1. The legal framework for doing business

1.1 Introduction

When a foreign company decides to set up a business in Belgium, it must decide whether it wants to do so through a branch (which does not have legal personality itself) or through a subsidiary (being a separate entity with legal personality).

Most foreign companies opt for a subsidiary. Such subsidiaries can take several legal forms under Belgian law but the most commonly used are:

(i) the public limited liability company (naamloze vennootschap or ‘NV’ in Dutch/société anonyme or ‘SA’ in French); and

(ii) the private limited liability company (besloten vennootschap met beperkte aansprakelijkheid or ‘BVBA’ in Dutch/société privée à responsabilité limitée or ‘SPRL’ in French).

As the NV and the BVBA are used in the vast majority of cases, we will concentrate on their main features in this publication, without going into further detail on other types of companies.

1.2 Summary of main differences between the NV/SA and the BVBA/SPRL

Originally, the NV/SA was mainly seen as a vehicle for medium-sized or large undertakings, whereas the BVBA/SPRL was intended to be used for small businesses where management and ownership often coincide. To this day, the BVBA/SPRL is mostly used for smaller (privately-owned) businesses. Large multinational groups tend to incorporate their Belgian subsidiaries under the form of an NV/SA (though some may opt for the BVBA/SPRL for foreign tax transparency reasons).

From a Belgian tax perspective, an NV/SA and a BVBA/SPRL are subject to the same corporate tax rules.

14.7.4 Organisations for self-employed workers 20514.7.5 Trade Unions 20514.8 Intellectual property 20514.9 Town planning and Environment 20614.9.1 Federal 20614.9.2 Flanders 20614.9.3 Wallonia 20614.9.4 Brussels 20614.10 Energy 20614.10.1 Federal 20614.10.2 Flanders 20714.10.3 Wallonia 20714.10.4 Brussels 207

15. Loyens & Loeff contacts 208

16. Loyens & Loeff offices 209


However, if the company intends to engage in certain regulated activities (e.g. banking or insurance activities, pharmaceuticals, transport, etc.), prior approval from the relevant governmental authorities will be required.

1.3.2 FoundersA BVBA/SPRL can be incorporated by one or more persons ans so it can have only one founder/shareholder. This possibility is however subject to several restrictions which have an important impact on the liability of the sole founder/shareholder:

• If the sole founding shareholder of a BVBA/SPRL is a legal entity, this legal entity will be jointly and severally liable for all obligations and liabilities of the BVBA/SPRL;

• If, during the existence of a BVBA/SPRL, a legal entity becomes the sole shareholder of a BVBA/SPRL and remains the sole shareholder for more than one year, it will become jointly and severally liable for all obligations and liabilities incurred by the BVBA/SPRL as from the moment the legal entity became its sole shareholder; and

• An individual who is the sole shareholder of a BVBA/SPRL will become jointly and severally liable for all obligations and liabilities of any other BVBA/SPRL of which it becomes the sole shareholder (either through incorporation or through transfer of shares).

An NV/SA must be incorporated by at least two persons, individuals or legal entities. If one or more of these founding shareholders together holds at least one-third of the capital, it or they may be designated as “founders” resulting in the other shareholders being considered as mere subscribers. This has important consequences as there are specific rules on the liability of founders of an NV/SA which do not apply to mere subscribers (or subsequent shareholders) (see Chapter 2).

The founders of an NV/SA or a BVBA/SPRL may be of any nationality and may be domiciled anywhere.

All founding shareholders must be present or represented at the incorporation meeting, which must take place before a notary. A shareholder can be represented by means of a written power of attorney. In principle, such power of attorney does not have to be notarised or legalised.

1.3.3 Incorporation procedure – contribution – financial planThe incorporation of an NV/SA or a BVBA/SPRL is recorded by a notary in a notarial deed of incorporation (oprichtingsakte/acte de constitution). This deed of incorporation must contain, among other things, the company’s first articles of association (statuten/statuts) and a description of the contribution made by each founding shareholder.

NV/SA BVBA/SPRL

• registered or dematerialised • registered shares only

shares (existing bearer shares to be

converted at latest by 31 December

2012 or 31 December 2013 depending

on the date they were issued)

• shares are freely transferable • shares are not freely transferable (limitations on transferability possible but subject to statutory restrictions)

• issue of profit shares, warrants • no issue of profit shares, warrants and convertible bonds possible or convertible bonds possible

• board of directors can (i) delegate • one or more managers (board daily management and/or (ii) install a optional) without possibility to Management Committee (i) delegate daily management or (ii) install a Management Committee

• minimum capital: EUR 61,500 • Minimum capital: EUR 18,5501

• can solicit public funds and be • cannot solicit public funds or be quoted on the stock exchange quoted on the stock exchange

1.3 Setting up an NV/SA or VBA/SPRL

1.3.1 No governmental controlAs a general rule, no filing with, or approval from, any governmental authority in Belgium is required prior to the incorporation of a company (regardless of whether it is an NV/SA or a BVBA/SPRL).

1 In this publication, we do not elaborate on the “BVBA/SPRL Starter”. The “BVBA/SPRL Starter” is a

specific form of BVBA/SPRL (only open to physical persons) and introduced by the law of 12/01/2010 and

for which the corporate capital can be freely determined with a minimum of EUR 1.


1.3.5 Pre-incorporation transactionsPrior to its incorporation/obtaining legal personality, a Belgian company may enter into contractual commitments. Such commitments are entered into on behalf of the company “in the course of incorporation”.

Unless the contrary is explicitly stated, all persons who act in the name of a company “in the course of incorporation” will be jointly and severally liable for those acts unless the company (i) obtains legal personality within two years following the act and (ii) ratifies the act within two months after obtaining legal personality.

1.3.6 Corporate booksIf registered shares have been issued, the company (be it an NV/SA or a BVBA/SPRL) must keep a shareholders’ register at its registered office. The shareholders’ register must contain such details as the name and address of each shareholder, the number of shares each holds, the amount paid-up on each share, the date of any share transfer, as well as pledges and other encumbrances. The shareholders’ register is of crucial importance as registration in the share register constitutes proof of ownership of the shares towards third parties (including the company itself). Similar obligations apply if registered bonds are issued.

The company must also keep a separate register of minutes for both shareholders’ meetings and board or any other management body meetings. These are separate from the accounting records which must be prepared and kept in accordance with Belgian accounting law.

1.3.7 Filing with the Commercial Court and publicationAs mentioned above, an extract of the deed of incorporation must be filed with the Clerk’s Office of the relevant Commercial Court within 15 days of the incorporation meeting in the presence of a notary. The Company acquires legal personality through this filing.

Approximately 15 days after filing with the Clerk’s Office of the Commercial Court, an extract of the deed of incorporation will be published in the Annexes to the Belgian Official Gazette.

1.3.8 Registration with the Crossroads Database for EnterprisesSimultaneously with the filing of an extract of the deed of incorporation with the Clerk’s Office of the Commercial Court, the company will be registered with the Crossroads Database for Enterprises and will obtain its enterprise number. The company must complete the registration process by filing details of all its business units, directors (for an

Depending on the location of the company’s registered office, the deed of incorporation will have to be in Dutch, French or German.

It should be noted that the legal personality of an NV/SA and a BVBA/SPRL is only conferred by and as of the filing of an extract of the notarial deed of incorporation with the Clerk’s Office of the relevant Commercial Court (being the commercial court of the judicial district of the company’s registered office).

As mentioned above, the deed of incorporation must describe the contribution made by each shareholder. Such contributions can be made in cash or in kind.

In the event of a contribution in cash, the money must be deposited on a blocked bank account, opened with a bank in Belgium for this specific purpose in the name of the company “to be incorporated”. The bank will issue (to the notary) a certificate confirming the amount of cash contributed by the shareholders into the blocked bank account. These funds will only be released (to the company) once the notary provides the bank with a certificate confirming the incorporation of the company.

A contribution in kind must consist of assets (other than cash) having an economic value (e.g. real estate, shares in another company, etc.). Except in some exceptional circumstances explicitly mentioned in the Belgian Companies Code, contributions in kind require an appraisal report by an external auditor, as well as a report issued by the founders.

The founding shareholders of an NV/SA or a BVBA/SPRL must also file a “financial plan” (justifying the amount of the corporate capital) with the notary at the time of incorporation. The notary will keep the financial plan, which, in principle will remain confidential. He can only be required to release it to the Commercial Court if the company becomes bankrupt within three years after incorporation (in order to help the court in its assessment of any founders’ liability – see Chapter 3). In view of the importance of the financial plan for the assessment of the founders’ liability and although the Belgian Companies Code does not impose a specific format for the financial plan, it is usually construed as a budget forecast for at least the first two years of the company’s operations.

1.3.4 Capital taxIn general, no capital tax is due on the amount of capital contributed. If real estate located in Belgium is contributed in kind by an individual and is entirely or partially used or intended for habitation, a capital tax of 10% or 12,5% will be due (depending on whether the real estate is located in the Flemish Region or elsewhere).


1.3.11 Registration with the social security administration

1.3.11.1 Registration requirements for the companyAll companies which are subject to Belgian corporate income tax must register with a social insurance fund for self-employed persons (sociale verzekeringskas voor zelfstandigen/caisse d’assurances sociales pour travailleurs indépendants) within three months after their incorporation and pay annual contributions.

1.3.11.2 Registration requirement for employeesIn addition, if the company has employees in Belgium, it must register with the Belgian social security administration for salaried workers (‘RSZ’/‘ONSS’) and comply with all Belgian social security regulations applicable to employers.

The registration procedure is usually handled by specialised payroll offices (sociale secretariaten/secrétariats sociaux).

1.3.11.3 Registration requirement for directors/managers and the managing director The directors (in case of an NV/SA) and managers (in case of a BVBA/SPRL) must register with a social insurance fund for self-employed persons, as they are not salaried employees but self-employed persons, regardless of whether or not they receive any actual remuneration for the performance of their duties as directors/managers. They must register within three months of their appointment.

This registration requirement also applies to the managing directors of an NV/SA if they are not salaried employees but work as a self-employed person, regardless of whether or not they receive any actual remuneration for the performance of their duties as managing directors.

The amount of the contribution due by these persons depends on the level of their remuneration (with a minimum amount to be paid even if they receive no remuneration). In some exceptional cases, no contribution will be due (e.g. if these persons are foreign citizens who benefit from a treaty between Belgium and their home country).

1.4 Articles of association

1.4.1 GeneralThe articles of association of a company contain the rules for its internal regulation and management.

NV/SA) or managers (for a BVBA/SPRL), and persons with daily management powers (if any) with an ‘Approved Business One-Stop Shop’ (erkende ondernemingsloketten/guichets d’entreprises agréés).

When registering with the Crossroads Database for Enterprises, small- and medium-sized companies (referred to as KMOs/PMEs), are required to provide proof that the person in charge of the day to day operational management of the company.has adequate management skills.These skills can be proven either by submitting diplomas or by providing proof of management experience.

This formality can be avoided if more than 25% of the shares in the capital of the company or the voting rights attaching to them are held by a company-shareholder fulfilling at least one of the following criteria:

(i) the annual average number of workers employed by this shareholder has exceeded 50 over the last two financial years; or

(ii) the annual turnover of this shareholder has exceeded EUR 7 million and the total of the balance sheet has exceeded EUR 5 million over the last two financial years.

In such case, the company will not be considered as a KMO/PME and, therefore, proof of appropriate management skills does not have to be provided. Previously a declaration upon honour of its shareholder confirming that at least one of the above mentioned criteria was met was sufficient to register the company with the Crossroads Database for Enterprises. Now, however, a declaration upon honour must be accompanied by other documents attesting that at least one of the above mentioned criteria is met (survey of number of employees, balance sheet, annual accounts, profit and loss account, copy of shareholders’ register).

1.3.9 Other filing requirementsIf the company intends to engage in certain regulated activities, a copy of the company’s permits or licences must be filed with the Crossroads Database for Enterprises.

1.3.10 Registration with the VAT authoritiesMost companies must be registered with the VAT (Value Added Tax) authorities. Applications can be filed with the VAT authorities directly or through an Approved Business One-Stop Shop.


(i) the issued capital (geplaatst kapitaal/capital souscrit), which reflects the aggregate nominal value of the issued shares; and

(ii) the paid-up capital (gestort kapitaal/capital libéré), which is the amount of the issued capital which has actually been paid up by the shareholders to the company.

For a BVBA/SPRL the minimum issued capital required is EUR 18,550, of which at least EUR 6,200 must be paid up at incorporation (EUR 12,400 if the BVBA/SPRL has only one shareholder).

For an NV/SA, the minimum issued capital required is 61,500 (which must be fully paid up at incorporation).

In addition, at least 20% (for a BVBA/SPRL) or 25% (for an NV/SA) of the nominal value or the par value of each share must be paid up when it is issued. If a share premium is due, it must be paid up in full on issue.

1.5 Shares

Both an NV/SA and a BVBA/SPRL can issue shares and bonds.

An NV/SA can also issue other securities such as warrants, convertible bonds or profit shares (winstbewijzen/part bénéficiaires).

1.5.1 Types of shares

a) Nature of the sharesA BVBA/SPRL may only issue registered shares (entailing, as mentioned above, an entry in the shareholders’ register).

An NV/SA can issue registered shares (entailing an entry in the shareholders’ register), or “dematerialised” shares (i.e. shares held in a depository account).

Until 31 December 2007, an NV/SA could also issue bearer shares. There is now a gradual phasing out system, under Belgian law, to do away with bearer shares. Depending on when they were issued, existing bearer shares must be converted into registered or dematerialised shares by no later than 31 December 2012 or 31 December 2013. An identical transition period exists for other bearer securities.

They must be in the official language (Dutch, French or German) of the region where the company’s registered office is located.

The main issues to be considered when preparing the articles of association are set out below.

1.4.2 Corporate nameThe proposed corporate name or trade name of the company should be sufficiently distinguishable from other existing corporate or trade names, whether or not registered, so as to avoid confusion. The Belgian Companies Code provides that the words “naamloze vennootschap”/”besloten vennootschap met beperkte aansprakelijkheid” (in Dutch), “société anonyme”/”société privée à responsabilité limitée” (in French), or the abbreviations “NV”/”BVBA”, “SA”/”SPRL”, as the case may be, must appear on all documents used by a company incorporated as an NV/SA or BVBA/SPRL. There is, however, no legal obligation to incorporate these words or abbreviations into the company’s corporate name itself. To retain a maximum degree of flexibility, it is recommended to exclude these words or abbreviations from the corporate name. To ensure that the proposed name does not infringe, or conflict with, existing names, a name search should be made in both public and private databases for a nominal fee.

1.4.3 Registered office The registered office is the address where the company is located according to its articles of association and where the corporate records are kept. In principle, all annual shareholders’ meetings and meetings of the board of directors are held at the registered office, although it is possible to hold them elsewhere. A company’s registered office may be different from its “management head-quarters”, in which case, the latter would determine the company’s nationality under Belgian law (see 1.6.2(c)).

1.4.4 Corporate purposeThe corporate purpose clause, in the articles of association, describes the company’s business and activities. As a company may only act within the limits of its corporate purpose, proper attention should be paid to the drafting of the corporate purpose clause in the deed of incorporation. It is of course possible to amend the corporate purpose but this involves formalities (including not only an amendment to the articles of association but also special reports from the statutory auditor and the board of directors/managers as well as a statement of assets and liabilities).

1.4.5 Corporate capitalFor both the NV/SA and the BVBA/SPRL a distinction must be made between two types of share capital:


Under Belgian law, standstill clauses (prohibiting a transfer of shares) are valid provided they are limited in time and are in the company’s corporate interest.

In addition, if share transfers are subject to “right of approval” (whereby the transfer is subject to the approval of e.g. the company’s board of directors), or a pre-emption right of the other shareholders, the restrictions must not prevent the transfer for more than six months as from the date of the request for approval or the invitation to exercise the pre-emption right. If any such clause provides for a total term exceeding six-months, the term is automatically limited to six months.

1.5.2.2 Shares of a BVBA/SPRLShares of a BVBA/SPRL are, as a general rule, not freely transferable: a transfer of shares of a BVBA/SPRL requires the approval of at least 50% of the shareholders, representing at least 75% of the share capital (excluding the shares for which the approval is requested). Such approval is, however, not required for transfers to other shareholders, spouses, parents, children or other persons approved in the articles of association. The articles of association of a BVBA/SPRL (or a shareholders’ agreement) cannot exclude or reduce these mandatory restrictions. They can however provide for more stringent restrictions.

1.6 Mandatory internal bodies

1.6.1 GeneralFor the NV/SA and the BVBA/SPRL, Belgian corporate law prescribes as mandatory at least two internal bodies, namely:(i) a board of directors (for an NV/SA) (raad van bestuur/conseil d’administration), or the

manager(s) (for a BVBA/SPRL) (zaakvoerder(s)/gérant(s)), or alternatively a board of managers (college van zaakvoerders/conseil de gérance); and

(ii) a general meeting of shareholders (algemene vergadering van aandeelhouders/assemblée générale des actionnaires).

The optional body of a Management Committee (directiecomité/comité de direction) is only possible within an NV/SA. Within an NV/SA, it is also possible to delegate the company’s day to day management to specific persons, whether they are directors or not.

b) Classes of sharesAn NV/SA can issue different classes of shares whose rights are determined in the company’s articles of association. This allows for example for:(i) the creation of different classes of shares entitling the holders to specific corporate

rights (e.g. the right to make (binding) recommendations with respect to the appointment of directors); and

(ii) the creation of “preferred shares” entitling the holder thereof to a preferred part of dividends and/or liquidation bonuses.

The creation of different classes of shares and/or of preferred shares is not possible in a BVBA/SPRL.

Both an NV/SA and a BVBA/ SPRL can also issue non-voting shares representing up to one-third of the issued capital. By law, such non-voting shares entitle their holders to a preferred part of dividends, liquidation bonuses and reimbursements of capital. It should be noted that these “non-voting” shares do, in fact, have limited voting rights (which cannot be excluded) in certain specific circumstances enumerated in the Belgian Companies Code.

c) Shares and voting-rightsThe voting rights attached to a share are, as a general rule, proportional to the amount of the capital represented by each share. In practice, each share issued by an NV/SA or a BVBA/SPRL usually represents an equal portion of the capital and carries one vote. Multiple vote shares are prohibited.

Shareholders may, however, be barred from voting with all their shares at a shareholders’ meetings, as the company’s articles of association may restrict the number of votes each shareholder may cast at the shareholders’ meetings. Such voting restrictions are valid provided they apply to all shareholders regardless of the type of shares with which they participate in the vote.

1.5.2 Transfer of shares

1.5.2.1 Shares of an NV/SAShares of an NV/SA are, as a general rule, freely transferable. Share transfers may, however, be restricted by provisions contained, in particular, in the company’s articles of association or in shareholders’ agreements (e.g. stand-still clause, pre-emption right, approval right for the board of directors of the company).


six years. Both managers and directors may be removed at any time, without cause (ad nutum), by a simple majority vote of the shareholders, except – but only as far as the BVBA/SPRL is concerned – if the articles of association provide otherwise. However, a statutory manager (i.e. a manager whose appointment is incorporated in the articles of association) of a BVBA/SPRL can only be removed on “serious grounds” or with the unanimous approval of all shareholders.

The appointment, resignation or removal of a director or manager must be filed with the Clerk’s Office of the Commercial Court and published in the Annexes to the Belgian State Gazette.

c) MeetingsAs mentioned above, in a BVBA/SPRL, each manager (if more than one manager is appointed) has the right to act individually. The articles of association may however stipulate that the managers must act as a board, in which case the articles of association should set out the rules governing the functioning of that board of managers.

In an NV/SA, the directors must act as a board, i.e. as a “collegial body”. The articles of association should set out the rules for the convening and functioning of the board of directors but the Belgian Companies Code does provide for a number of guidelines:

• As a general rule, all board meetings should be held in Belgium. They can be held abroad from time to time but this should not become habitual, as it could result in the company being deemed to be a foreign entity, (under Belgian law, the nationality of a company is determined on the basis of the location of its “management head-quarters”, i.e. the place from where it is effectively managed and where its centre of decision- making is located.

• Board meetings must be “proper” meetings where directors are given the opportunity to discuss the items on the agenda and the proposed resolutions. Consequently, at least two directors (or more if the company’s articles of association so require) must actually attend each board meeting.

The Belgian Companies Code only allows the board of directors of an NV/SA to adopt resolutions by circular letter, signed by all directors in the absence of any actual meeting, in exceptional circumstances, when the resolution needs to be taken urgently and when the corporate interest requires immediate action. This method of decision making, which must be explicitly allowed for in the articles of association, may not, however, be used for the approval of the annual accounts, for a decision to increase the capital within the limits of the “authorised capital” procedure (allowing the board of directors to increase the

1.6.2 Board of directors – (Board of) managers

a) GeneralAll corporate powers not explicitly granted to any other body of the company by law or the articles of association are vested in the board of directors (for an NV/SA) or the (board of) manager(s) (for a BVBA/SPRL).

Belgium has adopted the principle of the one-tier board structure and so makes no institutional distinction between supervision and managerial tasks. However, through the use of a Management Committee (see 1.6.4 below), a structure close to a two-tier system can be achieved.

An NV/SA is managed by a board of directors composed of at least three persons who may, but need not, be shareholders. The minimum number of directors can be reduced to two if, and only as long as, the company has only two shareholders.

A BVBA/SPRL is managed by one or more managers (zaakvoerders/gérants), who may but not need be shareholders, each with the power to act alone. The articles of association, however, can provide that if the company has two or more managers, they must act as a board.

b) AppointmentThe directors and managers are appointed and can be removed by the general meeting of shareholders, except for the first directors and managers who are appointed by the founders. A cooptation system for directors does not exist, except, in an NV/SA, to fill existing positions on a provisional basis.

There is no legal requirement as to the nationality or residence of the directors or managers.

The directors and managers are usually individuals but legal entities can also be appointed as directors or managers. In this case, the legal person entity must designate a “permanent representative” among its partners, managers, directors or employees who must be an individual and who will assume the activities of director or manager in the name and for the account of the legal entity. This permanent representative will have the same (criminal and civil) liabilities, as if he/she holds the office of director/manager in his/her own name and for his/her own account.

Managers of a BVBA/SPRL can be appointed for a definite or an indefinite period of time whereas directors of an NV/SA can only be appointed for a renewable term of maximum


The main special majority requirements are as follows:

(i) 80% for any amendment to the company’s corporate purpose or for the acquisition by the company of its own shares;

(ii) 75% for any other amendment to the company’s articles of association (including a capital increase or decrease), a merger, a demerger or the dissolution of the company; and

(iii) 25% for the dissolution of the company when the net assets have decreased, as a result of losses, to less than 1/4th of the corporate capital.

Except for resolutions that must be taken in the presence of a notary (e.g. capital increases or other amendments to the articles of association, merger,…), the shareholders can decide in writing on all issues for which the general shareholders’ meeting has power of decision, provided such decision is taken unanimously.

1.6.4 Management Committee (optional body within an NV/SA)The articles of association of an NV/SA can give the board of directors power to delegate its management powers to a Management Committee (Directiecomité/ Comité de Direction). Such delegation of authority may not, however, include the determination of the general policy of the company and any powers explicitly reserved by law to the board of directors (such as e.g. the use of the authorised capital). The board of directors must supervise the Management Committee.

The articles of association may also authorise the members of the ManagementCommittee to represent the company, acting individually or jointly.

Any limitation on the powers delegated to the Management Committee (other than those contained in the Belgian Companies Code) and any assignment of tasks to specific persons within the Management Committee will not be binding on third parties, even if made public.

A Management Committee is composed of two or more persons, who may but need not be members of the board of directors. The articles of association or, (in absence of specific provisions in the articles of association,) the board of directors will determine the rules relating to the appointment, removal, remuneration, etc. of Management Committee members.

company’s corporate capital) or for any other decisions explicitly excluded in the articles of association.

d) RepresentationIn an NV/SA, the board of directors is fully entitled to represent the company in dealings with third parties. The articles of association, however, may provide that (for example) one or two directors (and/or members of the Management Committee) may solely or jointly represent the company vis-à-vis third parties.

In a BVBA/SPRL, each manager can represent the company towards third parties, unless the articles of association explicitly provide for a system of joint representation by (for example) two managers if the BVBA/SPRL has multiple managers.

Any further limitations on these representation powers (e.g. in terms of amount) will not be binding on third parties, even if made public.

1.6.3 General meeting of shareholdersThe shareholders’ meeting of both the NV/SA and the BVBA/SPRL has specific powers granted by the Belgian Companies Code (such as the power to amend the company’s articles of association, the approval of the annual accounts or the appointment of the directors/managers and the statutory auditor).

As a general rule, shareholders’ meetings must be held in Belgium. A shareholder who is unable to attend a shareholders’ meeting may appoint another person to represent him at the meeting. Unless the company’s articles of association provide otherwise, a proxy holder need not be a shareholder.

All shareholders must be convened to each shareholders’ meeting. The directors/managers as well as the statutory auditor (and the holders of bonds or certificates issued with the company’s co-operation and, for the NV/SA, the holders of warrants) must also be convened to each shareholders’ meeting.

In the absence of more restrictive provisions in the company’s articles of association, the resolutions of a shareholders’ meeting usually require adoption by a simple majority of the votes cast, regardless of the number of shares present or represented at the meeting.

For certain important resolutions, however, the Belgian Companies Code requires, a quorum as well as special majority vote.


1.8 Dissolution and liquidation

1.8.1 GeneralAlthough there may be different legal causes for the liquidation of a company, this section will only discuss the voluntary dissolution of an NV/SA or a BVBA/SPRL on the basis of a resolution to that effect by the general meeting of shareholders.

The standard liquidation procedure is rather formalistic and time consuming (see section1.8.2 for an overview of the main procedural steps). It should be noted however that recent legislation (the Law of 19 March 2012) permits dissolution and liquidation in one notarial deed (avoiding the formalities and court preceedings required in the standard procedure). This “fast track” is however subject to a number of conditions (such as the absence of any debt).

1.8.2 Standard procedure for liquidation of an NV/SA or BVBA/SPRLThe liquidation of a company consists of two stages: the dissolution of the company and the liquidation of its assets and liabilities.

Dissolution restricts the objects of the company, which only continues to exist to the extent required for the liquidation of its assets and liabilities. As from the moment of dissolution, it cannot conduct any business other than what is required for the liquidation.

The liquidation consists of the settlement of the accounts (including paying the company’s creditors) and the sale of the non-financial assets for the purpose of paying off the creditors and paying the remaining proceeds – if any- to the shareholders and any other parties entitled to share in the liquidation proceeds by virtue of the articles of association. Please note that in general, 10% withholding tax is due on the distribution of liquidation bonuses (i.e. the part of the liquidation proceeds that exceeds the capital).

The liquidation procedure starts with a resolution of an extraordinary shareholders meeting, to be held in the presence of a notary, to dissolve the company, liquidate its assets and appoint liquidators (vereffenaars/liquidateurs). If there are two or more liquidators, they will act as a board.

Before an extraordinary shareholders meeting can decide to dissolve and liquidate the company, the board of directors (for an NV/SA) or the (board of) manager(s) (for a BVBA/SPRL) must submit to the meeting (i) a special board report, (ii) an interim balance sheet - not older than three months - and (iii) a special auditor’s report.

1.6.5 Daily managementThe manager(s) of a BVBA/SPRL are in charge of the day to day management of the company. They are not permitted to delegate this responsibility to other persons or bodies (except for specific, limited proxies).

The board of directors of an NV/SA, though also in charge of the day to day management, may delegate it to directors, referred to as “managing directors” (gedelegeerd bestuurders/administrateurs délégués), or non-directors often referred to as “general managers” (algemeen directeuren/directeurs général).

1.7 Annual accounts

The board of directors or the (board of) manager(s), as the case may be, must prepare annual accounts and must submit them to the annual shareholders’ meeting for approval within six months following the closing of the financial year. The annual accounts must be filed with the National Bank of Belgium within thirty days after their approval and within seven months following the closing of the financial year at the latest. These obligations are subject to criminal, civil and/or administrative sanctions.

The annual accounts must consist of a balance sheet, a profit and loss account and explanatory notes and must be prepared in accordance the Belgian accounting laws and Belgian GAAP. If an NV/SA or BVBA/SPRL qualifies as a “small company” (as defined below) it will be allowed to prepare less extensive annual accounts, in accordance with a more reduced format.

The company must appoint a statutory auditor, being a member of the Institute of Chartered Accountants (Instituut der Bedrijfsrevisoren/Institut des Réviseurs d’Entreprises), to audit the annual accounts and issue an accountant’s statement. Small companies (unless listed on a regulated stock exchange), however, are normally exempted from the obligation to have their annual accounts audited by a statutory auditor.

The board of directors or the (board of) manager(s), as the case may be, must prepare an annual report in which it explains and accounts for its policy. Such annual report must contain specific information about the company and its operations. Small companies (unless listed on a regulated stock exchange) are exempted from this requirement.

A company qualifies as a small company if it has not exceed more than one of the following thresholds during the last two closed financial year(s):(i) the average number of employees: 50;(ii) the net annual turnover (excluding VAT): EUR 7,300,000;(iii) the value of the assets according to the balance sheet: EUR 3,650,000


distribution plan. For the sake of completeness, it should be noted that, in principle, a loss making liquidation is not excluded under general Belgian corporate law.

After the liquidation, the liquidator must file all accounts and other supporting documents, verified by the company’s auditor (if applicable), at the registered office of the company. The liquidator must convene an extraordinary shareholders’ meeting to be held at the earliest one month after the filing of the accounts and the supporting documents. This extraordinary shareholders’ meeting will decide on the distribution of the liquidation proceeds, the discharge of the liquidator, the location where the company’s books and records will be kept for the next five years and the closing of the liquidation. This extraordinary shareholders’ meeting does not have to be held before a notary (unless real estate is to be be distributed in kind as liquidation proceeds to any or all of the shareholders but that is somewhat unusual).

An original copy of the minutes of the extraordinary shareholders’ meeting must be filed with the Clerk’s Office of the Commercial Court, together with an extract for publication in the Annexes to the Belgian Official Gazette.

Creditors or beneficiaries whose claims have not been taken into account in the liquidation may file a claim against the company (through the liquidator) within five years following the publication of the closing of the liquidation.

The liquidator is liable for the proper discharge of his duties and for any performance related shortcomings. Furthermore, non-compliance with certain, specific duties could attract criminal charges.

In the absence of a provision stating otherwise in the articles of association, or failing the specific appointment of another person or persons in the shareholders’ resolution to dissolve the company, the directors or the managers, as the case may be, in office at the time of the adoption of the shareholders’ resolution, will act as liquidators.

The appointment of the liquidator(s) by the extraordinary shareholders’ meeting only becomes effective after verification and approval by the relevant Commercial Court. The company must file a petition with the Commercial Court to that effect. The Commercial Court will, in principle, check the integrity of the proposed liquidator(s) and render its decision, within 24 hours of the filing of the petition. If the Commercial Court decides that the proposed liquidator(s) lack(s) the necessary integrity, it may appoint another liquidator.

The resolution to dissolve and liquidate and a copy of the court’s decision must be filed with the Clerk’s Office of the Commercial Court, together with an extract for publication in the Annexes to the Belgian Official Gazette. The registration with the Crossroads Database for Enterprises must also be updated to reflect the decision to dissolve and liquidate. From the moment of the dissolution, all publications, letters, announcements and other documents emanating from the company must mention that the company is in liquidation.

The liquidation process starts as of the moment of the dissolution of the company. However, as the appointment of the liquidator(s) must be verified and approved by the Commercial Court, it is advisable to wait for its formal approval before proceeding with any liquidation initiative. The liquidator(s) have the same powers, obligations and liabilities as the former directors/managers. The liquidation basically consists of three phases:

(i) drawing up an inventory and selling all assets; (ii) repaying all debts; and(iii) distributing the balance to the shareholders (or other persons entitled to part of the

liquidation proceeds).

Between the sixth and twelfth months of the liquidation, the liquidator must file a detailed statement (indicating the revenues, expenditures and distributions as well as what still remains to be liquidated) with the Clerk’s Office of the Commercial Court. As from the second year, such filing is only required every twelve months. In addition to the detailed statement, the liquidator must prepare and provide the shareholders with annual accounts every year (explaining why the liquidation has not yet been finalised).

Before the liquidation of the company can be finalised, the liquidator must submit to the Commercial Court for approval a plan for the distribution of the assets among the various creditors. The Commercial Court may question the liquidator as it deems fit to verify the


not, therefore, sanction any fault which clearly does not exceed that margin (“marginal control”). Furthermore, the assessment must be based on the information available at the time the director took the decision .

(ii) DamageLosses incurred, including loss of profit, are recoverable. Although damages must be provable, they can also include future damage. The value of the damages is, in principle, limited to the foreseeable damage resulting from the fault that has been committed. In the case of tortious acts or fraud however, all losses (including unforeseeable losses) give rise to liability which must be compensated.

(iii) Causal relationshipThe third condition required for proving liability is the causal link between the director’s fault and the damage. Damages will only be due to the extent that the loss is an immediate and direct consequence of the fault. In other words, this includes all losses which would not have been incurred in the absence of the fault. The court has complete discretion to determine the existence of a causal link between the loss and the fault.

2.2.2.2 Civil faults

(i) Mismanagement

• Concept Directors are agents (“lasthebbers” / “mandataires”) of the company. In that context,

they are liable vis-à-vis the company for the discharge of their responsibilities and for any shortcoming in the performance of their duties (article 527 of the Belgian Companies Code). It is generally accepted that only the company can claim this type of liability.

• Individual liability In principle, the liability imposed by article 527 of the Belgian Companies Code is an

individual liability. A director can only be held liable for his own management errors.

However, there are exceptions to the principle of individual liability. Indeed, there may be instances where (i) different directors together commit a fault (“faute commune - gemeenschappelijke fout” – joint fault) and (ii) each of the different directors makes an error, the accumulation of these separate errors resulting in the same loss (“fautes concurrentes - samenlopende fouten” – concurring faults).

2. Miscellaneous corporate issues: Liability of directors and shareholders

2.1 Introduction

This section contains a short overview of various provisions of Belgian law on the liability of the directors and shareholders of a Belgian NV/SA. The same rules apply, in principle, to the managers and shareholders of a Belgian BVBA/SPRL.

2.2 Directors’ liability

2.2.1 GeneralA distinction must be made between civil and criminal liability. In terms of civil liability, a director can be liable under several heads of faults such as :• tortious acts, in general, (article 1382 of the Belgian Civil Code);• mismanagement (article 527 of the Belgian Companies Code);• contravention of the articles of association or of the Belgian Companies Code (article

528 of the Belgian Companies Code); or• specific breaches.

2.2.2 Civil liability

2.2.2.1 Evidence of liabilityAs a general rule, a finding of liability requires proof of three factors: a fault, resulting damage and a causal link between the two.

(i) FaultProof of fault depends on whether the alleged breach is of a specific obligation or of an obligation requiring only a general duty of due care.

If a rule requires compliance with a specific obligation, the mere breach of that obligation will amount to sufficient evidence of fault.

But there can also be fault if directors fail to comply with the general duty of due care and diligence in the performance of their responsibilities. The litmus test is that of a normal prudent director and raises the question of what a reasonably prudent and diligent director would have done under the specific circumstances of the case? A court will have to make allowance for the director’s margin of discretion in making policy and decisions. It may


association. Again, fault, loss and causal link must be established for a liability claim on this ground to be successful.

A finding of fault must be based on a violation of the Belgian Companies Code or the company’s articles of association. As the Belgian Companies Code (including the Royal Decree of 30 January 2001 implementing the Belgian Companies Code) contains several accounting law provisions, a violation of these provisions will also fall within the scope of article 528 of the Belgian Companies Code.

• Joint and several liability If the fault is proven, a presumption of joint and several liability rests on all directors.

Any individual director can thus be held liable for the payment of the full amount of the damages for which all or some of the directors are liable as a result of a breach of the Belgian Companies Code or the articles of association of the company, without the claimant having to prove which director specifically committed the violation.

A director can rebut this joint and several liability if he/she can prove that he/she: (a) did not participate in committing the violation;(b) was not otherwise negligent; and(c) had no knowledge of the violation, or informed the shareholders of it at the first

shareholders’ meeting following the date on which he/she became aware of it.

• Who can bring a legal action? A liability claim for violation of the Belgian Companies Code or the articles of

association can be initiated by the company as well as by third parties.

Legal proceedings can be initiated by the company, on the basis of a simple majority decision of the general meeting of shareholders. Should the company or one or more minority shareholders wish to bring legal proceedings, the same rules as set out under 2.2.2.2 (i) apply.

Third parties (such as public authorities, creditors or employees) may also initiate a liability claim for violation of the Belgian Companies Code or the articles of association. A discharge granted to the directors by the annual shareholders’ meeting does not bar a claim from such third parties.

Directors will be held jointly and severally liable if the damage is triggered by a joint fault, i.e. different people knowingly contributed to the act causing loss.

In the case of concurring faults causing damage, each director will be held liable in solidum.

Both in the case of liability in solidum and of joint and several liability, each director is accountable for the entire amount of damages. Any director may be sued and the payment by one director releases all other liable directors from claims from the party who incurred the loss.

• Who can bring a legal action? In principle, liability claims against directors for mismanagement (“actio mandati”

on the basis of article 527 of the Belgian Companies Code) can only be initiated by the company itself, on the basis of a simple majority decision of the general meeting of shareholders. In the absence of such a decision, the board of directors cannot initiate claim proceedings, and any such claim will be declared inadmissible. Such inadmissibility would however be remedied if the general meeting of shareholders confirms the board of directors’ action. This confirmation has to take place before the claim is time barred (five years) and before a court decision on the admissibility of the claim.

The actio mandati can, furthermore, only be initiated by the company if the annual general meeting of shareholders does not grant a valid discharge (release of liability) to the directors in question.

An actio mandati may, however, also be initiated by the minority shareholders, acting on behalf of the company, provided their shareholdings (i) are equal to at least 1% of the votes attached to all issued shares of the company or (ii) have a minimum value of EUR 1,250,000. These criteria must be met on the day the general meeting of shareholders deciding on the matter of a discharge to be granted to the directors. In addition, minority shareholders can only initiate the actio mandati if they did not grant a valid discharge to the director(s) concerned.

(ii) Liability for violations of the articles of association or the Belgian Companies Code

• Concept Article 528 of the Belgian Companies Code states that directors may be held jointly

and severally liable towards the company and third parties for all losses resulting from a breach of the provisions of the Belgian Companies Code or the articles of


It should be noted, however, that directors benefit from the theory of quasi- immunity of an agent. If a director performs a contractual obligation on behalf of a company, he/she cannot be held personally liable for tort, unless:(a) he/she has violated the duty of due care; and(b) he/she was responsible for a loss other than the loss caused by the poor

performance of a given contractual obligation of the company.

An example of a violation which results in a crossover in liabilities, is the continuation of a business when it should be obvious to a diligent and reasonable business person that there was no possibility of recovery, as the indebtedness was on the increase. In such a case, the director will have violated article 527 of the Belgian Companies Code vis-à-vis the company and article 1382 of the Belgian Civil Code vis-à-vis the company’s creditors (as such continuation is a criminally offence).

On 20 June 2005, the Belgian Supreme Court nevertheless decided that a company’s liability due to a fault of its director during negotiations prior to the signing of an agreement, did not exclude the director’s liability. The liability of the company and that of the director, coexisted. This decision appears not to be in line with previous landmark decisions of the Belgian Supreme Court regarding the theory of quasi-immunity of an agent and is inconsistently followed by case law and scholars. This creates some legal uncertainty.

2.2.2.3 Specific liabilities

(i) Liability in the event of insolvencyLiability in the event of gross and manifest negligence having contributed to the bankruptcy (article 530 of the Belgian Companies Code).

• Concept In the case of bankruptcy, a director can be held liable (jointly or individually) for

all or part of the company’s debts if that director has been grossly and manifestly negligent, thereby contributing (i.e. not causing) to the bankruptcy. Gross and manifest negligence requires a fault which a normal careful and reasonable director would obviously not have committed.

It should be noted that, if such gross and manifest negligence is proven, a clear causal link does not have to be proven. It suffices to demonstrate that the gross and manifest negligence contributed to the bankruptcy.

(iii) Tortious liability

• Concept The common rules of tortious liability, set out in articles 1382 and 1383 of the Belgian

Civil Code, also apply to directors. Under these articles, if, as a result of a tort being committed, anyone suffers loss, that person is entitled to claim damages. The party claiming the tort must establish that there was fault, resulting loss and a causal link between the two.

A tort is committed if the general duty of due care or a specific, non-contractual obligation is infringed. In the first case, the test is what a diligent director would have done under the same circumstances. When determining the fault, the court has a margin of appreciation and must evaluate the director’s action at the moment of the alleged negligent action or omission.

In case of tortious liability, any loss which is necessarily caused by the tort, is recoverable.

• Individual liability For a director to be held liable on a tortious basis there must be a violation of a duty

which is personally binding on the director. A director is not, therefore, automatically liable for every tortious action committed by the company.

• Who can bring a legal action?

Relationship of director - company A company can only initiate a claim against its directors, based on articles 1382 and

1383 of the Belgian Civil Code, if the fault constitutes both a breach of the agreement between the relevant directors and the company, and a breach of the general duty of due care and diligence applying to everybody. In addition, the loss suffered in tort must differ from the loss resulting from the negligent performance of the management duties of a director. This difference is, in practice, difficult to establish.

Tort liability will, in most instances, be claimed by the company if the instance of mismanagement constitutes a criminally sanctioned violation.

Relationship of director – third parties Third parties, including creditors and shareholders, can hold the directors personally

liable for all losses incurred as a result of the violation of a specific legal provision or of the general duty of due care.


(iii) Liability for failure to pay VAT (article 93, undecies C of the Belgian VAT-Code) Directors are jointly liable for non-payment of VAT (including interest or additional costs) if they are at fault (under article 1382 of the Belgian Civil Code) in the performance of their management duties. Again, this applies, not only to the managing director, but also to other directors, and even de facto directors, if it is proven that they have committed a fault contributing to the failure to pay.

There is a (rebuttable) presumption of fault if at least two or three due debts are not paid within a period of one year (depending on whether the company must submit its VAT declaration quarterly or monthly).

There is no presumption of fault if the non-payment is due to financial difficulties leading to judicial reorganization, bankruptcy or dissolution proceedings.

2.2.3 Criminal liability

2.2.3.1 Both director and company

(i) Director’s liability A director who commits a criminal offence in the performance of his/her function, can be personally held criminally liable. The prosecutor has to prove that the director personally committed the offence.

If there are several directors, it is frequently difficult to establish which of them committed the criminal offence. The court will then determine who was responsible, after a thorough examination of the facts and circumstances of the case. The actual performance of duties will be decisive (and not the legal division of tasks).

In practice, directors are often held to be criminally liable for acts for which they gave instructions, without being the material author of the criminal offence. Likewise, a criminal omission by a director can also be prosecuted to ensure that the legal obligations are complied with.

(ii) Liability of the companyA company can also directly be held criminally liable. For this to happen, the criminal offence committed needs to be attributable to the company, both materially as well as morally.

• Individual/joint liability The court has discretionary power to hold the directors jointly or individually liable as

well as to order them to pay part or all of the company’s outstanding debts.

• Who can bring a legal action? The trustee in bankruptcy, as well as the creditors, can bring an action against the

directors. Individual creditors who initiate a claim can only receive compensation for the loss they suffered. This compensation will be for the sole benefit of the creditor bringing the action, irrespective of any claim initiated by the trustee in bankruptcy, in the interest of the general body of creditors.

• Special liability towards Social Security Authorities Current directors, former directors and “persons who have exercised actual

management powers regarding (“de facto directors”) may be held liable (individually or jointly and severally) by the Institute for Social Security and by the trustee in bankruptcy for all or part of the social security contributions, contribution increases, interest and the “fixed remuneration”, outstanding at the time of the bankruptcy, if their gross negligence was at the origin of the bankruptcy.

Any form of flagrant and organized financial fraud is characterised as gross negligence. Another possible instance of gross negligence would be where the company is managed by a director or representative who has been involved in at least two bankruptcies, liquidations or similar operations, leaving debts owed to one of the institutions which collects Social Security contributions.

(ii) Liability for failure to pay corporate tax prepayments (article 44, 2quater of the Belgian Income Tax Code).

Directors are jointly liable for non-payment of corporate tax prepayments if the failure (under article 1382 of the Belgian Civil Code) to do so is due to their mismanagement. Not only the managing director, but also other directors, and even de facto directors, may be held liable if it is proven that they were at fault and that the fault contributed to the failure to pay.

There is a (rebuttable) presumption of fault if at least two quarterly or three monthly prepayments per year have not been paid (depending on whether the prepayment is to be paid quarterly or monthly).

There is no presumption of fault if the failure to prepay is due to financial difficulties leading to judicial reorganization, bankruptcy or dissolution proceedings.


For the sake of completeness, it should be noted that not all types of companies under Belgian law have such limited liability. In some types of companies, some or all of the shareholders or partners are personally liable for the obligations of the company. Whether or not a specific type of company provides for limited liability, will of course be one of the key elements in deciding which type of company to incorporate.

2.3.2 Exceptions: statutory and judicial limitations to the principle of limited liability Both Belgian legislation and Belgian case law provide for exceptions to the principle of the limited liability of the shareholders of an NV/SA and a BVBA/SPRL through scenarios where their shareholder(s) become(s) personally liable for (specific) debts of the company.

The most important exceptions are briefly discussed below.

2.3.2.1 Statutory exceptions to limited liability

a) Liability of the foundersThe Belgian Companies Code provides for specific liabilities for the founders of an NV/SA and a BVBA/SPRL.

The incorporators can be held jointly and severally liable towards third parties for irregularities or inaccuracies in relation to (i) the incorporation of the company and (ii) the subscription and payment of the corporate capital (articles 229 and 456 of the Belgian Companies Code).

Probably the most important of the founders’ liabilities, however, is their liability with respect to the undercapitalization of the company. If the company is declared bankrupt within three years of its incorporation and if it appears that its initial corporate capital was clearly insufficient to ensure its planned activities for at least two years, the founders of the company will be jointly and severally liable for any loss sustained by third parties in proportions to be determined by the court.

Such insufficiency is a factual question which will be determined by the court on the basis of the specific circumstances. The undercapitalization must be manifest and must be considered at the time of the incorporation and not at the time of the bankruptcy.

Materially, a criminal offence can be attributed to a company if the facts are intrinsically related to the accomplishment of its objects, to the monitoring of its interests, or, where specific circumstances apply, the fault has been committed on its account. In practice, the court will verify whether the activities giving rise to the alleged criminal offence relate to the company’s purpose.

Moral accountability implies that the guilt of the company needs to be proven. The prosecutor will have to prove that a deliberate decision or negligence within the company caused the criminal offence every time that the criminal offence depends on the existence of a special interest condition.

If that can be proved, the company will, in principle, be criminally responsible.

However, if a company is criminally liable exclusively because of the actions of an identified natural person, that person will be convicted if he/she committed the most severe fault.

In principle, there is no accumulation of criminal responsibility of the company and the natural person acting within that company. Accumulation is only possible if the identified natural person was voluntarily and knowingly at fault. In the case of mere negligence, accumulation is not possible.

Case law seems to have evolved in a direction where the mere determination that the natural person acted voluntarily and consciously is sufficient to convict that person together with the company. In practice; the first phase of the prosecution, i.e. determining who committed the most severe fault, is left out of consideration.

The main sentence for a company is a fine.

2.3 Shareholders’ liability

2.3.1 General principle: limited liability for shareholders of an NV/SA and a BVBA/SPRL

In general, once an NV/SA or a BVBA/SPRL has acquired legal personality, the liability of its shareholders is limited to their contribution in the company’s capital. They are not personally liable for the debts and obligations of the company.

This general principle, of course, does not prevent shareholders themselves from “voluntarily” (in practice, at the request of another contracting party such as a bank) providing guarantees for liabilities of the company.


(i) any tax debts due by the cash company with respect to the tax period during which the transfer occurred (as well as the three preceding tax periods); and

(ii) any non-compliance by the cash company with a reinvestment obligation.

2.3.2.2 Case law exception to limited liability: “piercing the corporate veil”Over the years, Belgian case law has developed a judicial piercing the corporate veil doctrine. This doctrine, which is often (if not always) invoked in the context of a bankruptcy, sanctions the abuse of legal personality by shareholders. There has been deemed to have been abuse where there is evidence that the shareholders have consistently disregarded the separate existence and capacity of the company. Whether or not such abuse exists is a matter of factual appreciation, depending entirely on the specific circumstances of a case. The sanction consists of denying those shareholders the benefit of limited liability resulting in their personal liability for the debts and obligations of the company.

2.3.3 Shareholders’ liability in tort A shareholder can also be held liable towards third parties for all losses incurred by them as a result of a tortious act under article 1382 of the Belgian Civil Code. A finding of such liability, therefore, requires proof of (i) a fault by the shareholder, (ii) a loss suffered by a third party and (iii) a causal link between the fault and the loss.

A shareholder will be considered to be at fault if he/she acted in violation of a national or international statutory obligation and/or in a way which does not comply with the actions of a normally prudent and diligent person placed in the same circumstances (breach of the duty of care). If such fault and the loss are proven together with the causal link, the injured third party will be entitled to full compensation for the loss incurred.

A shareholder’s liability under article 1382 of the Belgian Civil Code could, for instance, be invoked if a shareholder is found to have unreasonably continued financing a loss making subsidiary, thereby wrongfully creating the appearance towards third parties that the subsidiary is creditworthy. The assessment of such possible liability is always a highly factual appreciation, depending on the specific circumstances of a case.

The financial plan2 which must be submitted to the notary at the time of incorporation of the company, will play an important role in this assessment. In case of bankruptcy, the notary may be requested to provide the financial plan to the relevant authorities.

b) Liability of the sole shareholder of an NV/SA or a BVBA/SPRLIf a BVBA/SPRL is incorporated by a single legal entity, the sole shareholder/legal entity is jointly and severally liable for all obligations and liabilities of the company as long as it remains the sole shareholder.

If, during the company’s existence, a legal entity becomes the sole shareholder of a BVBA/SPRL or an NV/SA and if:(i) no new shareholders have joined the company within one year; (ii) the company has not been dissolved within one year; or(iii) the NV/SA has not been converted into a BVBA/SPRL – with the sole shareholder

being a natural person– within one year,

then the sole shareholder will be jointly and severally liable for all obligations and liabilities of the company incurred as of the moment it became the sole shareholder and until (i) the moment a new shareholder joins the company or (ii) the publication of the dissolution of the company or of the conversion of the NV/SA into a BVBA/SPRL.

c) Liability of the shareholder as “de facto director/manager” of the companyThe specific liabilities mentioned in section 2.2.2.3 (relating to (i) “gross and manifest negligence having contributed to the bankruptcy of a company, (ii) specific liability towards the Social Security authorities for unpaid social security contributions, (iii) failure to pay corporate tax prepayments and (iv) failure to pay VAT) may also apply mutatis mutandis to shareholders who, due to an active role in the management of the company, are considered as being “de facto directors/managers” of the company.

d) Specific liability of shareholders of “cash companies3”Article 442ter of the Income Tax Code provides for a specific liability for the shareholders of a Belgian cash company, owning at least (directly or indirectly) 33% of such cash company. If they transfer, within one year, at least 75% of their participation, they will become jointly and severally liable for:

2 See section 1.3.3. of Chapter 1.

3 These are companies whose assets consist for at least 75% of claims, cash, financial fixed assets and/

or financial investments.


(i) the transaction takes place under the responsibility of the board of directors and at fair market conditions. The financial situation of the parties involved must be duly considered;

(ii) the transaction is subject to prior approval by the general shareholders’ meeting, by a majority vote of 75%, adopted with a quorum representing at least 50% of the company’s capital;

(iii) the board of directors issues a special report in which the reasons for and conditions of the transaction and the corporate interest of the company are justified;

(iv) the aggregate financial assistance granted to third parties, at no time results in the reduction of the net assets below the amount of the paid-up share capital plus the unavailable reserves;

(v) the company books an unavailable reserve on the liabilities side of its balance sheet, up to the amount of the aggregate financial assistance; and

(vi) where a third party, by means of financial assistance from the target company, acquires shares which are owned by the target company itself or subscribes for shares issued pursuant to a capital increase in the issued share capital of the target company, such acquisition or subscription is made at a fair price.

These conditions implement Directive 2006/68 of 6 September 2006, which amended the Second Company Law Directive introducing the prohibition against financial assistance in Belgian law. This absolute prohibition has been relaxed in order to improve the business efficiency and competitiveness of companies without reducing the protection offered to shareholders and creditors.

The Belgian financial assistance rules apply to public limited liability companies (NV/SA), private limited liability companies (BVBA/SPRL), partnerships limited by shares (Comm.VA/SCA) and cooperative companies with limited liability (CVBA/SCRL).

These conditions (except those under (iv) and (v),) do not apply to (a) the transactions of financial institutions as part of their day-to-day business and at arm’s length terms, and (b) management buy-outs.

The Belgian financial assistance rules are a matter of public policy and are interpreted restrictively. Any advance, loan, credit or security granted in breach of the financial assistance rules is null and void and is considered a criminal offence which can entail the criminal liability of the directors of the company, and may, in addition, trigger their civil liability (i.e. joint and several liability towards third parties and the company itself for a breach of the Belgian Companies Code).

3. Financial law

This section only deals with some of the main aspects of secured lending and securitisations in Belgium. It also gives an introduction to Euroclear, the international clearing and settlement system which is one of the world’s largest international central securities depositories.

3.1 Secured lending

3.1.1 General introductionThe focus of this contribution is on secured financing in Belgium to commercial entities. It relates primarily to the financing of Belgian commercial companies and does not address the specific laws and regulations that exist in relation to credit to individuals and consumers.

3.1.2 LicencesThe sole activity of granting loans in Belgium to commercial corporations is not a regulated activity subject to licence requirements (notwithstanding any possible passporting requirements). No special permits or licences are required if a Belgian company wants to lend or borrow funds. However, if a company wishes also to collect funds from the public, it must be recognised or registered as a credit institution.

3.1.3 Corporate resolutionsIf permitted by the company’s corporate object, and compatible with the corporate interest of the company, no specific restrictions apply to Belgian limited liability companies wishing to enter into credit, loan or security arrangements. Generally, Belgian companies may act either as lender or borrower.

The company’s board of directors or, as the case may be, its management committee must approve the financing agreement. Certain provisions, such as change of control clauses in loan agreements, require the approval of the shareholders’ meeting.

3.1.4 Financial assistanceA Belgian limited liability company may grant security, loans or other funding for the acquisition of its shares by a third party only if the following conditions are met:


the individual corporate benefit of a Belgian company. The possible consequences of a breach of corporate interest also remain unclear.

The following criteria, however, are generally accepted by learned authors in determining the extent to which a group’s interests can be taken into account in assessing the individual corporate interest:(i) the company receives a direct benefit from the transaction in proportion to its

commitment. A benefit resulting from a global assessment of the intra-group transactions may be sufficient, provided that the benefit is certain and current;

(ii) there is a balance between the commitments; and(iii) no company is sacrificed (i.e. the transaction is in proportion to the financial capacity

of the company) for the benefit of the group or a third party. This condition is generally interpreted in the sense that the transaction (both its structuring and performance) causes no irremediable damage to the company (i.e. ultimately leads to its insolvency).

Market practice shows that parties usually negotiate certain limitations on upstream guarantees and security arrangements, taking into account the financial condition of the company.

3.1.6 Security in accordance with Belgian lawBelgian law distinguishes between personal security rights, such as suretyships (borgstelling/ cautionnement) or abstract guarantees, and real security rights (in rem). Some common types of security rights (in rem) are briefly discussed below.

In accordance with the numerus clausus principle applicable in Belgium, only recognised security rights in rem are enforceable against third parties.

As a general principle, the creation and perfection of a security interest on assets and the question whether a security interest can be created over a certain type of asset, is governed by the law of the place where the asset is located or deemed to be located (lex rei sitae). Consequently, although parties to a security agreement are free to determine the law applicable to their mutual contractual rights and obligations, any security interest over an asset located in Belgium should be created and perfected in accordance with Belgian law to ensure its validity and enforceability.

No particular legal provision distinguishes between the nature of the creditor or debtor. However, government entities could benefit from immunity from legal action or enforcement and the articles of association of security providers may restrict or impose requirements on the granting of security interests.

In practice, the above procedure whereby the conditions to allow financial assistance are met, is not applied frequently, since less stringent alternatives (in particular in the framework of a “debt pushdown”) are conceivable and have been tried in the past.

Some examples of such alternatives are:

(i) the purchase of own shares by the target company prior to the sale;(ii) up-streaming of (available or borrowed) funds from the target company to the

acquiring entity by capital reduction or distribution of a (super)dividend;(iii) downstream or upstream merger between the acquiring company and the target

company, following a certain hardening period; and(iv) performing an asset deal instead of a share deal (as the prohibition on financial

assistance only targets the transfer of shares).

It is also generally accepted that pledging the shares acquired in the target company is excluded from the scope of these rules.

Which alternative procedure to be used must be carefully examined and its feasibility and legality will largely depend on the factual circumstances and the tax treatment of the transaction.

When considering the up-streaming of funds, one should take into account the judgment of the Court of Appeal of Ghent of 11 April 2005, in which the security provided by a target company to secure a loan to finance a dividend distribution and thus enable the shareholder to repay its acquisition debt (incurred upon the acquisition of the target company), was held to be null and void, as it would constitute unlawful financial assistance (pursuant to the rules applicable at that time).

Furthermore, when considering any of the above alternatives, one should always take into account the corporate benefit of the target company.

3.1.5 Corporate interestAlthough there is no legal restriction, as such, to providing security for liabilities of other entities, any security or guarantees granted by a Belgian entity must be justified as being in the own corporate interest of the grantor. In this context, Belgian company law does not recognise the notion of group interest.

Although jurisprudence lays down certain conditions for providing such assistance, there is no consensus on the degree to which the interests of a group can be deemed to be for


agreement is executed. The pledge will be enforceable against the debtor of the pledged receivable as from the notification to or acknowledgement by the debtor. From this moment, the pledge will also rank in priority to the concurrent rights of any third parties.

Under Belgian law, a pledge of a bank account is considered to be a pledge of a receivable owed by the account providing bank.

In accordance with Belgian conflict of law rules, a pledge of receivables or similar rights by a Belgian entity should be created and perfected in accordance with Belgian law. In this regard, it must be noted that the prevailing view remains that, except for some specific cases, security assignments of receivables and rights (instead of pledges) may not be enforceable against third parties in the event of a concurrence of creditors, like bankruptcy. Until the Supreme Court decides otherwise, parties should refrain as such from assigning such rights for security purposes.

3.1.6.4 SecuritiesThe creation and perfection requirements for pledges of securities depend on the form of instruments subject to the pledge agreement. Belgian law typically distinguishes between directly-held bearer, directly registered, and directly-held dematerialised securities and indirectly-held book-entry securities.

Under Belgian law, a pledge of bearer securities requires dispossession. A pledge of registered securities should be perfected by entering the pledge in the relevant register. A pledge of dematerialised securities requires the crediting of the securities to a special designated account. A similar rule applies to indirectly-held book-entry securities that are delivered as collateral into an account maintained in Belgium.

The Belgian legislator has provided for a gradual phasing out system with respect to bearer securities. Since 1 January 2008, the issuing of any new bearer securities is prohibited. Depending on the time of issuance, existing bearer securities will need to be converted by no later than 31 December 2012 or 31 December 2013 into registered securities or dematerialised securities. With respect to pledged bearer securities, the preservation of the pledge upon conversion will require that the perfection requirements of registered or dematerialised securities will need to be complied with at that time.

Following the implementation into Belgian law of the European Collateral Directive 2002/47/EC, secured creditors have received extensive foreclosure rights, including the right to liquidate the pledged securities without any prior authorisation. Belgian courts have the right however to carry out a subsequent control to verify whether the conditions in connection with the realization of the pledged securities have been respected and

As to the types of security rights (in rem) on assets, a distinction must be made between movable assets and immovable property.

3.1.6.1 Commercial businessBelgian companies can pledge their commercial businesses comprising, with a few exceptions, all its constituent parts. Contrary to a pledge on individual assets (see below at paragraph 3.1.6.2), a pledge on a commercial business does not require the pledged assets to be dispossessed and allows the pledgor to continue using the pledged assets for the operation of its business. The initial pledgee should be a qualified financial institution and the pledge can only be granted to secure credit, a loan, guarantee or leasing transaction.

Such a pledge can be created either by public or private deed. Subsequent registration with the tax administration and inscription in the register of the mortgage keeper’s office (kantoor van de hypotheekbewaarder/bureau du conservateur des hypothèques) is required. A 0.5% registration tax is payable on the amount of the claims secured. In addition, mortgage keeper’s fees will be due on the secured amount.

To reduce the burden of registration tax, the parties can agree to pledge for a portion only of the amount of the credit and to give a mandate for the balance. Note, however, that such a mandate does not create a security right (in rem). It only allows the holder of the mandate to proceed with the creation and perfection of an additional pledge. If the additional pledge is created and perfected after the bankruptcy of the security provider or during the “suspect” or “hardening” period before bankruptcy (six months or less prior to the bankruptcy), the pledge will not be enforceable against third parties, including the receiver in bankruptcy.

3.1.6.2 Tangible movable assetsParties can also create a pledge over movable assets without reverting to a pledge of the commercial business. A pledge of tangible movable assets can be created by a private agreement. No registration tax will be due. The pledged assets must, however, be removed from the physical control of the pledgor to the benefit of its creditor. This makes pledges of tangible assets, such as commodities and inventory, particularly cumbersome under Belgian law. Some arrangements exist whereby the parties appoint a custodian of the assets.

3.1.6.3 Receivables and similar rightsA pledge of receivables or other similar rights can be created by a private deed. The pledge will be perfected against third parties (other than the debtor of the pledged receivable and third parties with a concurrent right on the claim) as from the moment the


3.2 Securitisation

3.2.1 Optional regimeBelgian law provides for regulated securitisation through a special securitisation vehicle. The regime of regulated securitisation is not mandatory and parties may wish to structure their securitisations differently. However, securitisations of residential mortgage credit and consumer credit are subject to several limitations.

3.2.2 Regulated securitisationBelgian securitisation legislation also permits the creation of a special vehicle whose sole purpose is to invest in receivables, referred to as a collective investment undertaking for investing in receivables (instelling voor collectieve belegging in schuldvorderingen/ organisme de placement collectif en créances) (‘CIU’). This CIU can be structured as a fund or as a company in the form of a public limited liability company (NV/SA) or partnership limited by shares (Comm. VA/SCA).

If there are investors who do not belong to certain specified categories of institutional investors, the vehicle will be deemed to be a “public” entity (i.e., a vehicle that is financed through a public offering), which will trigger prospectus requirements. A “public” CIU must be licensed and will fall under the supervision of the Financial Services and Markets Authority (FSMA).

If all investors are institutional investors acting for their own account, the vehicle will be considered an “institutional” CIU, provided that its units or shares are registered. An institutional CIU must be registered with the Ministry of Finance.

The units or shares of an institutional CIU, which are exclusively issued to institutional investors, may only be transferred to other institutional investors. The listing of the units or shares of the institutional CIU does not affect the institutional character of the CIU, nor does the fact that the units or shares have come into the hands of non-institutional investors provided that, in the latter case, the CIU has taken appropriate measures to ensure its institutional status and does not contribute to the possession of the units or shares by non-institutional investors. In this respect safe-harbour rules have been drawn up, compliance with which ensures the institutional status of the vehicle.

The CIU has the following distinct features:

satisfied. In addition, security arrangements relating to securities and cash benefit from special protection against the traditional insolvency rules. Belgian law also recognises the transfer of title for security arrangements of securities and cash between companies.

3.1.6.5 Immovable propertySecurity over immovable property and certain rights in rem that relate to immovable property, such as building right, usufruct and ground lease, must be created by way of a mortgage. A mortgage, which is created by a public deed before a notary, must subsequently be registered with the tax administration and recorded in the register of the mortgage keeper’s office. A 1% registration tax and a 0.3% mortgage stamp duty are due on the amount of the claims secured. In addition to the notary fees, mortgage keeper fees will be due on the secured amount.

Similar to a pledge on a commercial business (see above at paragraph 3.1.6.1), the parties may agree to create an effective mortgage on a portion only of the total credit amount and to grant a mortgage mandate for the balance. The 1% registration tax and the 0.3% mortgage stamp duty over the amount for which the mortgage mandate is given, will only fall due when that mandate is exercised. To perfect the transfer of mortgage-backed receivables or rights, a 1% registration duty will again be payable. In addition, the transfer will need to be executed as a public deed. To avoid such registration duties on a transfer, the market has reverted to alternative techniques such as registered bonds, parallel debt, joint creditorship and the incorporation of the loan and mortgage into a negotiable certificate.

3.1.7 Security agents and trusteesWith the exception of pledges or transfers of title over securities, certain other types of financial collateral and cash, the prevailing view is that security can only be granted to creditors. The grant of security to a security agent or a trustee, acting as a trustee on behalf of the lenders, is not, therefore, recommended under Belgian law, unless the pledged assets constitute financial collateral or cash. The following alternatives are applied in Belgium:

(i) the (underlying) lenders only risk- or sub-participate in the loan;(ii) all lenders become joint and several creditors under the loan and the security is

granted to one lender only; or(iii) a parallel debt is created whereby a parallel loan is owed by the borrower to the

security agent or trustee in addition to that owed to all lenders for their portion.


requirements) or by way of private placement. In order to allow for a private placement, the safe-harbour rules provide that:

(i) the offer must be addressed exclusively to certain qualified investors;(ii) the offer must be addressed to fewer than 100 natural or legal persons per EEA

member state, other than the qualified investors;(iii) the offer must be addressed to investors who acquire securities for a total

consideration of at least EUR 50,000 per investor and for each separate offer;(iv) the nominal value per investment instrument amounts to at least EUR 50,000; or(v) the total value of the offer per year amounts to less than EUR 100,000.4

The assignment of the rights under a loan to the special purpose vehicle includes the transfer of the ancillary rights under the loan, such as the security interests. A disadvantage of such a structure is the obligation to pay the taxes and costs for perfection of the transfer of a mortgage-backed receivable.

3.2.4 Mobilization ActOn 24 August 2012 the Law containing several measures to facilitate the mobilization of receivables in the financial sector (the Mobilization Act) was published in the Belgian State Gazette.

The Mobilization Act will significantly reduce (or even eliminate) the set-off risk and certain other contractual defences related to the securitization of credit claims, i.e. pecuniary claims arising out of an agreement whereby a credit institution (or other eligible categories of lenders) grants (or grant) credit5.

“In short, the act comes down to the following:A debtor may no longer claim legal or contractual set-off against a transferee, once that debtor has been notified of the transfer, unless the conditions for set-off existed prior to such notification. A debtor is equally precluded from claiming legal or contractual set-off against a transferee if the conditions for set-off are only satisfied by the insolvency or concurrence of creditors vis-à-vis the transferor.The restrictions on contractual set-off do not, however, apply if the debtor is a public or financial institution using a netting arrangement (within the meaning of the Financial Collateral Law) that is part of a collateral arrangement. Such netting arrangements, to the

4 The limits set out under the safe-harbour rules may change in the near future due to the implementation

of Directive 2010/73/EU, which was due 1 July 2012.

5 Provided the debtor cannot rely on article 27 of the Consumer Credit Law.

(i) Advantages:

• tax advantages, such as mortgage loan transfers to the vehicle being exempt from the 1% transfer tax payable on transfers or assignments of mortgage loans (see above at paragraph 3.1.6.5 for the common regime);

• a ‘trustee’ can be appointed to represent the investors (also in court); and• the vehicle can be ‘compartmentalised’, whereby insolvency proceedings only apply to

a specific compartment.

(ii) Restrictions and mandatory provisions (non limitative):

• single (or limited) asset financing is not permitted for a public CIU, unless an exception is granted by the supervisor. The principle of risk diversification also applies to the institutional CIU;

• loans must be established first and subsequently transferred;• future receivables cannot be assigned to the vehicle (unless an exception is granted

by the supervisor);• the vehicle must be independent from the originator;• if the vehicle’s equity is public, the equity must be listed;• the vehicle must be close-ended;• the profits must be distributed, reserved for distribution or cover default risk;• if established as a fund, a public CIU must enter into an agreement with a licensed

management company, if established as an investment company, a public CIU must either manage itself independently or enter into an agreement with a licensed management company;

• if established as an institutional fund, specific safe harbour rules are to be complied with; and

• the public CIU must be approved and is subject to supervision by the FSMA and must enter into an agreement with a rating agency, a depository, a supervisory company and a collecting agent.

Despite the efforts of the Belgian government to promote the use of regulated vehicles, the copious legislation that applies to them reduces their attractiveness.

3.2.3 Contractual securitisationAs an alternative to the regulated securitisation, as described above, securitisations can be structured as a transfer under the relevant articles of the Belgian Civil Code.

If a loan is granted, the rights under the loan can be assigned to a special purpose vehicle, which will issue bonds or shares financed through a public offering (prospectus


the location of the relevant intermediary, i.e. the intermediary holding the account in which the parties agree to provide the collateral. As such, if the parties have agreed that the securities held in Euroclear are to be delivered as collateral, Belgian law will govern the creation and perfection requirements of the security.

In accordance with the Royal Decree N° 62, a pledge of fungible book-entry securities must be created and perfected by crediting the securities to a specially designated account. The Euroclear procedures require that this special account be opened in the name of the pledgee or its representative. Euroclear issues standard pledged account opening documentation for such purposes. In addition to this special account opening documentation, the parties must agree on the conditions of the pledge in a separate pledge agreement.

3.4 Future legislation

A new draft bill was submitted in 2012 which will, if enacted, change the Belgian system in relation to security interests significantly. The draft bill provides for the possibility to perfect security over movable assets by way of registration (instead of dispossession).

extent they are part of a financial collateral arrangement, are protected by the Financial Collateral Directive.Furthermore, if a receivable is pledged (or subject to another security interest), the restrictions on (legal or contractual) set-off will not prevent the enforcement of that pledge (or other security interest) by means of set-off.Similar restrictions apply to a possible Enac claim by the debtor”.

3.3 Euroclear

3.3.1 The Euroclear SystemThe Euroclear System, based in Brussels, Belgium, is one of the largest international clearing and settlement system in the world. Euroclear Bank, a Belgian regulated bank, performs the role of International Clearing and Settlement Depositary (‘ICSD’) for eurobonds.

The basic contract between Euroclear Participants and the Euroclear Bank consists of the Terms and Conditions Governing the Use of Euroclear and the Operating Procedures Governing the Use of Euroclear. This contract is governed by Belgian law.

Pursuant to its Terms and Conditions, Euroclear Participants agree to submit the securities held on their behalf in the Euroclear System to the provisions of the Co-ordinated Belgian Royal Decree No. 62 dated 10 November 1967 governing the custody of fungible financial instruments and the settlement of transactions on the instruments (‘Royal Decree n° 62’). Royal Decree N° 62 provides the basis for the Belgian domestic clearing system and governs the terms on which banks which are direct members of the domestic clearing system may hold securities on a fungible basis.

The provisions of Royal Decree N° 62 apply to all securities deposited on a fungible basis in the Euroclear System by virtue of the reference made to these provisions in the contract with Euroclear Participants, even though the Euroclear Bank re-deposits many of these securities with sub-custodians.

By virtue of Royal Decree N° 62, Euroclear Participants have been given a co-ownership right in the notional pool of such securities held by the Euroclear Bank, protecting them against the insolvency of Euroclear Bank.

3.3.2 Taking collateral in EuroclearUnder evolving European Union law and, more specifically, under the Belgian Financial Collateral Act dated 15 December 2004 implementing the European Collateral Directive 2002/47/EC, it is recognised that the lex rei sitae or lex situs of book-entry securities is


4.2 Agreements restricting competition

Article 2, § 1, of the Belgian Competition Act prohibits all agreements between undertakings, decisions by associations of undertakings and concerted practices which may significantly restrict, distort or prevent competition on the Belgian market.6

Infringement of this prohibition may give rise to fines imposed by the Belgian Competition Council (“Conseil de la Concurrence” or “Raad voor de Mededinging”). Contractual agreements which infringe the prohibition are null and void and unenforceable.

Article 2, § 3, of the Belgian Competition Act provides for an exception to the prohibition of Article 2, § 1, closely mirroring its European counterpart Article 101(3) TFEU (formerly Article 81(3) EC). In short, the exception applies where the economic benefits of an agreement for third parties, in particular customers, outweigh its restrictive effects. As with Article 101(3) TFEU, the exception applies automatically: there is no need to file a notification and obtain an exemption decision.

Importantly for companies, an EU block exemption also shields agreements against Article 2 of the Belgian Competition Act: an agreement which satisfies the requirements of an EU block exemption will not infringe the Belgian prohibition on restrictive agreements. This is true even if that agreement does not significantly affect trade between EU Member States, with the result that the European rules on restrictive agreements do not apply: even then the EU block exemption will shield the agreement in question.

4.3 Abuse of dominance

Article 3 of the Belgian Competition Act prohibits undertakings from abusing a dominant position on the Belgian market or a significant part thereof.

In line with European competition law, a dominant position is defined as a position which enables an undertaking to prevent effective competition from being maintained on the relevant Belgian market and enabling it to act, to a significant extent, independently of competitors, suppliers or customers. Economic analysis, in particular definition of the relevant market and assessment of the degree of market power, are required to establish whether a dominant position exists.

6 An “undertaking” in this context refers to any entity with an economic activity, and usually coincides with

the corporate group rather than an individual company. Intra-group agreements are therefore generally

outside the scope of the Article 2, § 1, prohibition.

4. Competition law

4.1 Introduction: Competition rules modelled on their European counterparts

Belgium is one of the founding members of the European Union (the “EU”), and for decades the European competition rules enshrined in the Treaty on the Functioning of the European Union (“TFEU”, formerly the EC Treaty) have applied.

However, those rules apply only to anticompetitive practices which significantly affect trade between EU Member States. Likewise, the EU Merger Regulation applies only to concentrations with a cross-border dimension.

In the early 1990s, and in parallel with similar moves in other EU Member States, a national Competition Act was introduced to regulate anticompetitive practices and concentrations with a more local impact. Throughout the EU, national competition authorities were established in order to enforce the new national competition laws, and Belgium was no different.

Since 2003, in the context of the European Commission’s decentralisation policy, these national competition authorities’ powers have been expanded to include enforcement of the European rules on anticompetitive practices.

The first fully-fledged Belgian Competition Act dates from 1991. It was extensively revised in 1999 and 2006. A further review is expected in the near future.

The Belgian Competition Act closely follows the European model. It contains a prohibition on anticompetitive agreements (mirroring Article 101 TFEU, formerly Article 81 EC Treaty), a prohibition on abuse of dominance (based on Article 102 TFEU, formerly Article 82 EC Treaty), and a pre-closing merger control regime similar to that of the EU Merger Regulation. Many concepts used in the Belgian Competition Act have the same meaning as in European competition law, and substantive provisions are, as a matter of policy, interpreted in the same way as their European counterparts.


Decisions of the Competition Council can be appealed to Brussels Court of Appeal. However, a decision prohibiting a concentration or approving it subject to conditions can also be reviewed by the Cabinet (“Conseil des Ministres” or “Ministerraad”) at the notifying parties’ request or even ex officio.

The Cabinet can approve the transaction, or fully or partly remove the conditions imposed by the Competition Council, and it can do so on the basis not only of a competition analysis but also of public interest considerations, such as national security or employment. So far the Cabinet has never exercised this power to review concentrations.

The substantive test under the Belgian regime is similar to the test applied at EU level, viz. whether the notified concentration will lead to a substantial lessening of effective competition on the Belgian market or a significant part thereof (“SLC test”). In a rare departure from the European example, where the undertakings concerned have a combined share of the relevant market of no more than 25%, the Belgian Competition Council is obliged to issue a phase I clearance decision. In other words, there is an irrebuttable presumption in favour of concentrations involving market shares not exceeding 25%. However, the parties still have to notify such transactions if they exceed the turnover thresholds mentioned above.

4.5 Enforcement of the prohibition on restrictive agreements and abuse of dominance

Although the Belgian Competition Act refers to a single Belgian Competition Authority, at present this consists of several entities, the most important of which are:

• the General Directorate for Competition (“Direction générale de la concurrence” or “Algemene Directie mededinging”). This is a division of the Ministry of Economic Affairs, which conducts competition investigations under the direction of:

• the “College of Auditors” (“auditorat” or “auditoraat”). This is the “investigative arm” of the Competition Council. Besides directing investigations, the Auditors also set enforcement priorities and have certain decision-making powers (e.g. rejecting complaints and approving concentrations under the simplified procedure);

• the “decision-making arm” of the Competition Council, consisting of twelve councillors.

The latter sit in three-member panels or “chambers” (“chambres” or “kamers”), with the power to find infringements, issue prohibitions and impose fines and periodic penalty payments. The President of the Competition Council can grant injunctive relief (“interim measures”). The Competition Council has the status of an administrative court.

Having a dominant position is not prohibited: only abuse of that position is prohibited.

Examples of abuse are excessive prices or other unreasonable terms and conditions, margin squeezing, tying, unjustified refusal to supply and discrimination.

4.4 Merger control

Under the Belgian Competition Act concentrations, (i.e. mergers, acquisitions and certain joint ventures) must be notified to the College of Auditors (“auditorat” or “auditoraat”) (the “investigative arm” of the Competition Council) for prior approval where:

• the combined aggregate Belgian turnover of all undertakings concerned exceeds 100 million euros; and

• at least two undertakings concerned each have a turnover in Belgium of at least 40 million euros; and

• the turnover thresholds of the EU Merger Regulation are not exceeded. This is a consequence of the so-called “one stop shop” rule, under which concentrations subject to EU merger control cannot be reviewed under national merger control laws in the Member States, unless the European Commission decides to refer the transaction to one or more of them.

Notifications must be filed using a standard notification form similar to the EU’s “Form CO”. In certain cases a simplified (short-form) notification can be made, e.g. where the parties to a merger or acquisition are not active on the same or on vertically related markets, or have combined market shares of less than 25%.

There is no time-limit within which concentrations must be notified, but the Belgian Competition Act imposes a stand-still obligation: notifiable transactions must not be implemented until they have been approved.

A two-phase procedure similar to that of the EU Merger Regulation applies. The Competition Council must take a “phase I” decision within 40 working days, in which it either approves the transaction or, if it has serious doubts, orders a “phase II” investigation. If a phase II investigation is ordered, the Competition Council must take a final decision within a further 60 working days. Both the 40 working days “phase I” and the 60 working days “phase II” time-limits are extended where remedies are offered.

Where the simplified procedure applies, a decision must be issued within 20 working days after notification. A large proportion of Belgian merger cases is handled under the simplified procedure.


4.6 Review of the Belgian Competition Act

Two bills are currently before the Belgian Parliament which replace the current Competition Act with a new text, to be included in the (also new) Economic Law Code. Based on the latest version of the bills the main substantive changes are the following:

• A new prohibition on certain hardcore restrictions is introduced, applicable specifically to natural persons. Infringements of that prohibition can give rise to fines of 100 to 10,000 euros;

• A new system of price controls is introduced. Under certain circumstances the Competition Authority or the Minister of Economic Affairs can intervene in pricing, without first having to establish an infringement of the competition rules;

• The various enforcement bodies are replaced by a single “Competition Authority”. However, this comprises various organs with distinct investigative and decision-making powers.

An important novelty of the new competition rules currently under discussion at the political level, is that they would replace the various existing bodies with a single institution, the “Belgian Competition Authority”.

Competition investigations can be opened ex officio, on the basis of a complaint by an interested third party, at the request of the Minister for Economic Affairs or certain other public entities, or following a leniency application.

The Auditors and the officials of the General Directorate for Competition have investigative powers comparable to those of the European Commission. They are entitled to conduct on-the-spot inspections (“dawn raids”), issue requests for information, organise interviews, etc. However, unlike the European Commission, the Auditors need outside authorisation from the Competition Council President to conduct a dawn raid on business premises. Dawn raids on certain private homes are possible but require authorisation by an investigating magistrate (“juge d’instruction” or “onderzoeksrechter”).

When the Auditor has completed his investigation and considers that there has been an infringement, he will file a report with the Competition Council. This report is the Belgian equivalent of the Statement of Objections (SO) in EU competition procedure, with the difference that it is then for a distinct body (a chamber of the Competition Council) to rule on the merits of the case.

Fines for infringement of the substantive competition rules may not exceed 10% of the annual consolidated turnover, achieved in Belgium and from exports, of the undertakings concerned. At present only undertakings can be fined. The new rules, under political discussion at the time of writing, would introduce fines for certain natural persons.

Decisions of the Competition Council and its President can be appealed to Brussels Court of Appeal.

Private enforcement is also possible. Victims of competition law infringements can seek damages through the courts, although this rarely happens. Another form of private enforcement are so-called “cease and desist actions”. These are accelerated proceedings before the President of the Commercial Court allowing interested parties to obtain injunctions prohibiting infringing conduct.

When faced with questions of interpretation of Belgian competition law, the courts are entitled to seek a preliminary ruling from the Belgian Supreme Court (“Cour de Cassation” or “Hof van Cassatie”). Likewise, the Competition Council can seek a preliminary ruling from the Supreme Court.


Income which does not fall within one of these categories is not taxable. A notable example of income that is generally untaxed is capital gains realised on the sale of shares (in the course of normal management of private wealth).

The net taxable income in each of these income categories is generally determined by deducting the corresponding tax deductible items from the category of gross income concerned. The income of all categories is then subsequently aggregated. This global income can be further reduced by certain allowances, such as child support payments, qualifying gifts and certain contributions for child care.

The net global income is subject to taxation at progressive rates. The following rates apply for the assessment year 2013:

Taxable income Rates

Up to EUR 8,350 25%EUR 8,351 – EUR 11,890 30%

EUR 11,891 – EUR 19,810 40%

EUR 19,811 – EUR 36,300 45%

Over EUR 36,300 50%

A portion of the net global income is however exempt from income tax. For the 2013 tax assessment year, this tax-free amount is equal to EUR 6,800 (more where there are children and descendants dependent on the taxpayer).

Although local authorities may not as a rule levy income taxes, municipalities are allowed to levy a surcharge on individual income tax. The rate of this surcharge varies, depending on the municipality, from 0% to 9%.

Taxpayers are required to file a tax return with their local tax authority for each assessment year. Note, however, that taxes are generally paid through prepayments (e.g. real property withholding tax and wage withholding tax) and advance tax payments (in the case of self- employed individuals). In principle, these prepayments and advance tax payments are fully credited against the individual’s final income tax liability. Investment income is in most cases subject to final withholding taxes so that it does not always need to be subsequently reported in a taxpayer’s tax return.

5. Tax aspects

5.1 Introduction

Belgium plays an increasingly important role in international tax planning, primarily due to the number of advantageous features of the Belgian tax system. These features include:

(i) the participation exemption, which provides for a favourable tax regime for income from qualifying subsidiary companies, i.e., dividends received and capital gains realised on the transfer of shares;

(ii) the notional interest deduction regime;(iii) the extensive and beneficial tax treaty network;(iv) the application of the EU Parent-Subsidiary Directive to all tax treaty countries;(v) the possibility of obtaining advance confirmation from the Belgian tax authorities on

various tax issues (rulings);(vi) the absence of capital tax;(vii) the special tax regime for patent income resulting in an effective tax rate of 6.8%;(viii) the beneficial tax regime for stock options; and(ix) the favorable tax regime applicable to qualifying foreign executives.

In this chapter we provide a brief overview of these features. Special attention is given to the issues that companies may encounter when either investing in Belgium or routing investments through Belgium.

5.2 Individual income tax

5.2.1 GeneralResident taxpayers are subject to Belgian individual income tax on their worldwide income. Individuals are considered to be resident in Belgium if they have their domicile or centre of wealth within Belgium. Non-resident individuals are subject to non-resident individual income tax on their Belgian-sourced income only.

The taxable income of resident individuals can be divided into the following categories:

(i) business income (wages, pensions, etc.);(ii) investment income (interest, dividends, etc.);(iii) immovable income (deemed rental value of property, income from leasing, etc.); and(iv) miscellaneous income (speculative gains, income from subleasing, etc.).


5.2.3 Special taxation regime for foreign executivesSince the progressive tax rates in Belgium can reach as much as 50% and foreign executives are often remunerated on a net basis, international companies are confronted with considerable expenses when sending foreign executives to Belgium for employment purposes. In order to remove that barrier to international employment, the Belgian government introduced in 1983 a special taxation regime for foreign executives, specialists and researchers.

In order to qualify for this regime, the following conditions must be met:

(i) the executive must not have Belgian nationality;(ii) it must be difficult to recruit executives with the required educational background,

professional experience or knowledge on the Belgian labour market;(iii) the executive may not be recruited on the Belgian labour market; (iv) the executive

must be:a. temporarily seconded by a foreign company to a Belgian company controlled by

that foreign company;b. temporarily seconded by a foreign company that is part of an international group to

a Belgian company that is part of the same international group;c. directly recruited outside Belgium by a Belgian subsidiary of a foreign parent

company or by a Belgian company belonging to an international group for a temporary assignment in Belgium;

(v) the executive must retain his/her centre of economic, social and family interests outside Belgium.

In order for the special tax regime to apply to foreign executives, the employer must file a one-time application with the “Foreigners Service” in Brussels. This application must normally be filed within six months from the beginning of the calendar month following the month in which the employment or assignment to Belgium begins.

The most important feature of the special tax regime is that the part of the executive’s salary relating to professional activities performed outside Belgium is exempt from Belgian income tax. In other words, the foreign executive will be considered as a non-resident for income tax purposes.

Another feature of this special tax regime is that some of his/her assignment related expenses in Belgium may be considered as costs attributable to the employer and therefore be regarded, within certain limits, as non-taxable allowances.

5.2.2 Stock optionsBenefits in kind resulting from the grant of stock options, are traditionally considered by the Belgian tax authorities as taxable when the option is exercised. The Act of 26 March 1999 introduced, however, a beneficial tax regime for stock options in Belgium, aimed at stimulating the grant of stock options to employees and directors. For these purposes, a stock option is defined as “the right to purchase, during a fixed period, a fixed amount of shares, at a fixed price”.

The options can be granted by either a Belgian or a foreign company, and do not have to relate to the shares of the company granting the options or the company in which the professional activity is exercised.

Under the regime, the benefit in kind resulting from stock options, granted in the framework of a professional relationship, is taxable on the 60th day following the date of grant – not at the moment of exercise. One of the main conditions for an option plan to qualify for this tax regime is that the beneficiary must accept the offer in writing within 60 days following the grant.

For quoted options, the taxable benefit is determined on the final quotation of the day preceding the day of grant. For non-quoted options, the taxable benefit is determined at 18% or, under certain conditions, 9% of the value of the underlying stock at the moment of grant. The benefit received by the option holders is taxable at the progressive rates.

The lump sum valuation of the taxable benefit at 9% only applies if the following conditions are cumulatively fulfilled:

(i) the exercise price is definitively fixed at the moment of grant;(ii) the option cannot be exercised before the end of the third calendar year or after the

tenth calendar year following the year in which the option was granted;(iii) the option is not transferable (except on the death of the beneficiary);(iv) the risk inherent in the option (i.e. risk of reduction in the value of the underlying

shares) is not covered, directly or indirectly, by the company that granted the option or by any affiliated company;

(v) the underlying shares are shares of the employer, the employer’s parent company, or that company’s parent.

It must be noted that for stock options in the money (i.e. options whereby the exercise price is lower than the value of the underlying stock at the moment of grant), the taxable benefit is increased by the difference between the value of the underlying stock at the moment of grant and the exercise price.


In general, all business expenses are tax deductible in so far as they are incurred to secure or preserve taxable income. However, special tax provisions limit the tax deductibility of certain items, such as fines, social benefits granted to employees, taxes, clothing costs, etc.

The depreciation of setting-up costs, tangible and intangible assets constitute tax deductible items to the extent that they are necessary and correspond to a decline in value that actually occurred during the taxable period. Belgian tax law allows the use of both straight-line depreciation and declining-balance depreciation.

However, the latter can only be used for certain assets and cannot be applied to intangible assets for example. Goodwill acquired from third parties may be depreciated (as a rule, over five years.

The taxable income of resident companies is determined on an individual basis. Belgian tax law does not provide for a system of tax consolidation. In practice, however, some techniques can give a similar result.

Losses incurred by a Belgian company can be carried forward without limitation. They cannot, however, be carried back. Losses carried forward are definitively lost whenever there is a change in the control of a company, unless the change can be justified by legitimate financial or economic reasons. Losses carried forward are also substantially reduced where there is a tax neutral reorganisation (merger, spin-off, etc.).

5.3.2 Participation exemptionDividends received by a Belgian company benefit from a 95% exemption under the participation exemption regime. The remaining 5%, which is, in principle, subject to standard corporate income tax, can be set off against other costs incurred by the company.

The participation exemption regime only applies if the company in which the Belgian company holds a participation,meets the “subject-to-tax requirement”. The Belgian Income Tax Code defines this condition restrictively by setting out five exclusions. A company does not qualify for the participation exemption if:

(i) it is not subject to Belgian corporate income tax or a similar foreign tax or is established in a country the normal tax regime of which is substantially more advantageous than the standard Belgian tax regime. A tax regime is deemed to be “substantially more advantageous” if the standard nominal corporate income tax rate is lower than 15% or if the general effective tax burden is lower than 15%. The tax

Both recurring and non-recurring expenses can be reimbursed. Non-recurring expenses include for example expenses for the relocation to Belgium, the furniture of a house in Belgium, etc., while recurring expenses include:

• the housing and living cost differentials between Belgium and the expatriate’s home country;

• educational costs (i.e. school fees) for the primary and secondary education of the expatriate’s children;

• the cost of one return economy class trip home for the executive and his family;• travel expenses for special circumstances; and• tax equalisation between Belgium and the expatriate’s home country.

Recurring expenses (excluding school fees) will be considered reasonable only to the extent they do not (in aggregate) exceed EUR 11,250 per annum. This limit is increased to EUR 29,750 per annum for expatriates working in supervision and coordination offices, or laboratories and centres of scientific research. Non-recurring expenses and school fees will be considered as costs attributable to the employer to the extent they are justified and reasonable, and are not subject to a cap.

5.3 Corporate income tax

5.3.1 GeneralCompanies and associations are subject to Belgian corporate income tax if they meet all three of the following criteria:

(i) they are validly incorporated and have a separate legal personality;(ii) they carry out a business or are engaged in profit-making activities; and(iii) they have their registered office, main establishment or place of management in

Belgium.

Corporate income tax is levied at the rate of 33.99% on the total worldwide profit realised by a company, including distributed dividends. However, the effective tax rate is in many cases much lower than the nominal rate of 33.99% as a consequence of the so-called notional interest deduction regime (see below).

Contrary to the Netherlands for example, Belgium does not have the concept of a separate fiscal balance sheet. The taxable income of resident companies is therefore determined on the basis of the financial accounts and the accounting rules, unless the tax laws provide otherwise (such as for transfer pricing adjustments).


gains are subject to tax at the rate of 25.75%. If the “subject-to-tax requirement” is not met, the rate is 33.99%. Capital losses on shares are not tax deductible (although the loss incurred on the liquidation of a company in which shares are held remains deductible up to the loss realised on the paid-up share capital represented by those shares). The scope of application of this tax non-deductibility is limited to capital losses realised on shares. Capital losses realised on other securities (e.g. bonds) or derivatives (e.g. options) are fully tax deductible.

Currency gains and losses on a participation are treated in the same way as other capital gains and losses on a participation.

5.3.3 Deductibility of costs in the acquisition of a participationWhen acquiring a shareholding, a company may incur certain costs, for instance, interest expenses and other financial charges on loans taken out for the acquisition of a participation and currency losses on such loans. An important feature of the Belgian participation exemption regime is that such costs are, contrary to the case in many other European jurisdictions, generally fully deductible for tax purposes. This tax deductibility applies regardless of whether the acquisition relates to domestic or foreign shares or whether the participation qualifies for the participation exemption regime. The deduction can be claimed against all sources of income of the corporate taxpayer.

Under the general rules, however, interest expenses are not tax deductible (in whole or in part) in some particular cases, for example, if the interest rate is not at arm’s length or if a thin capitalisation rule applies.

There are two thin capitalisation rules in Belgium. A specific tax rule on thin capitalisation with a debt to equity ratio of 1:1 applies in the case of financing by Belgian or foreign individual shareholders or directors, or non-EU corporate directors. A more general thin capitalisation rule with a debt to equity ratio of 5:1 applies to loans granted by affiliated companies or by low taxed taxpayers.

5.3.4 Ruling policyIn addition to an informal ruling practice, there is also an important formal ruling practice in Belgium. Under this ruling policy, a taxpayer may apply for a ruling with respect to any tax issue. The introduction of a ruling request is however not possible in the following cases:

(i) the ruling request concerns transactions which are the subject of litigation;

regimes of all EU countries are deemed not to be substantially more advantageous than the Belgian tax regime, irrespective of their nominal or effective tax rate;

(ii) it qualifies as a finance company, a treasury company or an investment company which benefits from a special tax regime in the country where it is tax resident. Under certain conditions, however, the participation exemption remains available for EU-based finance companies and for investment companies;

(iii) it receives foreign-source income, other than dividends which, in the country where it is tax resident, is subject to a separate tax regime which deviates from the standard tax regime;

(iv) it realises profits through one or more foreign branches that are, as a whole, subject to a tax assessment regime substantially more advantageous than that in Belgium. The participation exemption remains applicable, however, if the effective tax burden on the profits originating from the foreign branch or branches amounts, as a whole, to at least 15% or if both the company and its foreign branch are established within the EU; or

(v) it receives dividend income derived from “contaminated” participations. For this purpose, dividend income from “contaminated participations” means dividends

of which at least 10% would have been excluded from the participation exemption under one of the exclusions set out above, had they been distributed directly to a Belgian company. This last exclusion means that not only the first-tier subsidiary of a Belgian company must meet the conditions above, but also any company in which this first-tier company holds shares directly or indirectly (irrespective of whether it is a majority or minority stake).

The participation exemption regime for capital gains is only subject to one further condition, namely a minimum holding period of 12 months. If shares which would otherwise meet these subject-to-tax requirements, are sold before this minimum holding period has expired, the capital gain is separately taxed at 25.75%.

The participation exemption for dividends is subject to the following additional conditions:

(i) the shareholding amounts to at least 10% of the distributing company’s nominal share capital or, alternatively, has a historic acquisition price of at least EUR 2.5 million;

(ii) at the time of the dividend distribution, the holding company has fully owned the shares for at least 12 months or undertakes to do so.

Capital gains on shares are only subject to tax at the rate of 0.412% if (i) the “subject-to-tax requirement”’ and (ii) a holding period of one year are met. This tax does not apply to capital gains realized on shares by SME’s (in such case, capital gains are tax exempt). If the ”subject- to-tax requirement” is met but the minimum holding period is not met, capital


As of 1 January 2007, a flexible legal and fiscal context has been created for pension funds established in Belgium. The aim is to make Belgium an attractive location for pan-European pension funds. In addition, investments in R&D were further stimulated in 2007 by the introduction of a special tax regime for income from patents. Under this regime, the tax deduction for patent income, amounting to 80% of the income, produces an effective taxation of the income at the rate of 6.8%.

Last but not least, the Belgian Government introduced, in 2006, the notional interest deduction regime. The purpose was to encourage Belgian companies to strengthen their equity positions and to reinforce the attraction of Belgium as a location for treasury and finance centres, capital intensive companies and headquarters.

It entitles all companies, subject to Belgian corporate income tax, and all non-Belgian companies with either a Belgian establishment or immovable property located in Belgium (and/or related rights), to reduce their tax base by annually calculating a fictitious interest expense on the aggregate amount of their equity. The interest rate applied corresponds, in principle, to the interest rate for 10-year government bonds, but is capped at 3% (3.5% for SME’s). For the financial year 2013, it amounts to 2.742% (3.242% for SME’s). The deduction is based on the amount of a company’s aggregate equity as determined under Belgian Generally Accepted Accounting Principles (GAAP), and comprises the share capital and share premium, the various retained earnings and carry-forward losses (-), and the revaluation surpluses and capital subsidies.

The defined aggregate amount of equity must be determined by reference to the company’s equity position at the end of the preceding financial year.

Once the base amount has been determined, the following items must be deducted:

• revaluation surpluses and capital subsidies.• the net fiscal value of own shares.• the net fiscal value of fixed financial assets consisting of shares (non-portfolio

participations).• the net fiscal value of participations in investment companies if dividends received

from such investment companies are eligible for the participation exemption at the level of the Belgian company.

• the positive difference between (i) the net book value of assets allocated to foreign establishments if the establishments’ income is tax exempt at the level of the

(ii) the ruling request concerns the application of an Act regarding the collection of taxes;(iii) the transaction envisaged does not have economic substance in Belgium; or(iv) the essential aspects of the transaction envisaged relate to a tax haven which does

not co-operate with the OECD.

In theory, a ruling request must be filed before the transaction is implemented. In other words, the envisaged transaction may only take place once the taxpayer has obtained the advance ruling. However, under certain conditions, ruling requests can remain, valid when only preparatory transactions have have already taken place (i.e. a ruling is possible as long as the transaction has not become definitive). In practice, this condition is quite flexibly interpreted by the tax administration.

In general, the tax administration must decide on the ruling request within three months of its filing. This period can, however, be varied by mutual agreement. In practice, the actual term is determined on a case-by-case basis within 15 days of the filing of the request. A ruling is usually valid for a maximum of five years, although a longer period can be granted if it can be justified by the taxpayer. A ruling can also be renewed. The Belgian tax administration will exceptionally not be bound by the ruling if:

(i) the conditions of the ruling have not been fulfilled;(ii) the envisaged transaction was not accurately described in the ruling request.(iii) essential elements of the envisaged transaction were not implemented in the way

described by the taxpayer;(iv) the applicable statutory provisions have changed;(v) the ruling violates the tax treaties or domestic/European laws; or(vi) the main consequences of the transactions have been altered by one or more related

or subsequent elements which can, directly or indirectly, be attributed to the taxpayer.

5.3.5 Incentive regulationsUnder Belgian tax law, a number of incentive regulations, subject to specific conditions, have been on the statute book for a long time, such as investment allowances, deductions for investment in safety measures, etc. In addition, beneficial tax regimes applying to certain branches of industry have been introduced or reinforced in the last few years, such as the tonnage tax regime for the maritime sector and the tax shelter for investments in the audiovisual industry.


The participation exemption regime applies to dividends received by a permanent establishment of a non-resident company, under the same conditions as for resident companies.

Under certain circumstances, it is possible to obtain beneficial (transfer pricing) rulings regarding a branch’s taxable income. Known examples include rulings obtained by branches operating as service or distribution centres.

It is important to note that no withholding taxes are levied on the remittance of branch profits to the head office.

5.4 Withholding taxes

5.4.1 Dividend withholding taxA dividend distribution made by a Belgian company will, in principle, trigger Belgian withholding tax at the rate of 25%. Under the tax treaties concluded by Belgium, this rate is generally reduced to 15% or less. Recent tax treaties even provide in an exemption from dividend withholding tax.

On implementing the EU Parent-Subsidiary Directive of 23 July 1990, Belgium also provided for an exemption from withholding tax on dividends paid by a qualifying Belgian subsidiary to its qualifying EU parent company or to its Belgian parent company. This exemption applies only if the parent company holds at least 10% of the share capital of the Belgian subsidiary for an uninterruptedly period of at least one year. This exemption also applies, under certain conditions, if, at the time the dividend is paid out or attributed, the minimum 12-month holding period has not yet expired. However, in this case, the distributing company needs to provisionally withhold the dividend withholding tax (without a bank guarantee being required). As soon as the minimum holding period has expired, it can also distribute that part of the dividend withheld.

As of 1 January 2007, Belgium extended this exemption regime from the EU to all countries with which Belgium has concluded a tax treaty. The same withholding tax exemption conditions on dividends are, therefore, extended to dividends paid to parent companies resident in countries which have a tax treaty with Belgium. For this extended exemption regime to apply, the relevant tax treaty must provide an exchange of information clause and the parent company must be subject to corporate tax without benefiting from a special tax regime.

On the liquidation of a Belgian company, the difference between the liquidation distributions and the paid-up capital is subject to a liquidation withholding tax of 10%.

Belgian company on the basis of a tax treaty, and (ii) the liabilities allocated to such establishments.

• the positive difference between (i) the net book value of foreign real estate or entitlements thereto if these assets do not belong to a foreign establishment and if the real estate income is tax exempt at the level of the Belgian company on the basis of a tax treaty, and (ii) the liabilities allocated to the real estate or entitlements thereto.

• the net book value of assets financed with equity if and to the extent that interest on debt that would have been incurred in order to acquire or preserve these assets, would not have been deductible because those assets exceed the company’s reasonable business needs.

• the book value of items held as investments when these items do not normally produce recurrent taxable income. This exclusion is directed at assets such as jewellery, gold and works of art that usually qualify as private assets.

• the book value of real estate or entitlements thereto if that real estate is used by individuals performing paid managerial functions within the company or by their close family members.

The amounts involved are determined by reference to the company’s position at the end of the preceding financial year.

Any subsequent changes in the base amount or the items for its adjustment have to be taken into account, on the basis of a weighted average. For calculating purposes, these changes are deemed to have taken place on the first day of the calendar month following the month during which they occurred.

As from 1 January 2012, the excess of notional interest deduction cannot be carried forward. The carry forward of the existing stock of notional interest deduction at 31 December 2011 is still possible but is subject to certain limitations.

5.3.6 Non-resident companiesBranches of foreign companies are subject to non-resident corporate income tax at the rate of 33.99%. The taxable income of a branch is generally determined in a similar way to the taxable income of resident companies. However, expenses are only deductible if they are attributable to Belgian taxable income. Furthermore, interest paid by the branch to its head office is not tax deductible.


5.7 Tax treaty network

As the Belgian economy is an open and internationally-oriented economy, it has always been one of the objectives of the Belgian government to remove any obstacles that could hinder the international flow of goods and capital.

As such, the Belgian government’s policy has been to encourage international investments by minimising withholding taxes on dividend, interest and royalty income.

With this in mind, Belgium has concluded a significant number of bilateral tax treaties for the avoidance of double taxation with respect to taxes on income. Currently, the Belgian tax treaty network includes tax treaties with the following countries:

• Albania, Algeria, United Arab Emirates, Argentina, Armenia, Australia, Austria, Azerbaijan, Bangladesh, Belarus (White Russia), Brazil, Bulgaria, Canada, Chile, China, Croatia, Czech Republic, Cyprus, Democratic Republic of Congo, Denmark, Ecuador, Egypt, Estonia, Finland, France, Gabon, Ghana, Georgia, Germany, Greece, Great Britain, Hong Kong, Hungary, Iceland, Ireland, India, Indonesia, Israel, Italy, Ivory Coast, Japan, Kazakhstan, Kuwait, Korea, Latvia, Lithuania, Luxembourg, Mauritius, Malaysia, Malta, Mexico, Mongolia, Morocco, the Netherlands, New Zealand, Nigeria, Norway, Pakistan, the Philippines, Poland, Portugal, Romania, Rwanda, the Russian Federation, San Marino, Senegal, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, Tunisia, Turkey, the United States of America, Ukraine, Uzbekistan, Venezuela, Vietnam. In addition, the treaty with the Soviet Union continues to apply to the following former member states of the Soviet Union: Kyrgyzstan, Moldavia, Tajikistan and Turkmenistan. Finally, the treaty with Yugoslavia continues to apply to Bosnia-Herzegovina, Macedonia and Serbia.

Several other tax treaties have been signed but have not yet entered into force. This extensive tax treaty network offers important tax planning opportunities. By way of example, reference is made to the tax treaty with Hong Kong and to the new tax treaty with the United States of America.

Belgium was one of the first countries in the world to conclude a tax treaty with Hong Kong. One of the important features of this tax treaty is that it provides for a zero dividend withholding tax rate under certain circumstances. This feature of the tax treaty has already encouraged many investors to route their investments through Belgium.

Payments to qualifying EU parent companies or to qualifying companies resident in a tax treaty country, will generally be exempt (see above).

5.4.2 Withholding tax on interest and royaltiesInterest paid by a Belgian company triggers Belgian withholding tax at the rate of 25%. However, this withholding tax can, in most cases, be easily avoided. If the company has, for example, borrowed from an EU-affiliated company, a Belgian bank or a bank located in a tax treaty country, or has issued registered bonds to non-resident taxpayers, no Belgian withholding tax will be due on the basis of domestic exemptions. Furthermore, this rate is generally reduced to 10% (or less) under the Belgian tax treaties. Provided a number of conditions are met, interest payments are fully exempt from withholding tax under the tax treaties with for example the Netherlands, Luxembourg and Germany. Royalties paid by a Belgian company trigger Belgian withholding tax at the rate of 25%. However, royalty payments to an EU-associated company are generally exempt. In addition, most tax treaties concluded by Belgium fully exempt royalties from this withholding tax.

5.5 Capital tax

The contribution of cash or other assets to a Belgian company is only subject to a flat fee of 25 euro. The 0.5% capital tax was abolished in 2006.

5.6 Other taxes

5.6.1 Transfer taxTransfer tax is levied on the transfer of ownership of immovable property located in Belgium. The tax is levied at a rate of 10% or 12.5%, depending on the location of the property. The taxable base is the higher of (i) the fair market value of the real estate transferred and (ii) the consideration received. The transfer of new buildings is subject to VAT and not to transfer tax.

5.6.2 Tax on stock exchange transactionsTransfers of public securities for consideration, that are concluded or executed in Belgium through a professional intermediary, are subject to Belgian stock exchange tax. The standard rate per party amounts to 0.25% which is levied on the purchase price (broker fees excluded) if due by the transferee and on the sales price (broker fees included) if due by the transferor. The total amount of the securities tax per party and per transaction is however capped at EUR 740.


6. VAT and import duties

6.1 Value added tax

6.1.1 GeneralValue added tax (‘VAT’) (Belasting over de Toegevoegde Waarde, ‘BTW’) is levied at each stage in the production chain and the distribution of goods and services. The tax base is the total amount charged for the transaction excluding VAT, with certain exceptions. Because deductions are made in previous stages of the chain, VAT is not cumulative. Every taxable person is liable for VAT on their turnover (the output tax), from which the VAT charged on expenses and investments (the input tax) may be deducted. If the balance is positive, tax must be paid to the tax authorities; if the balance is negative, a refund is received. The tax paid by the ultimate consumers of the goods or services is not tax deductible. The tax is based on the VAT rate applicable to the VAT exclusive price of the goods or services received.

In 2010, the EU VAT rules were simplified (the so-called “VAT Package”).

The content of the VAT Package falls into three main sections. Firstly, and most importantly, there are changes regarding the place where services are provided. In B2B transactions, a service will, from now on, generally be deemed to have been provided where the recipient of that service is established. This will, on the one hand, limit the number of cases where businesses have to register in other EU countries and, on the other hand, it will reduce instances of businesses being charged with foreign VAT. Secondly, a new listing obligation for EU taxpayers which provide services to businesses in other EU Member States, has been made mandatory. Finally, a new procedure for the refund of foreign EU VAT to EU taxpayers has been introduced allowing those taxpayers to claim a VAT refund via an electronic portal.

6.1.2 Taxable personsTaxable persons are persons who conduct business for their own account, including individuals, corporate entities, partnerships and associations. A public body can also act as a taxable person, depending on the type of activity and the operating conditions (not for its public duties). As from 1 April 2007, Belgium has introduced the system of VAT grouping. No VAT will be charged between the members of a VAT group as they are considered as a single taxable person. This system opens interesting perspectives for optimising the VAT position.

On 27 November 2006 the United States of America and Belgium signed a new tax treaty. An important difference with the existing tax treaty lies in the fact that the new treaty provides, subject to certain conditions, full exemption from withholding tax on dividend distributions and interest payments. This feature of the new treaty can be an important consideration when structuring US investments into Europe.


6.1.7 FormalitiesIf a taxable person performs taxable operations in Belgium, they must comply with certain formalities, such as VAT registration, filing of VAT returns, etc. Foreign businesses can, if they wish, comply with these formalities by appointing a local tax representative to carry out these formalities.

6.2 Import duties

6.2.1 GeneralImport duties must be paid when goods are imported from a country outside the EU into the customs territory of the EU. No duties are levied on the import of goods from EU Member States to Belgium or on the export of goods from Belgium to other EU Member States. Import duties are generally paid by the importer making the customs declaration for import of the goods into the EU.

6.2.2 Key elements in detremining whether imported goods are dutiableImport duties are calculated by taking into account:

• the classification of the goods in the combined nomenclature (and the customs tariff applicable for that type of goods);

• the origin of the goods;• the customs value of the imported goods (i.e. the taxable base)

Key element 1: The classification of products (combined Nomenclature)The determination of the import duties due is also related to the kind of product in question. For all existing products a classification is possible in the system of Combined Nomenclature codes. The codes are established by the World Customs Organisation. In an extended way they are used by the European Union to classify all goods in the user’s tariff. In the European Union, in principle, the same code will be attributed to a product. In practice, it should not make any difference whether the goods are imported into the Netherlands or into Italy. Each code refers to a rate of duty (percentage of value or specific (kg/litre) right).

The rates on import duties vary from one product to another and mainly depend on the type of product imported.

Key element 2: Origin and departureThe origin of goods plays a significant role in the context of customs and trade measures. Firstly, it is important that goods produced in the European Union can move freely within the member states. Secondly, this is also the case with products manufactured outside the

6.1.3 Tax baseThere are four taxable activities:

(i) the supply of goods;(ii) the supply of services;(iii) the intra-Community acquisition of goods by businesses; and(iv) the importation of goods.

The term ‘supply of goods’ is widely interpreted – goods are all physical objects but include such supplies as electricity, heating and cooling. Services are defined as all activities performed for remuneration that are not classified as the supply of goods.

6.1.4 ExemptionsSeveral types of transactions are exempt from VAT. An exemption means that no VAT for these transactions should be charged, and that for some of these transactions, the corresponding prepaid VAT cannot be deducted. This is the case for a lease of immovable property or for most financial services for example.

6.1.5 Tax ratesThe general VAT rate is 21%. A reduced rate of 6% applies to the supply, import, and acquisition of goods and services mentioned in Table A of the Annex to Royal Decree No. 20. The reduced rate of 6% is mainly applicable to foodstuffs, some real estate services and medicines. A reduced rate of 12% applies to the goods mentioned in Table B of the same Annex, such as social housing and certain restaurant services. A zero percent rate applies to goods that are transported to another EU Member State or outside the EU. Goods destined for another EU Member State, will be subject to VAT in the EU Member State to which they are transported.

6.1.6 VAT on imported goodsGoods are considered to be imported if they are shipped from countries outside the EU into the customs territory of the EU. The VAT rates on importations are the same as those applicable to domestic supplies of goods in Belgium.

VAT will be levied either in the same way as import duties or, after the appropriate authorisation has been granted, in accordance with a so-called deferred payment system. In the latter case, the import VAT is paid when the importer files its the periodic VAT return or is immediately deducted (if allowed), so that there is no pre-financing cost. As a result, the time of payment coincides with the business entitlement to deduct the input VAT.


6.2.3 The Modernized Customs Code and its Implementing provisionsSince the approval of the EU Modernized Customs Code (MCC) in 2008 (Regulation (EC)450/2008), the trade community is anxiously awaiting the development of the MCC Implementing Provisions (MCCIP). These provisions are currently being drafted by the European Commission (EC) in collaboration with the EU member states and will set up a pan-European electronic customs environment with harmonized and simplified customs procedures.

Focus on customs valuation: first sale for export–rule and customs valuation treatment of royaltiesIn this respect it should be noted that some of the current rules on customs valuation might change with the implementation of the Customs Code Implementing Provisions. This was expected to happen by June 2013, but has recently been postponed to a later date to accommodate different Member States’ readiness.

One of the proposed changes would be the removal of the first sale for export -rule as a valid valuation provision. This means that the transaction value would now always be based on the last sale when multiple contracts are involved and not on the basis of an earlier sale at a lower value. This modification should prove to be a major setback for many multinational importers, but it is not yet a done deal as discussions are on-going.

Another development which is giving cause for concern, is the future customs valuation treatment of royalties. As mentioned above, royalties are to be added to the transaction value (i.e., customs value) of imported goods only if they are (1) related to the goods being valued and (2) payable as a condition of sale of those goods for export to the EU.

The MCCIP-drafts mention however that a royalty is a condition of sale if the seller or related entity requires the buyer to pay the royalty, or if the payment is made by the buyer to fulfill an obligation of the seller. The current “condition of sale” application has, therefore, been broadened to include an implied obligation of the seller.

Furthermore, the MCCIP-drafts also seem to include a provision to the effect that a ‘condition of sale’ already exists if the goods may not be produced or sold without the royalty being paid directly or indirectly to the licensor. This new definition of “condition of sale” is almost automatically met because the production, sale or distribution of products that incorporate trademarks, technology or other intangibles, classed as intellectual property rights such as trademarks, patents, copyrights, etc., without the consent of the holder of this intellectual property right, is against the law.

European Union but which have been imported into the European Union after compliance with all customs formalities.T the origin of these goods will always remain, e.g., China, despite the fact that they have been given “in free circulation” status once those customs formalities have been complied with.

The question of, “origin” can also be of interest when other tariff or trade measures are applicable; such as anti-dumping duties, quantitative import restrictions or even import bans (see above).

Key element 3: Customs ValueThe Customs value of the goods is usually defined as ‘the price actually paid or payable for the imported goods in a sale for export to the EU provided that none of the restrictions or conditions leading to the rejection of the transaction value applies and adjusted certain additions and deductions to/from the price’. In other words, the assumption that import duties will be based on the invoice value of the goods, may prove to be wrong. In addition to the invoice value, various other elements must be included in the customs value, such as (air) freight costs, insurance contributions, royalties and licence fees and research and development costs. There are other factors that may, however, be deducted from the customs value of the goods to be imported: these invlude purchase commissions, costs of transportation after arrival in the European Union, technical assistance, installation, assembly and costs of maintenance.

There is a general (international) trend towards a reduction in the rates applied and even a waiver of import duties altogether for certain goods or in certain trade relations (for example under the South- Korea – EU Free Trade Agreement).

On the other hand Customs authorities are becoming more focused on customs valuation and non-duty measures (such as ensuring the safety and security of the supply chain).

With respect to valuation, Customs focus is shifting, in particular, to related company transactions and royalty payments. Royalties and related revenue are attracting the attention of Customs, which are looking into the possible inclusion of royalty payments in the valuation of goods for customs duty purposes. Although importers report royalty payments in their financial statements and pay withholding tax on such payments, they are bound to include them in the import value of their goods.

The reality is that royalty payments are increasingly being questioned and open to possible taxation from both the direct and indirect tax authorities.


7. Employment law & social security7

7.1 Introduction

The employment and social security laws in place today are the result of the historic pattern of employment relations upon which social conciliation between trade unions and employers’ representatives has had a significant impact and has influenced day-to-day working relations. A large number of statutory rules and collective bargaining agreements (‘CBAs’), negotiated at the federal or sectorial level, are mandatory and restrict the parties freedom of contract.

The prevalence of Belgian employment law has continued to spread – as from 1 April 2002, every foreign employer who temporarily assigns employees to Belgium must comply with the Belgian salary and employment conditions contained in Belgian legal, administrative or conventional provisions, under pain of criminal sanctions. As the vast majority of the provisions of Belgian employment law carry criminal penalties, foreign employers are bound to apply almost all Belgian employment laws to employees working in Belgium, even if only on a temporary basis.

In practice, Belgian rules such as year-end premiums, holiday pay, statutory holidays, salary protection and salary indexation apply to Belgian and non-Belgian employees alike for as long as their services are performed in Belgium.

7.2 Sources of employment law

7.2.1 International sourcesAs a member of the EU, Belgium must comply with the directives and regulations of the European Union and the decisions of the European Court of Justice and the European Court of Human Rights.

Furthermore, the treaties of the International Labour Organisation (‘ILO’) and the bilateral treaties concluded with other countries have a significant impact on Belgian employment law.

7 Based on the contribution of Johan Kerremans.

Taking into account the impact on EU businesses it is clear that the deal on royalties is not yet done and it is therefore not certain at all that these proposals will be encoded in the MCCIP. It does, howecver, clearly indicate Customs’ focus on customs valuation. Importers are thus advised to take a good look at their valuation policies.

6.2.4 Introduction of the Authorised Economic Operator (AEO)As mentioned before, the European Customs Code has been modernized in order to make customs regulations simpler and clearer as well as harness the efficiencies and possibilities of IT-technologies. Given the potential disruption of the flow of essential goods, these provisions should also contribute to the safety and security of the international supply chain. The European Commission’s aim is to harmonise throughout the risk analyses for goods entering the European Union and an electronic exchange of information between frontier control authorities. In this context, the European Unionhas introduced the concept of reliable traders (the so-called ‘Authorised Economic Operator’). The status of ‘Authorized Economic Operator’ (hereinafter ‘AEO’) is awarded to any economic operator that meets common criteria relating to the operator’s control systems, financial solvency and compliance record. As a result, the AEO can benefit from a number of simplifications that gives it a green lane for its trade with(in) the EU. The ultimate goal of these measures is to increase the competitiveness of companies doing business in Europe, reduce the compliance costs and improve the safety and security of the European trade.


7.3.2 Works Council (plant/company level)A Works Council must be elected in each company which employs 100 people or more on an average basis. Its members are elected by the employees of the company.

The Works Council cannot interfere with the management of the business. It has an advisory role and is entitled to receive information on the business operations of the company.

The Works Council has the following rights:

(i) to receive and examine corporate, commercial and personnel information relating to productivity which the employer is obliged to disclose every quarter and, at least once a year, information concerning the financial results;

(ii) to receive information on the (changes in the) structure of the company’s shareholdings or group structure;

(iii) to receive information on debts due for over three months to the tax authorities or social security;

(iv) to be informed and consulted in cases of collective dismissal or plant closure;(v) to be consulted prior to the implementation of any decision regarding the

organisation of work;(vi) to propose and amend work regulations;(vii) to advise on the standard for hiring and dismissing personnel;(viii) to determine the annual collective holiday period in agreement with management;

and(ix) to consent to the appointment of the statutory auditor.

7.3.3 Committee for Prevention and Protection at WorkA Committee for Prevention and Protection at Work must be set up in each company which employs 50 people or more on an average basis.

The main tasks of the Committee for Prevention and Protection at Work can be summarised as follows:

(i) advise on health and safety conditions and how to improve the work premises; (ii) examine complaints with regard to health and safety;(iii) implement the health and safety regulations and policy;(iv) advise on all other problems relating to working conditions;(v) give its prior approval for the appointment and replacement of the prevention advisor,

his or her assistants, and a temporary replacement of these persons, as well as the content of their functions; and

7.2.2 National sourcesAlthough the international sources may not often have a direct effect, they are generally implemented through a large number of statutory and regulatory provisions or CBAs drawn up by the National Labour Council.

Employment obligations arise from a number of sources which are subject to a set hierarchy:

• the law;• CBAs declared to be generally binding by Royal Decree;• CBAs which have not been declared generally binding;• written individual employment agreements;• CBAs which have not been declared generally binding where the employer belongs to

a joint committee in which a CBA is agreed, although the employer is not a signatory or member of a signing federation;

• work regulations;• additional statutory or regulatory provisions;• verbal individual employment agreements; and• general practices within the branch of the company.

The provisions of an individual employment agreement may not be contrary to the rules imposed by a higher source.

Nearly all regulations under employment law carry criminal sanctions for violation.

7.3 Union representation

7.3.1 Trade unionsSince World War II, the relations between employers and employees have been institutionalised. The unions represent employees at all levels: federal (in the National Labour Council), at the branch level (in the Joint Committees or Sub-Committees), and at the company level (in the Works Council, the Committee for Prevention and Protection at Work or the Union Delegation). Together with the employer’s representatives, the trade unions conclude CBAs, which can be negotiated at these three different levels.

There are three national union confederations: the Christian-Democrat Union (A.C.V. - C.S.C.), the Socialist Union (A.B.V.V. - F.G.T.B.), and the Liberal Union (A.C.L.V.B. - C.G.S.L.B.).


On the spot walk-outs, slowdowns, etc. cannot be prevented or sanctioned. Picketing and third party picketing are allowed within certain limits. Participating in a strike may not be used as a reason to terminate an employment agreement even if the strike was irregular.

An employer is not required to pay wages to striking employees. Instead, the unions pay a daily allowance to their striking members.

If the strike is contrary to the obligations accepted by the unions under a CBA or threatens public order, recourse to the courts is possible, although exceptional.

7.5 Employment contracts

7.5.1 CharacteristicsAn employment contract is a contract by which an employee undertakes to provide services, under the authority of the employer in consideration of the payment of a remuneration. The existence of a subordinate relationship is characteristic of an employment contract. The authority of the employer over the employee constitutes the criterion and determining factor which identifies and classes an agreement as an employment agreement.

If the activities are performed without any kind of authority, the individual is considered to be self-employed. Service agreements may, however, qualify as employment agreements, and therefore subject to the rules regarding employment agreements, if the activities, in practice, are provided under the authority of an employer and the substance of the arrangement is therefore incompatible with the form.

Employment contracts can be concluded for an unlimited or limited duration, for a specific project, for a full-time or part-time function, for the replacement of an employee, for seasonal employment, for a training period, for summer jobs to be performed by students during school holidays, etc.

7.5.2 FormIn principle, an employment agreement does not require any special or official form. A written contract is only required for certain purposes, for instance if the parties wish to enter an employment contract for a limited duration, for a specific project, for part time employment or if they wish to insert certain specific clauses in the contract which deviate from the general principles.

(vi) propose that medical supervision be extended to cover all or part of the personnel not covered by the legal provisions.

If there is no Works Council or Union Delegation in the company, the Committee for Prevention and Protection at Work takes over some of the powers of the Works council.

7.3.4 Social electionsThe employees’ representatives in the Works Council and the Committee for Prevention and Protection at work are elected during “social elections”, which must be organised by the employer every four years.

7.3.5 Union DelegationThe Union Delegation is composed of employees who are elected or designated to represent union members vis à vis the employer. A Union Delegation should be set up at the request of one or more of the nationally recognised Unions referred to above under paragraph 7.3.1.

The Union Delegation has powers in the following areas:

(i) dealing with grievances related to employment relations and conditions, such as salary and working hours;

(ii) conducting negotiations with a view to concluding CBAs and collective arrangements at the company level;

(iii) monitoring the application of several regulations, such as the social legislation, CBAs, individual employment contracts, etc.;

(iv) representing the employees in individual and collective disputes with the employer.

If there is no Works Council in the company, the Union Delegation assumes certain, but not all, powers and duties of the Works Council.

7.3.6 Employer’s federationsEmployers are represented at three different levels: employers’ federations per sector, and sectors organised on a cross-section basis both at regional and federal level.

7.4 Strikes and plant closures

Under Belgian employment law, employees have an unfettered right to strike. Unless specifically provided for in a CBA, there is no procedure, such as giving of advance notice, that has to be complied with by the employees or the unions before they can resort to industrial action.


7.6 Clauses

7.6.1 Probation periodA clause providing for a probation period may be included in any employment contract, but must be established in writing for each employee individually before the employment begins. Otherwise, there will be considered to be no probation period.

The length of the probation period is different for white-collar employees (i.e. employees performing intellectual activities) and blue-collar workers (i.e. employees performing manual work):

• for blue-collar workers, the minimum probation period is seven days and the maximum is fourteen days;

• for white-collar employees, the minimum probation period is one month, with a maximum of six months if the employee’s annual salary does not exceed EUR 38,665 (amount 2013) or twelve months if it exceeds that threshold.

During the trial period, the employment contract may be terminated by the employer or by the white-collar employee with a notice period of seven days. An employment agreement for blue-collar workers can be terminated without any notice period.

If the termination occurs within the first month of employment for white-collars or within the first seven days for blue-collars, it will, however, only become effective at the end of this first month or seven days. The contract may be terminated at any time for serious cause, without any notice period or indemnity in lieu.

If the performance of the employment is suspended, for example, because of the employee’s incapacity to work (due to illness, accident, pregnancy/maternity leave), the probation period is prolonged by the suspension period.

7.6.2 Non-compete clausesA non-compete clause is a clause in which the employee undertakes not to perform any similar activity, either for his own account or for the account of a competitor, either as an employee or as self-employed person, after the termination of the employment contract. Such a clause must be in writing.

A distinction must be made between blue and white-collar employees on the one hand and sales representatives on the other hand.

7.5.3 Contracts for an indefinite termAn employment agreement for an indefinite term can be verbal. If the parties wish to include specific clauses in their contract (such as non-compete, probation and confidentiality clauses, home working or clauses requiring the transfer of IP rights), it is necessary to put them into a written agreement.

7.5.4 Contracts for a fixed term or a specific taskContracts for a fixed term or a specific task must be in writing. If the employment continues after the termination of the project or after expiry of the agreed term, it will be deemed to constitute an employment contract for an indefinite period.

Successive employment contracts of a limited duration are in principle deemed to be of an unlimited duration, unless the total duration of the successive contracts does not exceed two years, with a maximum of four successive contracts, each having a minimum duration of three months.

Subject to the prior authorisation of the Labour Inspectorate, the total duration of successive contracts may be up to three years if the minimum duration of each contract is six months.

7.5.5 Part-time employmentWork performed on a regular and voluntary basis for less than the normal full-time period will be regarded as part-time employment. Part-time employees are entitled to equal treatment. They are entitled to the same protection and benefits (albeit on a pro rata basis) as full-time employees.

Individual written employment contracts must be drafted for part-time employees before or at the latest at the beginning of the (performance of the) contract, and must specify the part-time regime and the agreed working hours. The contract must fulfill a number of conditions: it must include a time schedule or at least refer to the time schedule which is part of the work regulations, the employees work hours may not be less than 1/3 of a full-time employee, and the activities must be performed for at least three successive hours.

7.5.6 Particular employment contractsA number of particular employment contracts, such as seasonal employment contracts, student employment contracts, replacement contracts and apprenticeship employment contracts, have their own particular rules.


general non-compete clause limitations regarding the national territory and the maximum period of twelve months. All other conditions applicable to ordinary non- compete clauses remain obligatory.

As opposed to general non-compete clauses, special non-compete clauses may also apply if the employment agreement is terminated during the trial period, or if the employment is terminated by the employer without cause. Special non-compete clauses will, however, have no effect if the employment contract is terminated by the employee for cause.

7.6.2.3 Sales representativesFor sales representatives, whose salaries do not exceed EUR 32,254 per annum (as from 1 January 2013), non-compete clauses have no effect. If the annual salary exceeds EUR 32,254 however, they are valid if they refer to similar activities, do not exceed twelve months from the day of termination, and are limited to the area in which the sales representative activities were exercised.

Contrary to the non-compete clause for employees, there is no lump-sum compensation due for sales representatives. Sales representatives will, however, have to pay a lump-sum compensation if they breach the clause, although this indemnity may not exceed three months’ salary. The employer may claim a higher indemnity figure if it can prove the existence and extent of greater damage.

Non-compete provisions for sales representatives have no effect if the employment contract is terminated i) during the trial period, ii) without cause by the employer after the trial period, or iii) for cause by the sales representative.

A non-compete clause in a sales representative’s employment contract, creates a rebuttable presumption that the sales representative introduced new clients to the employer. If a sales representative has more than one year’s seniority, he or she will be entitled to an indemnity for clientele unless the employer can demonstrate that the sales representative concerned did not attract any new clients.

7.6.3 Inventions and copyrightsThree situations must be distinguished in determining whether the employer or employee owns the rights to an invention or copyrights:

(i) If the discovery or invention can be considered to be part of the essential function of the company, and falls within the scope of the employee’s job description, it will be the property of the employer.

7.6.2.1 Blue-collar and white-collar employeesTo be enforceable, a general non-compete clause for blue-collar workers and white- collaremployees must meet a number of requirements. If the employee’s annual salary doesnot exceed EUR 32,254 (indexed amount for 2013), the non-compete clause will have no legal effect. If the annual salary exceeds EUR 32,254 but does not exceed EUR 64,508 the non-compete clause will only be enforceable if the person’s function is included on a list defined in a CBA. If the annual salary exceeds EUR 64,508 the non-compete clause will be enforceableexcept vis-à-vis employees whose categories of functions are defined in a CBA.

Furthermore, a valid non-compete clause must (i) be geographically limited to the territory where the employee can effectively enter into competition with the employer (under no circumstances outside Belgian territory), (ii) be limited to activities similar to those performed by the employee for his own account or for the benefit of a competitor, and (iii) not apply for more than 12 months from the termination date.

A non-compete clause must also explicitly provide for the payment by the employer of a lump-sum compensation indemnity equal to at least half the employee’s gross salary over the term of the non-compete clause.

If one of these conditions is not met, the non-compete clause will be void.

A valid non-compete clause will not always be operative. Such a clause will only be operative if the employment agreement is terminated (i) after the trial period has expired, and (ii) by the employee without cause or by the employer for cause.

If the employee is in breach of the non-compete clause, he or she will be obliged torefund the lump-sum compensation received from the employer and pay the employer an additional amount equivalent to the sum reimbursed.

The employer may waive his right to enforce the clause at the end of the employment contract. This waiver must be notified to the employee within fifteen days of the contract’s termination. Failure to do so will result in the lump-sum compensation, provided for in the contract, remaining due.

7.6.2.2 The special non-compete clauseIf the company has either an international field of operations or important economic, technical or financial interests in international markets, or has its own research services, a “special” non-compete clause can be used. This allows the employer to deviate from the


Part of the salary may be paid in kind, e.g. housing accommodation, payment of utilities (gas, electricity, water, heating, etc.), the use of land, work material and equipment, work clothing and the like.

In principle, salaries are tied to the “healthcare” index (gezondheidsindex/indice santé). The adjustment system is stipulated in the CBAs and may differ from industry to industry.

CBAs also provide for salary schedules with minimum salaries computed on the basis of the employee’s seniority or work experience and his professional category.

A minimum salary increase margin is composed of indexations and salary increases based on the salary schedules within the CBAs. Such increases are thus mandatory and not discretionary.

7.7.2 Variable salaryThe salary for sales representatives can be fixed, variable or, as in most cases, a combination of both. If a variable salary is agreed upon, the employer must provide the sales representatives with a monthly statement of commissions due, which are payable within 15 days after the statement is sent.

7.7.3 Fringe benefitsIn addition to the monthly salary, employees are entitled to a holiday allowance (referred to as ‘double holiday pay’).

In the majority of industries, the employer is obliged to pay the employee a thirteenth month as an end-of-year bonus. If such a bonus is agreed in a CBA and declared to be generally binding, the parties cannot agree otherwise.

Employees may often also benefit from a large range of benefits, such as luncheon vouchers, transport allowances, lump-sum cost allowances, personal use of a company car, complementary insurance plans, pension plan coverage, performance bonuses and stock options.

These fringe benefits are normally considered an integral part of the employee’s salary package and, once granted, cannot be withdrawn without the consent of the employee.

(ii) If the discovery or invention is part of the essential function of the company but is not the direct result of the employee’s function, it will be the property of the employer but the employee will be entitled to compensation for helping with this discovery or invention.

(iii) If the discovery or invention is unrelated to the company’s activities, it will be deemed to be the exclusive property of the employee.

Any clause inserted in an employment contract which is counter to the second or third situation will be invalid.

The “economic” rights of a discovery or invention can be transferred to the employer if it is explicitly stated in the employment contract and if the creative work falls within the scope of the employment contract. In contrast, the “moral” rights (i.e. the right to be named the author) are not transferable.

7.7 Salary

7.7.1 Fixed salaryThe main legal provisions and basic principles of remuneration are laid down in the Employee Remuneration Protection Act 1965. One of the first principles is the employee’s freedom to dispose of his salary.

The salary must be paid at certain fixed dates with a maximum interval of sixteen days between payments. The salary of white-collar employees must be paid on a monthly basis.

Withholdings on employees’ salaries are limited by law to the following payments or contributions:

(i) tax withholdings, social security contributions and any contributions to finance complementary social security benefits which can be deducted by virtue of individual or collective agreements;

(ii) fines imposed by the work regulations;(iii) advance payments;(iv) indemnities related to the employee’s liability incurred in the execution of the

employment agreement; and(v) the amount of any security given by the employee for the observance of his obligations

(guarantee). If the employee performs his duties in Belgium, the salary must be paid in euros.


7.9.1 Termination of indefinite term contractsBlue-collar workers and white-collar employees do not have the same job protection. Furthermore, certain categories of employees benefit from particular job protection (e.g. pregnant women, members of the Works Council, the Committee for Prevention and Protection, and the Union Delegation).

7.9.1.1 Blue-collar employeesThe following notice periods apply to blue-collar workers if no particular notice periods have been agreed at sectorial level:

Seniority Notice given by employee Notice given by employer< 5 years 14 days 35 days5 > 10 years 14 days 42 days10 > 15 years 14 days 56 days15 > 20 years 14 days 84 days20 years and more 28 days 112 days

For employment agreements concluded after 1 January 2012, the following notice periods apply:

Seniority Notice given by employee Notice given by employer< 6 months 14 days 28 days6 months > 5 years 14 days 40 days5 > 10 years 14 days 48 days10 > 15 years 14 days 64 days15 > 20 years 14 days 97 days20 years and more 28 days 129 days

In addition, blue collar workers whose employment agreement entered into force after 1 January 2012 will be entitled to a lump-sum special severance indemnity of 1,250 EUR paid by the National Employment Office.

If the employment agreement entered into force prior to 1 January 2012, this indemnity will be as follows:

Seniority Indemnity< 5 years 1,250 EUR5 > 10 years 2,500 EUR> 10 years 3,750 EUR

7.8 Suspension

An employment agreement can be suspended, without loss of pay, in the event of leave for holidays, sickness, short leave for personal reasons, education, pregnancy or permitted short absences.

7.9 Termination

An employment contract can end:

(i) by mutual agreement;(ii) by unilateral termination (dismissal or resignation);(iii) by expiry of the term of the contract ( if concluded for a limited duration); (iv) on completion of assignment (if concluded for a specific project);(v) on the death of the employee;(vi) by a court decision to dissolve the contract;(vii) by an act of God; or(viii) on the occurrence of a specific event provided for in the contract (condition

résolutoire).

As a rule, an employment contract can be unilaterally terminated by either party without observing any specific procedure involving consultation with or a decision of third parties and without the prior authorisation of any social mediation, arbitration or legal body. The party who notifies the termination is not even obliged to justify his decision. An exception applies however for protected employees, dismissal for serious cause, collective dismissals or plant closures.

The only procedural requirement is that the notice of termination be in writing and, to be valid, specifies the beginning and the duration of the notice period.

If the employee wishes to terminate the employment contract, he must notify the employer of his decision in a written document to the employer, by sending a registered letter or by serving the official written document through a bailiff (Huissier de Justice/ Gerechtsdeurwaarder).

If the employer terminates the contract by notice, the termination letter must be sent by registered mail or served on the employee by a bailiff. If these formal requirements are not observed, the notice will be considered void.


on the courts, nor is it binding on the parties. Moreover, this formula tends to overstate the required length of notice in a number of cases which cannot be considered as average, e.g. high salary and lower seniority.

If notice is given by the employee, the notice period may not exceed four and a half months, if the annual salary is between EUR 32,254 and EUR 64,508 or six months, if the salary exceeds EUR 64,508. For employees earning an annual salary which exceeds EUR 64,508 an alternative notice period may be contractually agreed at the latest on the effective start date of the employment. However, The minimum duration of the employer’s notice, however, is at least three months per commenced five-year period of seniority. Notice given by the employee cannot be fixed in advance.

For employees with an annual salary of more than EUR 32,254 but less than EUR 64,508 new rules will apply to employment contracts entering into force after 1 January 2012. The following notice periods will apply:

Seniority Notice given by employer< 3 years 91 days3 > 4 years 120 days4 > 5 years 150 days5 > 6 years 182 days> 6 years 30 days per commenced year of seniority

Seniority Notice given by employee< 5 years 45 days5 > 10 years 116 days> 10 years 145 days> 15 years and 180 daysan annual salary ofmore than EUR 64,508

The following notice periods apply in case of dismissal after 1 January 2014:

Seniority Notice given by employer

< 3 years 91 days3 > 4 years 116 days4 > 5 years 145 days5 > 6 years 182 days> 6 years 29 days per commenced year of seniority

Lastly, if the reason for terminating a blue-collar worker does not relate to their attitude or fitness or valid business reasons (economic reasons), the dismissal is presumed abusive until proven otherwise. In the event of a dispute, the onus is on the employer to prove the reasons for termination. If the employer fails to satisfy this burden of proof, it must pay the employee an indemnity equal to six months’ salary.

7.9.1.2 White-collar employeesThe length of notice to be given to or by a white-collar employee depends on his annual salary and his seniority.

For employees who earn EUR 32,254 (amounts valid for 2013) or less, the employer’s notice period is at least three months for employees with less than five years’ seniority. This statutory minimum is increased by three months for each successive five year seniority period. The annual salary includes all contractual and statutory benefits, as well as certain fringe benefits. If notice is given by the employee, the notice period is reduced by half but may not exceed three months. If the employee’s annual remuneration is more than EUR 32,254 the notice period is to be fixed by mutual agreement between the employer and the employee at the earliest when notice is given. In the absence of an agreement between the parties, the notice period is determined by the courts.

In determining the appropriate length of notice, one must take into account the employee’s seniority, age, function level and salary, and the assumed degree of difficulty for the employee to find a suitable new job. When trying to apply these criteria, employers and employees often take into account certain formulae developed under Belgian legal theory, based on a computerised average of case law.

The most widely used formula is the “Claeys Formula” which is as follows:

• If the annual salary is less than EUR 120,000: (0.87 x seniority) + (0.06 x age) + (0.037 x annual gross remuneration in thousands of

euro x 106.53/index of the month of termination) – 1.45 = notice period

• If the annual salary equals or exceeds EUR 120,000: (0.87 x seniority) + (0.06 x age) + (0.029 x annual gross remuneration in thousands of

euro x 106.53/index of the month of termination) – 1.45 = notice period

The number of years’ seniority is expressed in units, and the number of months in tenths of units. It should be noted that this formula has no legal basis and is therefore not binding


by the Employment Court prior to the termination or for economic or technical reasons accepted and acknowledged by the Joint Committee prior to termination.

In the event of a non-observance of these dismissal procedures, the employee may or may not request reinstatement. If the employee requests to be reinstated and the employer rejects this request, the employee is entitled to (i) an indemnity equal to two, three or four years’ salary according to the employee’s seniority (less than 10 years, between 10 and 20 years, 20 years or more) and (ii) the salary for the period between the dismissal and the end of the mandate of the member of the Council or Committee. If the employee does not request reinstatement, only the first of these indemnities will be due.

7.10.2 Members of the Union DelegationMembers of the Union Delegation, who are elected or designated to represent the employees who are union members, can only be dismissed if the dismissal procedure set out under the applicable CBA, is observed. If the employer terminates the employment contract of a Union Delegate without observing that special procedure, the employer must pay the employee an indemnity equal to one year’s salary in addition to the regular termination indemnity.

7.11 Work regulations

All companies hiring employees must have work regulations. These must be posted in the premises of the company and a copy must be provided to each employee.

The text of the work regulations is to be approved by the Works Council or, in the absence of a Works Council, by the employer who must take into account the comments of its employees. The issues that must be dealt with in the work regulations are set out in the law.

7.11.1 Working hoursEmployees may not work for more than 38 hours a week (or 40 hours with 12 days per year of compensatory rest) or for more than eight hours a day, nor may they work on Sundays. In a vast majority of companies, the working hours are even less. The five-day week is standard and Saturday is considered an obligatory non-working day.

Night work, defined as work performed between 8p.m. and 6a.m., is in principle prohibited. There are, however, a large number of exceptions provided by law.

Notwithstanding the limits on working hours, a considerable number of employees still exceed these limits, which is then compensated by additional time off or holidays.

Employees who reach retirement age may be dismissed with a reduced notice period. Notice given by the employer is, in this event, equal to three or six months, depending on whether the employee has more than five years’ seniority. If notice is given by the employee, the notice period is reduced by half.

Termination on the spot, without any notice but with a severance payment, is common when the employee is either redundant or occupies a managerial position.

7.9.2 Termination of fixed-term contractsFixed-term employment agreements cannot be terminated before the expiry of the agreed term, unless for serious cause or with the payment of a severance package equal to the salary for the remainder of the agreement, with a maximum of two times the compensation that would have been due, had the agreement been for an indefinite term.

7.9.3 Termination for serious causeIf either the employee or the employer commits a serious breach, the employment agreement can be terminated immediately, without notice or indemnification if the continuation of the professional relationship between the employer and employee immediately and permanently ceases to be possible.

The termination must occur within three working days from the moment when the facts concerning the breach are sufficiently known to the other party. The facts on which the dismissal is based must be notified to the dismissed party by registered mail within three working days from the date of dismissal.

Grounds for termination will be considered on the facts involved, although theft, dishonesty, violence, gross negligence and inexcusable insubordination are generally accepted as serious causes. Incompetence or occasional absences are not so considered.

7.10 Protected employees

Certain categories of employees benefit from particular job protection related to their position or their physical situation (e.g. pregnant employees). In addition, in certain industries (like the insurance industry), CBAs provide particular rules on job protection.

7.10.1 Candidates and members of the Works Council or Committee for Prevention and Protection

Members and candidates of a Works Council or Committee for Prevention and Protection are protected against dismissal. They may only be dismissed for serious cause, accepted


considered adequate, the employee is entitled to an allowance of six months’ salary on top of the regular termination benefits.

7.12 Use of language

The Belgian legislation on the use of language in employment relationships is very complex and differs for the three geographic regions. The language to be used depends on the location of the place of work, which is not necessarily the same as the registered office.

If the place of work is situated:

• in the Flemish Region, all social documents addressed to employees must be drafted in Dutch. A document drafted in the wrong language is deemed void.

• in the Walloon Region, all social documents must be drafted in French, otherwise they are deemed void. Documents drafted in the wrong language can be replaced by a document in French.

• in the Brussels Region (Brussels city - 19 communes of Brussels), social documents must be drafted in either Dutch or French depending on whether the employee is Dutch or French speaking. Any other foreign language is rejected. A failure to comply with this obligation results not in the nullity of the document, but rather in the obligation to replace it with a document drafted in the appropriate language.

• in the communes with special language facilities and the German Region, social documents must be drafted in either Dutch, French or German, depending on whether the commune is located in the Flemish, Walloon or German Region. A document drafted in the wrong language can be replaced.

7.13 Discrimination

Belgian employment law contains a number of non-discrimination rules relating to the equal treatment of men and women, equal pay between male and female employees for equal work, and discrimination based on gender, religion, age, ethnicity or fortune.

7.14 Social documents

Employers are required to keep a number of employment documents with respect to their employees’ activities (e.g. individual accounts and work regulations).

Foreign employers who have filed a Limosa-declaration (section 7.20.1) are exempted

7.11.2 Overtime workWork in excess of standard working hours is defined as overtime. In principle, overtime work is prohibited, but there are, however, a number of specific exceptions. The situations in which overtime is allowed are determined by law.

Overtime pay is equal to 50% of salary and 100% on Sundays and legal holidays, on top of the employee’s regular salary. In addition to overtime pay, compensatory rest must also be granted within a certain period following the date(s) of the overtime.

7.11.3 Annual holidaysWhite-collar employees are entitled to a minimum of 20 working days holiday during which they remain entitled to their normal remuneration (‘single holiday pay’), as well as an extra allowance of 92% of their monthly salary (‘double holiday pay’). For blue-collar workers, the holiday allowance is funded and paid through the social security system, at an additional cost to the employer of 15.38% on 108% of the gross wages. The holiday allowances due to white-collar employees are at the employer’s expense.

The right to annual holidays is accrued on the basis of the performances during the calendar year (the ‘service year’) immediately preceding the calendar year during which the annual holidays are taken (the ‘holiday year’).

7.11.4 National holidaysIn addition to annual holidays, employees are also entitled to ten public (bank) holidays per year. The employer may not, in principle, require its employees to work during these legal holidays.

The legal holidays are: New Year’s Day, Easter Monday, May 1, Ascension Day, Whit Monday, July 21, August 15, November 1, November 11 and Christmas Day. Employees’ remuneration is not affected by these legal holidays.

7.11.5 Time credit (career break)Employees are allowed to take a leave of absence for a maximum of one year and a minimum of three months (which may be extended to five years) for certain reasons, or to limit their presence by a part-time formula (3/4, ½, 4/5, etc.). Their pension rights, family allowances, etc. are fully maintained as if they continue to work full time, and they receive an allowance from the social security system.

Employees benefiting from a time credit cannot have their employment contract terminated unless there is an ‘adequate’ reason for it. If the reasons invoked are not


less than 20 workers, the employer itself may assume this function. If a Committee for Prevention and Protection at Work has been elected within the company, a Prevention Advisor is designated, and may only be removed, with the prior consent of the Committee.

7.18 Violence and moral or sexual harassment at work

The Act of 10 January 2007 relating to protection from violence, moral harassment (bullying) and sexual harassment in the workplace aims both to prevent violence, moral harassment and sexual harassment at work and to protect workers who are victims of such acts.

Victims of harassment can submit a complaint to the prevention advisor, who will seek to find an internal solution through conciliation and preventative and curative measures. If this proves unsuccessful, the prevention advisor must pass the matter over to the Medical Inspectorate, which will, in turn, attempt conciliation. If this is unsuccessful, a formal statement, known as a pro justitia, will be forwarded to the Public Prosecutor for employment matters (Arbeidsauditeur/Auditeur du Travail). The plaintiff and witnesses are protected against dismissal.

7.19 Privacy

Belgian employment law contains a number of regulations to protect the privacy of employees. For instance, these regulations cover the use of surveillance cameras in the workplace and the monitoring of employees’ e-mails and internet use in the workplace.

7.20 Social security

7.20.1 GeneralBelgium has a wide range of social security benefits including unemployment, sick leave and medical benefits for salaried workers, children’s allowances, vocational training allowances and benefits for occupational illnesses. Workers’ compensation (for work-related accidents) is mandatory and is privately insured.

The social security system is financed through contributions from both employees (13.07% of the gross wage; for blue collars workers - calculated on 108% of the gross wage) and employers (around 35% for white-collar employees and 40% for blue-collar workers). These contributions are supplemented by significant state subsidies to the social security scheme.

from the obligation to keep these social documents for a maximum period of twelve months. During this period, they are only obliged to keep a copy of the foreign documents, that are comparable to the Belgian social documents, at the place of business in Belgium or with the employer’s representative in Belgium. After this twelve-month period, the foreign employer is treated as a Belgian employer and is therefore obliged to keep employment documents in full compliance with the Belgian legislation.

Often companies contract a private payroll agency (sociaal secretariat/secrétariat social) to process the personnel administration, draft the required documents and compute (net) salaries, holiday allowances, severance indemnities, etc.

7.15 Employee liability

The personal liability of an employee can only be invoked in the event of fraud, serious fault, or, in the case of minor faults, when these occur frequently.

7.16 Posting

The posting of employees (seconding an employee to another company) is in principle prohibited. The law provides, however, for certain exceptions, for example, if prior approval from the Social Inspectorate has been obtained.

Prior approval is not necessary if an employee is, by way of exception, seconded to a company within the framework of co-operation between group companies or within the framework of specialised work which requires a specific professional skills.

In this case, the Social Inspectorate must be informed by the lending employer at least 24 hours beforehand.

In the event of an unlawful secondment, the employee will be considered as an ordinary employee of the user and will be deemed to have entered into an employment contract with the user for an indefinite period of time, which may be terminated by the employee without notice or compensation. Furthermore, failure to comply with these conditions could lead to civil and criminal sanctions for both the lending employer and the user.

7.17 Health and safety

Each employer must appoint a Prevention Advisor responsible for the well-being of the employees in the company and must take all adequate measures, that are useful or required by law, to improve health and safety in the workplace. In companies with


7.20.4 Family allowanceEmployers must be affiliated to the National Office of Family Allowances for Wage-earners as and when they take on an employee in Belgium, irrespective of whether the employee is entitled to family allowances. This office pays out family allowances.A family allowance is paid if there is a link between the child and the employee and the child is raised in Belgium or in another EU Member State. The allowance depends on the age of the child and amounts per month to (amounts valid in 2010):

• For the first child: EUR 86.77• For the second child: EUR 160.55• For the third child: EUR 239.72

In addition, extra allowances are paid when the child reaches the ages of 6, 12 and 18 years.

7.20.5 RetirementThe age of retirement is 65 years.

The pension paid on retirement depends on the period the beneficiary has been employed in Belgium and on the salary he earned. The pension of an employee is calculated as follows:

• annual salary / 45 x 60% or 75%

This calculation is repeated for every year the employee was employed.

The annual salary used for the calculation is limited to EUR 47,960.29 (for 2010), and is indexed at the moment the pension is determined.

The multiplication by 60% or 75% depends on the employee’s family situation. The 75% multiplication applies if the employee is married and their spouse has no pension or other Belgian or foreign revenue. This family pension is intended as a common pension for the married couple. if one party dies, the surviving spouse, who was dependant on the deceased, is entitled to a survivor’s pension of 80% of the family pension.

7.20.6 Occupational illnessesIf an employee incurs an illness which is recognised by the authorities as an occupational illness, he is entitled the same allowances as for an industrial accident. The Occupational Illnesses Fund reimburses part of the medical cost that would usually be borne by the beneficiary.

In addition to having to register as an employer with the social security administration (‘ONSS’/‘RSZ’), all employers must inform the social security administration of any new hiring or termination by immediately filing, by electronic mail, a declaration of employment (‘DIMONA’). Employers who do not do so may incur administrative as well as criminal sanctions. Employers based abroad are exempt if they have only seconded an employee to work in Belgium. All employees, self-employed persons and trainees who come to Belgium to perform assignments must first notify the relevant social security administration of their activities via an online ‘Limosa’ declaration.

7.20.2 UnemploymentIn order to benefit from an unemployment allowance, the employee must:

(i) prove that he or she has worked a certain number of days (312 days if younger than 36; 468 days if between 36 and 49; 624 days if 50 or older) over a certain period (18, 27 or 36 months respectively);

(ii) be involuntarily unemployed and receive no salary; and(iii) register as unemployed and reside in Belgium.

A person who is the head of the family is entitled to an allowance of 60% of the average daily wage, with a maximum daily amount of EUR 53.64. A single beneficiary benefits from an allowance equal to that of a head of family for the first 12 months of unemployment. The allowance is subsequently reduced to 55% of the average daily wage with a maximum of EUR 41.89 per day (amounts valid as at 1 September 2011).

7.20.3 Health insuranceEmployees are required to affiliate themselves to a Mutual Health Society of their choice. This insurance covers medical costs (medical and dental services, prescriptions, hospitalisation, physiotherapy and paramedical auxiliaries), to which the employee must pay a limited contribution amounting to approximately 25%, and the allowances in the event of temporary work incapacity (after the first month of incapacity, during which white-collar employees retain their right to their guaranteed wage, borne by the employer). The employer will then continue to pay the employee’s normal salary. After this period, white-collar employees will receive an allowance of 60% (if the head of the family) or 55% of the foregone wage. After one year, the insured falls within the invalidity system and employees will receive an allowance, paid by the social security service until retirement age, equal to 65% of the former wage if the beneficiary is head of the family and to 50% or 40% for single persons or cohabitants respectively.


The issuing of work permits to foreign workers is linked to the issue of authorisations to employers to employ foreign nationals. This depends on the need for foreign workers in a particular sector of the economy at a particular time. Both the permit and the authorisation are issued by the Regional Ministries of Flanders, Wallonia or Brussels.

7.21.2 Professional cardsAll self-employed non-residents, except EEA nationals, require a valid professional card. Such a professional card is also required for managing directors of companies incorporated in Belgium who stay in Belgium for an uninterrupted period of more than three months.

A professional card application can be filed with the Belgian embassy or consulate of the country in which the non-resident self-employed or managing director resides or in which they reside when they are staying abroad.

7.21.3 Residence permitsForeign employees require a residence permit for stays of three months or longer. An application must be filed with the Belgian Embassy or a Belgian Consulate of the country in which the employee was located abroad. The employee must register at the local town hall within eight days of arriving in Belgium.

EEA citizens coming to Belgium to work for more than one year can register by presenting a valid passport or identity card.

7.20.7 Self-employedSelf-employed individuals must register with a social insurance fund for self-employed persons or the National Fund no later than the first day of their self-employed activity. This obligation also applies to directors of a company having its registered offices in Belgium, irrespective of the director’s domicile or remuneration.

The social security charges, to be paid by a self-employed person, amount to 22% ofan income of up to EUR 52,378.55 and 14.16% of income between EUR 52,378.55 and EUR 77,189.40 without any employer’s contributions being due. If the income of a self- employed person exceeds EUR 77,189.40 no additional social security charges are due and the contributions are capped.

By paying these social security contributions, a self-employed person can benefit from sick leave, an old age pension and family allowances. The benefits for a self-employed worker are however correspondingly lower compared to salaried workers.

7.21 Regulatory

7.21.1 Work permitsNon-EEA (the EEA (European Economic Area) includes all EU Member States as well as Iceland, Norway and Liechtenstein) nationals need a work permit to be able to be employed in Belgium.

For non EEA workers, the first work permit they receive (work permit B) is only valid for one year, and limited to one employer or one sector. After working in Belgium for three to five years (which implies prolonged or consecutive work permits), they can apply for an “A” work permit, valid for all employment and for an undetermined period.

Executives with higher education qualifications, who earn a gross salary of at least EUR 36,604 per annum, can apply for a single renewal for four years. The employment of executive staff is no longer subject to a time restriction, provided the person concerned earns gross remuneration of at least EUR 61,071 per annum and is not temporarily assigned to Belgium. In this case, the work permit B is valid indefinitely.

Furthermore, a work permit C has been introduced for persons legally authorised to reside in Belgium for a limited period of time, but who qualify for a residence permit for an unlimited period of time. This work permit C will be valid as long as the residence permit is valid, up to a maximum of one year.


transactions in the name and for the account of the principal. The agent organises his activity as he sees fit and disposes freely of his time.’

An agency relationship exists when the following requirements are met:

(i) the agent acts in the name and for the account of the principal;(ii) the agent negotiates and possibly enters into business transactions (covering services

and/or goods);(iii) the agent is entitled to remuneration; (iv) the agent is self-employed; and(v) the agency relationship is exercised on a permanent basis.

8.2.2 Commercial agent vs. sales representative (handelsvertegenwoordiger/représentant de commerce)

A sales representative agreement is an employment agreement whereby an employee, the sales representative, undertakes to seek and visit customers against remuneration with a view to the negotiating or concluding of transactions (except for insurance contracts) under the authority, in the name and for the account of the principal.

Notwithstanding any contrary provisions or the silence of the agreement, any agreement entered into between a principal and an intermediary is deemed to be a sales representative employment agreement, no matter the qualification given by the parties. This presumption is, however, refutable.

Bearing in mind the extensive protection of employees in Belgium, most principals will prefer to avoid requalification of an agency agreement into a sales representative agreement, in particular because of the difference in treatment from a tax and social security perspective. The burden of proof lies, however, with the principal. Appropriate agreement drafting is therefore of the utmost importance.

The presence of a subordinate relationship is characteristic of a sales representative agreement.

The authority of the principal over the employee (the sales representative), constitutes the criterion and determining factor for identifying and qualifying an agreement as a sales representative agreement. The Act of 26 December 2006 (Programmawet I/Loi Programme I) lists general criteria allowing the assessment of the existence or absence of authority, such as:

8. Commercial agency, distributorship and franchising

8.1 Introduction

Belgium has a specific Act dealing with agreements (for services and/or goods) whereby a commercial agent (handelsagent/agent commercial), acting independently and against remuneration, is entrusted on a permanent basis by the principal with the task of negotiating and, if applicable, concluding business transactions in the name and on behalf of the principal. This Act implements Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed agents.

With respect to distributors (resellers), Belgian law specifically addresses the unilateral termination of certain distribution agreements (for goods only) between a supplier (concessiegever/concédant) and a distributor (concessiehouder/concessionnaire).

In the absence of any specific legislative framework relating to the contractual phase of franchise agreements, general principles of Belgian contract law govern franchise agreements entered into between a franchisor (franchisegever/franchiseur) and a franchisee (franchisenemer/franchisé). However, the Act of 19 December 2005 regarding pre-contractual information within the framework of commercial co-operation agreements (‘Wet betreffende de precontractuele informatie bij commerciële samenwerkingsovereenkomsten’/ ‘Loi relative à l’information précontractuelle dans le cadre d’accords de partenariat commercial’) governs the pre-contractual phase of, inter alia, franchise agreements. This Act entered into force on 1 February 2006.

8.2 Commercial agency

8.2.1 Definition of the agency agreement/ScopeCommercial agency agreements are governed by the Agency Act of 13 April 1995 as amended by laws of 4 May 1999, 1 June 1999 and 21 February 2005 (the ‘Agency Act’).

The Agency Act defines an agency agreement as follows:

‘An agency agreement is an agreement whereby one of the parties, the agent, is entrusted, on a permanent basis and against remuneration, but without subordination, by the other party, the principal, with the negotiation and possibly the conclusion of business


As there is to date no relevant case law in this respect, the question of whether the Act of 19 December 2005 regarding pre-contractual information (within the framework of commercial co-operation agreements governing the pre-contractual phase of commercial co-operation agreements) also applies to commercial agency agreements falling within the scope of the Agency Act (see Section 8.4.5 below) is subject to debate in scholarly opinion.

If in doubt, the principal will be well advised to take this Act into account when negotiating and entering into agency agreements and to supply the agent with a draft agreement and an additional document that contains the required information no less than one month prior to the conclusion of the proposed agreement, in order to avoid the potential adverse consequences resulting from a breach of this Act. Indeed, failure to (timely) comply with any of the detailed obligations may result in nullity either of a specific clause or of the entire commercial co-operation agreement.

8.2.4 DurationAgency agreements can be entered into for either a fixed term or an open-ended term.

The parties can enter into an unlimited number of fixed-term agency agreements.

An agency agreement is deemed to be entered into for an indefinite duration if:

(i) it is not in writing;(ii) its fixed term was not specified in writing at the time of entering into the agreement;(iii) a fixed-term agency agreement continues to be performed after its contractual

expiration date;(iv) a fixed-term agency agreement provides for a clause allowing early termination.

8.2.5 RemunerationThe Agency Act does not define what constitutes an agent’s remuneration. It merely states that an agent’s remuneration may consist of a fixed amount, a commission amount or a combination of both. Any portion of remuneration varying according to the number or value of business transactions is deemed to be a commission.

The parties are free to determine the amount of the commission. If the parties have not set the amount of the commission, it will be set by reference to local and sector usage and, in last resort, ex aequo et bono by the judge if such usage does not exist.

If the remuneration is partly or wholly paid as commissions, the following rules apply:

• the parties’ will, as expressed in their agreement, provided that the latter corresponds with the actual performance of the agreement;

• the (absence of) freedom to organize the work and working hours;• the (absence of the) possibility to exercise hierarchical control.

However, the following elements are considered not to be decisive in demonstrating(the absence of) an employee relationship:

• the title of the agreement;• registration with a social security institution;• registration with the Belgian Companies Registry (Kruispuntbank van Ondernemingen/

Banque Carrefour des Entreprises);• registration with the Value Added Tax authorities;• the way in which revenues are declared to the Tax Authorities.

In summary, and taking into account the above guiding principles, the subordinate relationship and the authority of the principal must be assessed on a case-by-case basis by the courts, taking into account all factual circumstances.

8.2.3 Formation of the commercial agency agreementThe Agency Act does not stipulate any formal requirements for entering into an agency agreement.

There are no language requirements, although in the context of legal proceedings, a court may require that the parties provide a Dutch or French translation of the agreement.

For evidentiary purposes, written agreements are preferable. The existence of an agency agreement can be demonstrated by any means, including witness statements and presumptions.

The Agency Act requires that certain contractual commitments be put down in writing in order for them to be valid and enforceable:

• a fixed term;• a non-compete clause;• a ‘delcredere’ clause.

Furthermore, the Agency Act provides that each party is entitled to receive from the other, upon request, a written and signed document setting out the terms of the agency agreement or any modifications agreed subsequent to the entering into the agreement.


right to a commission. The agent appointed as a result of termination of a previous agency agreement will not be entitled to a commission in respect of transactions for which the agent’s predecessor is entitled to a commission, unless the circumstances dictate that it is equitable for the commission to be shared between both agents. If the parties cannot agree, the court will decide on this ex aequo et bono.

c) Payment of commissionsCommissions fall due as soon as any of the following occurs:

(i) the principal has performed the agreement with the customer or should have done so; or

(ii) the third party has complied with its obligations.

Furthermore, the commission can be claimed as soon as the customer has performed its part of the agreement or should have done so, had the principal performed its part. The commission must be paid no later than the last day of the month following the quarter during which it accrued.

If the agent’s remuneration consists in whole or in part of a fixed salary, the salary must be paid monthly, unless the parties agree otherwise.

d) Circumstances in which commissions are not dueThe parties may agree that there will be no entitlement to commissions under the following circumstances:

(i) if it is established that the customer will not perform its obligations, except where such failure to perform is attributable to circumstances within the principal’s control;

(ii) if performance was rendered impossible as a result of circumstances beyond the principal’s control;

(iii) if performance cannot reasonably be required from the principal, especially when there are serious reasons attributable to the customer that justify non-performance.

In order to be valid and legally enforceable vis-à-vis the agent, these situations must be explicitly provided for in the agency agreement.

8.2.6 Termination

a) Termination without causeA fixed-term agreement performed until its contractual expiration date does not give rise to any compensation except for a possible clientele or goodwill compensation. If either party

a) Computation of commissionsUnless otherwise agreed, the agent’s commission is calculated on the basis of the gross amount invoiced to the customer, including incidental expenses unless invoiced separately. Incidental expenses include packaging costs, transport and insurance. Taxes and duties are, however, excluded from the calculation basis of the commission. Fidelity discounts, refunds and cash discounts unilaterally granted by a principal to a customer cannot be deducted from the calculation basis of the commission payable to the agent.

If, during the performance of the agreement, a principal unilaterally modifies the commission rate initially agreed upon, such modification may constitute an act amounting to breach equivalent to unilateral termination of the agreement (‘acte équipollent à rupture’).

The Agency Act provides for a specific commission adjustment mechanism for agents acting within the banking, insurance and regulated securities/stock markets industry.

b) Entitlement to commissionsFor commercial transactions concluded during the period covered by the agency agreement, the agent is entitled to a commission:

(i) where the transaction has been concluded as a result of his/her action; or(ii) where the transaction is concluded with a third party whom he/she has previously

obtained as a customer for transactions of the same kind; or(iii) where it was agreed that the agent has an exclusive right to a specific area or group of

customers and where the transaction has been entered into with a customer belonging to that area or group.

For commercial transactions concluded after termination of the agency agreement, the agent is entitled to a commission:

(i) if the transaction is mainly attributable to the agent’s efforts during the period covered by the agency agreement and if the transaction was entered into within 6 months after termination of that agreement; or

(ii) if the order of the third party reached the principal or the agent before termination of the agency agreement and the transaction is concluded with a third party whom he/she has previously obtained as a customer for transactions of the same kind.

The agent will have to establish that these two last conditions are fulfilled.In principle, when both the former agent and his/her successor could be entitled to a commission, the former agent’s right to a commission prevails over his/her successor’s


b) Termination for causeEach party may terminate the agency agreement with immediate effect without granting prior notice in the event that:

(i) exceptional circumstances render all further professional cooperation between the principal and the agent permanently impossible; or

(ii) the other party is in material breach of its obligations.

The existence of exceptional circumstances does not presuppose any fault and will be decided by the courts, taking into account the circumstances of the case. For instance, the fact that the agent’s health prevents him/her from continuing his/her activities or the take-over of the agent by the principal’s direct competitor shall be deemed to be exceptional circumstances.

A clause providing for automatic termination in the event of non-compliance by the agent with one of his/her obligations is likely to be declared null and void. Taking into account the mandatory nature of the Agency Act, the majority of scholarly opinion defends the position according to which a condition subsequent is unenforceable, but can still be used by the courts in order to assess the seriousness of a breach.

The Agency Act sets out two requirements for terminating an agreement for material breach or exceptional circumstances:

(i) the terminating party first became aware of the fact justifying termination with immediate effect less than seven working days prior to termination; and

(ii) notification of the material breach or exceptional circumstances must take place either by means of a bailiff’s writ or by registered mail sent within seven working days following termination with immediate effect.

8.2.7 Clientele and goodwill indemnityAn agent will be entitled to a clientele and goodwill indemnity if he/she proves that:

(i) he/she has brought in new customers or significantly increased the principal’s volume of business with existing customers, and

(ii) the principal continues to derive substantial benefits from business with such customers following termination of the agency agreement.

The clientele and goodwill indemnity takes into account both the contribution of new customers and the increase in existing business.

terminates such fixed-term agreement prior to the contractual expiration date, the other party will be entitled to claim adequate compensation. Exceptionally, specific performance may be granted.

An open-ended agreement can be terminated by either party subject to giving sufficient prior notice.

The notice period will depend on the duration of the agreement and will amount to one month per year, with a maximum of six months. A year commenced is computed as a full year. The parties cannot agree on a shorter notice period to the detriment of the agent before notification of the decision to terminate. However, they can agree on a longer notice period, provided the notice due to be given by the principal is not shorter than the one that must be observed by the agent.

Notice must be in writing and must indicate the commencement date and duration of the notice period. It can be given through delivery of a letter to the other party, by registered letter becoming effective the third business day after the date of dispatch, or by means of a bailiff’s writ. Unless otherwise agreed in the agreement, the end of the notice period must coincide with the end of a calendar month. If these formalities are not met, the termination is effective but the notice granted is null and void.

If a party does not grant sufficient advance notice as per the Agency Act and does not rely on the legal grounds of serious breach or exceptional circumstances and/or comply with the prescribed procedure as defined in the Agency Act to terminate the agreement with immediate effect, the termination will be effective but the other party will be entitled to an indemnity in lieu of notice. The indemnity in lieu of notice corresponds to the remuneration that would have been payable if a sufficient notice period had been granted. If the agent’s remuneration consists in whole or in part of commissions, the indemnity in lieu of notice is calculated on the basis of the average monthly commission/ remuneration earned over the twelve months preceding termination of the agreement or, if the agreement has been in effect for less than twelve months, over the months preceding termination of the agreement. The indemnity in lieu of notice is a lump sum that is due no matter the actual damage or loss suffered.

The Agency Act provides for a specific protection and related indemnity mechanism for specific categories of agents acting within the banking, insurance and regulated securities/stock markets industry.


can claim additional compensation covering the difference between the damage or loss actually suffered and the amount of the clientele and goodwill indemnity granted.

Scholarly opinion and case law are divided on the question as to which kinds of damage or loss may be taken into consideration when determining the supplementary indemnity, and the courts are generally reluctant to grant additional damages on this basis.

The agent will in any event have to provide evidence of the additional damage or loss.

The parties may only contractually depart from these rules on the condition that the agreed indemnity is equivalent to or higher than the amount to which the agent is entitled pursuant to the Agency Act. In practice, however, it is almost impossible for them to predict the amount to which the agent will be entitled.

8.2.9 Non-compete clauseA non-compete clause with post-termination effects is only valid when it:

(i) is agreed upon in writing;(ii) relates to the type of business transactions assigned to the agent;(iii) solely relates to the (group of persons and) geographical area entrusted to the agent;

and(iv) has a maximum duration of six months beyond termination of the agreement.

Courts must invalidate non-compete clauses that do not meet all of the requirements set out in the Agency Act.

A non-compete clause is unenforceable in the event where the principal terminates the agency agreement for reasons other than material breach or exceptional circumstances as defined in the Agency Act or when the agent terminates the agency agreement precisely for such reasons (i.e. material breach or exceptional circumstances).

Parties may agree on a lump-sum indemnity in the case of a breach of a non-compete clause. However, the lump-sum indemnity agreed in the agency agreement may not exceed a sum equivalent to remuneration for one year, calculated on the basis of the average annual remuneration over the previous five-year period (or, if the agency agreement has been entered into for less than five years, over the actual contract duration). This is without prejudice to the principal’s right to claim a higher amount, provided he/she demonstrates the existence and the extent of the damage or loss suffered.

The agent will still be entitled to the clientele and goodwill indemnity:

(i) when the agency agreement is terminated by mutual agreement.(ii) when the increase in customers or in the principal’s volume of business with existing

customers is due to efforts by both the principal and the agent.

If the agreement contains a non-compete clause, there is a refutable presumption in favour of the agent that the principal continues to derive substantial benefits from the clientele brought in by the agent. Case law held that this presumption remains in effect even if the non-compete clause is null and void.

Compensation for goodwill is capped at the equivalent of remuneration for one year, calculated on the basis of the average annual remuneration over the previous five-year period (or, if the agency agreement has been entered into for less than five years, over the actual duration of the agreement). In case of discussion, the judge will decide ex aequo et bono.

The parties may only contractually depart from these rules on the condition that the agreed indemnity is equivalent to or higher than the amount to which the agent is entitled pursuant to the Agency Act.

However, no clientele and goodwill indemnity will be owed in any of the following cases:

(i) the agency agreement is lawfully terminated by the principal for material breach attributable to the agent;

(ii) the agency agreement is terminated by the agent, unless such termination occurs as a result of a material breach attributable to the principal or on grounds of the agent’s age, disability or illness, as a result of which the agent can no longer reasonably be required to continue his/her activities; or

(iii) the agent (or his/her heirs) assigns his/her rights and obligations under the agency agreement to a third party with the principal’s consent.

The agent loses his/her right to a clientele and goodwill indemnity if he/she fails to notify the principal of his/her intention to exercise this right within one year after termination of the agreement.

8.2.8 Supplementary indemnityIn the event where the agent is entitled to a clientele and goodwill indemnity and where the amount of this indemnity does not fully cover the damage or loss suffered, the agent


The Cour de Cassation held that, with respect to non-compete clauses, the one-year period starts as from the moment on which the non-compete obligation ends.

8.2.12 Jurisdiction (courts/arbitration), governing law and conflict of lawsThe Agency Act provides that, subject to the application of international treaties or agreements, all disputes regarding an agent whose principal place of business is located in Belgium will be subject to Belgian law and to the jurisdiction of Belgian courts.

Since most of the articles of the Agency Act are mandatory (dwingend/impératif) and not of internal/international public order (interne/internationale openbare orde / ordre public interne/ international), parties cannot opt to derogate from them in writing to the detriment of the protected party/parties.

For agency agreements with an international dimension, the Belgian Code of Private International Law (the ‘PIL code’) specifically addresses the jurisdiction of Belgian courts, governing law and the conditions for the effect in Belgium of foreign judgments in international matters. The PIL code is, however, subject to the application of international treaties and EU law, which take precedence.

As regards international jurisdiction and conflicts of law, and alongside the PIL code, the possibly relevant EU and international law provisions include:

(i) as regards jurisdiction, EC Council Regulation 44/2001 of 22 December 2000 on jurisdiction, recognition and the enforcement of judgments in civil and commercial matters;

(ii) as regards governing law, EC Regulation No 593/2008 of 17 June 2008 on the law applicable to contractual obligations that applies to agreements entered into after 17 December 2009 (Regulation ‘Rome I’) and the 1980 Rome Convention on the law applicable to contractual obligations (‘Rome Convention’), which applies to agreements entered into before 18 December 2009;

(iii) as regards arbitration, the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 (‘New York Convention’) and the European Convention on International Commercial Arbitration of 21 April 1961 (‘Geneva Convention’).

8.3 Distribution

8.3.1 GeneralBelgian law does not contain specific rules on distribution agreements, except as provided in the Act of 27 July 1961, as amended by the Act of 13 April 1971 (the ‘Distribution Act’),

If the principal is more interested in rapidly halting infringement of the non-compete clause than in obtaining a lump sum, he/she may consider initiating summary proceedings against the agent concerned and/or against the new employer or the new principal of the agent concerned.

8.2.10 ‘Delcredere’ clauseUnless otherwise agreed in writing, a ‘delcredere‘ clause provides for the agent’s commitment to act as guarantor for the solvency of the customers with which the principal has entered into a business transaction. In principle, insolvency implies a definitive cessation of payment. However, the parties are free to broaden the scope of the term ‘insolvency‘ in their agreement, provided it is in writing.

A ‘delcredere’ clause is only valid when the following conditions are met:

(i) the clause is agreed upon in writing;(ii) the scope of the clause is limited to business transactions personally concluded or

negotiated by the agent or by its sub-agent;(iii) the principal does not a posteriori unilaterally modify the payment or delivery

conditions to the customer’s detriment; and(iv) the amount is not higher than the commission fee, unless the clause relates to one

specific transaction or to transactions concluded by the agent in the name and for the account of the principal. In such cases the parties can agree on a higher amount than the commission fee. However, if there is a significant discrepancy between the risk the agent has to bear and the agreed commission, the courts can mitigate the effect of a ‘delcredere clause’, taking into account the circumstances of the case; the right to mitigate remains limited to the part of liability that exceeds the amount of the commission due.

The Agency Act provides for a specific regime with respect to certain categories of agents acting in the sector of credit institutions.

8.2.11 Statute of limitationsAll claims and legal actions resulting from an agency agreement become time-barred on the earlier of (i) one year following the end of the agreement and (ii) five years following the event that forms the basis for the claim.

The claim for a clientele and goodwill indemnity is only time-barred if the agent does not notify the principal of his/her intention to exercise this right within one year after termination of the agreement.


8.3.4 FormationThe Distribution Act does not impose any formal requirements when entering into a distribution agreement. For evidence purposes, however, written agreements are preferred. There are no language requirements, although in the context of legal proceedings, a court may request the parties to provide a Dutch or French translation of the distribution agreement.

The existence of a distribution agreement can be demonstrated by any means, including witness statements and presumptions. The existence of a distributorship may be inferred from the parties’ conduct.

As there is to date no relevant case law in this respect, the question of whether the Act of 19 December 2005 regarding pre-contractual information (within the framework of commercial co-operation agreements governing the pre-contractual phase of commercial co-operation agreements) also applies to distribution agreements falling within the scope of the Distribution Act (see Section 8.4.5 below) is subject to debate in scholarly opinion.

If in doubt, the supplier will be well advised to take this Act into account when negotiating and entering into distribution agreements and to supply the distributor with a draft agreement and an additional document that contains the required information no less than one month prior to the conclusion of the proposed agreement, in order to avoid the potential adverse consequences resulting from a breach of this Act. Indeed, failure to (timely) comply with any of the detailed obligations may result in nullity either of a specific clause or of the entire commercial co-operation agreement.

8.3.5 DurationDistribution agreements can be entered into for either a fixed or an open-ended term. However, the agreement is deemed to be entered into for an open-ended term if:

(i) it is not in writing;(ii) its fixed term was not specified at the time of entering into the agreement in writing;(iii) the fixed-term agreement continues to be performed after its contractual expiration

date;(iv) the parties do not comply with the mandatory termination requirements to terminate

their fixed-term agreement and the parties have not agreed upon tacit renewal of the agreement;

(v) the fixed-term agreement already twice renewed is renewed a third time.

which only applies to certain categories of distribution agreements (for goods only) and only deals with the unilateral termination of such agreements.

Agreements falling within its scope are governed by this Distribution Act and the parties cannot derogate from its provisions (mandatory nature of the Distribution Act).

The general principles of Belgian contract law as set out in the Belgian Civil Code govern all other aspects of distribution agreements (e.g. the forming of the agreement).

8.3.2 DefinitionThe Distribution Act defines a distribution agreement as follows:

‘Any agreement by which a supplier grants to one or more distributors the right to sell in their own name and for their own account products manufactured or distributed by the supplier.’

It is clearly to be distinguished from an agency agreement, which is characterised by the fact that the agent operates on behalf and for the account of the principal rather than in his/her own name and for his/her own account.

8.3.3 ScopeThe Distribution Act only applies to certain categories of distribution agreements. It applies as soon as:

(i) there is a framework agreement under which the supplier’s products are sold to the distributor for resale by the latter to other distributors or end-users and special rights are granted to, and obligations are imposed on, the distributor;

(ii) (quasi) exclusivity is granted to, or substantial obligations are imposed on, the distributor (for example, restrictions on selling outside a given area, obligation to organise after-sales services, obligation to advertise, restriction on selling competitive products, etc.);

(iii) there is coverage of all or parts of Belgium.

The Distribution Act also provides for mandatory formalities for the termination of distribution agreements entered into for a fixed term. These formalities require the terminating party to give prior written notice by registered mail between six and three months before the contractual expiration date.


• Reasonable notice/Indemnity in lieu of noticeEither party can terminate an open-ended agreement at any time by giving reasonable notice or by paying an indemnity in lieu of notice. There are no formal requirements.

Taking into account the notice’s irrevocable nature, a terminating party is bound by its decision. It cannot unilaterally decide to extend or reduce the notice period granted. During the notice period, the parties’ rights and obligations remain unaltered.

Furthermore, given the mandatory nature (dwingend karakter/caractère impératif) of the Distribution Act, parties cannot, before the decision to terminate has been notified, agree on the length of the notice period to be granted. Therefore, clauses in a distribution agreement providing for a notice period, whether agreed between the supplier and the distributor on execution of or during the performance of the distribution agreement, are in principle unenforceable.

However, this does not restrict the parties’ right to insert a minimum notice period into the agreement. If, following notification of the intent to terminate, the parties do not agree on the notice period, it will be up to the court to decide on the matter ex aequo et bono, possibly taking into account applicable customary practice.

The Distribution Act does not define or indicate what constitutes reasonable notice. According to recent scholarly opinion, supported by recent Court of Appeal and Cour de Cassation case law, the reasonable notice period is meant to give the distributor the time necessary to comply with his/her obligations towards third parties and to reorganise his/her activities so that the termination does not lead to the distributor’s financial ruin. In addition, the reasonable notice period must allow the distributor to find another source of net income equivalent to the one lost, if needed through full or partial conversion of his/her activities. This equivalence in terms of income is the only form of equivalence that may be taken into account in assessing the adequacy of the notice period.

Courts traditionally also take a number of parameters into account in determining the duration of the reasonable notice period. The most important are:

(i) the duration of the terminated distributorship agreement;(ii) the territorial scope of the distributorship;(iii) the importance of the distributorship in the distributor’s global business/turnover; (iv) the prominence and renown of the distributed brand/trademark (Is there a lot of

competition on the market? Will it take a long time for the distributor to represent a competing brand with a corresponding reputation?); and

8.3.6 Termination

a) Termination of fixed-term distribution agreements falling within the scope of the Distribution Act

A fixed-term agreement performed until its contractual expiration date does not give rise to any indemnity (e.g. a complementary indemnity), provided that the terminating party complies with the mandatory formalities imposed by the Distribution Act (i.e. to give prior notice by registered mail between six and three months before the contractual expiration date). If no notice is given, or if notice is given either more than six months or less than three months before the contractual expiration date, the fixed-term agreement will be deemed to be an agreement for an open-ended term as from the initial date it was entered into, unless the parties have agreed upon tacit renewal of the agreement.

Parties can contractually provide for an explicit termination clause, either related to contractual breach (uitdrukkelijk ontbindend beding/clause résolutoire expresse) or related to the occurrence of a condition subsequent (ontbindende voorwaarde/condition résolutoire). Pursuant to a termination clause, either party may terminate the agreement with immediate effect and without having to pay an indemnity on the occurrence of (i) a contractual breach (whether actually material or not, provided it is defined as a breach justifying termination) or of (ii) a condition subsequent (irrespective of whether a breach was committed). No prior court approval will then be required. If termination occurs on the ground of an explicit termination clause, the court’s discretionary power is in principle limited to examining whether the event occurred or the breach existed. It is only if the wording of the clause is too general that the court will be allowed to examine the seriousness of the alleged breach.

If either party terminates the fixed-term agreement prior to the contractual expiration date without invoking an explicit termination clause, the other party will be entitled to claim adequate compensation or, albeit exceptionally, specific performance.

b) Termination of open-ended distribution agreements falling within the scope of the Distribution Act

• Explicit termination clauseEither party can terminate an open-ended agreement with immediate effect and without having to pay any indemnity by invoking an explicit termination clause on the occurrence of either (i) a contractual breach (whether actually material or not, provided it is defined as a breach justifying termination) (uitdrukkelijk ontbindend beding/clause résolutoire expresse) or of (ii) a condition subsequent (irrespective of whether a breach was committed) (ontbindende voorwaarde/condition résolutoire) (see Section 8.3.6.a above).


• Material breachEither party can terminate an indefinite-term agreement with immediate effect for material breach by the other party (grove tekortkoming/manquement grave). In such a case, the terminating party does not have to grant notice nor does it have to pay an indemnity in lieu of notice. Case law has held that granting a (more than adequate) notice period is not compatible with termination for material breach.

When terminating for material breach, the Distribution Act does not require that any formal requirements be met. However, case law requires that the terminating party specify the material breach in the notification of termination of the agreement.

The Distribution Act does not define what is meant by ‘material breach’. Case law clarifies that the breach should be serious to such a degree that it renders any further co-operation between the parties impossible. The party facing a material breach by the other party needs to terminate the agreement with immediate effect.

Examples of material breach include the unilateral modification of the distributor’s territory, the repeated failure to meet agreed sales quotas and the refusal to supply. No prior court approval for such termination is required. However, the terminated party can always challenge the alleged material breach in court.

• Complementary indemnityIn addition to an indemnity in lieu of notice and even when the notice period granted has been adequate, a distributor may be entitled to a complementary indemnity if:

(i) the supplier terminates the distributorship on grounds other than material breach by the distributor;

(ii) the distributor terminates the distributorship for material breach of the supplier.

Contrary to an indemnity in lieu of notice, only distributors are entitled to a complementary indemnity.

A complementary indemnity may only consist of the following three elements:

1. Clientele and goodwill indemnityIn order to claim a clientele and goodwill indemnity, the distributor must prove:

(i) the existence of a clear increase in turnover, sold products and/or customers in the course of the distribution agreement;

(v) the (evolution of the) profits generated by the distributorship (How long would it reasonably take to find a distributorship with an equivalent profitability potential?).

There is no mathematical formula for calculating the duration of the reasonable notice period, and the Distribution Act does not give any indication in this respect. It is often difficult to predict what importance a court will give to each of the parameters set out above. It is therefore similarly difficult to predict what a court deems to be reasonable notice. Courts have granted notice periods ranging from one month up to four years maximum.

If the court holds the notice period granted to be unreasonable, it will grant an indemnity in lieu of notice based on what it considers to be a reasonable period of notice. Following notification of the intent to terminate the distribution agreement, parties can also agree on what would constitute a reasonable indemnity in lieu of notice, including its basis of calculation.

An indemnity in lieu of notice compensates the economic disadvantages the terminated party incurs as a result of not having been granted (sufficient) notice.

The Distribution Act only states that the indemnity in lieu of notice must be fair. There is no specific formula for calculating an indemnity in lieu of notice. The Courts usually grant an indemnity equal to the net distributorship profits before taxes that the terminated party could have made during the part of the reasonable period of notice that was not granted by the terminating party, plus ‘non-compressible’ costs related to the distributorship that were financed by the distributor and related to the relevant part of the notice period (the total amounts to the ‘semi-gross profits‘). ‘Non-compressible’ costs are costs inevitably borne by the distributor during the notice period (and which cannot be immediately reduced on termination of the distribution agreement, for example building lease costs, insurance premiums, maintenance of the buildings, etc.). Another way to obtain the semi-gross profits is to subtract ‘compressible’ costs from the gross profits.

Normally, the courts take the average net profits (before taxes) plus the non- compressible costs of the last two to three years immediately preceding termination of the agreement as the basis of calculation. However, recent scholarly opinion, supported by recent Court of Appeal and Cour de Cassation case law, argues that events that occur (results obtained) during the notice period can also be included in the basis of calculation and, furthermore, that the courts may take into account all elements of fact that are at their disposal at the time of rendering their judgments.


If it is concluded for an indefinite duration (i.e. an open-ended term), a distribution agreement can be terminated at any time, provided such termination is not abusive or in bad faith. Generally speaking, the obligation to avoid abuse or bad faith translates itself into a requirement to give reasonable prior notice of termination. A notice period between three and six months is generally advisable, depending on the circumstances, except where termination should take place for material breach. Here also, in the event of termination for material breach, the terminating party should act immediately after it becomes aware of the breach, failing which it may be argued that the breach is not serious enough to justify termination. As a rule, termination of an agreement concluded for an indefinite duration need not be substantiated, but if termination takes place for material breach and without prior notice, the terminating party will be well advised to specify the reasons for termination.

A fixed-term distribution agreement cannot be terminated prematurely, except for material breach or pursuant to an explicit termination clause (see Section 8.3.6.a above).

8.3.7 Repurchase of inventoryAs the Distribution Act does not cover this issue, parties may freely determine in the distribution agreement what will happen to a distributor’s inventory upon termination of the distribution agreement. Case law generally holds that a supplier is required to repurchase a distributor’s inventory if nothing has been provided for in the distribution agreement or if the distributor terminates the distribution agreement for material breach by the supplier.

8.3.8 Sub-distributorsUnless otherwise agreed, a distributor can always appoint a sub-distributor. The Distribution Act’s provisions also apply to distributorships granted by a distributor to one or more sub-distributors.

The Distribution Act stipulates that a sub-distributor can initiate legal proceedings against the main supplier if termination of the open-ended sub-distributorship is caused by termination of the main open-ended distributorship and such termination is not attributable to the intent of or breach by the distributor. Furthermore, when the contractual expiration dates of the fixed-term sub-distributorship and the fixed-term main distributorship coincide, the distributor will have a fortnight as from the moment of receipt of its own termination notice to, in turn, give notice to his/her sub-distributor.

8.3.9 Statute of limitationsAll claims and legal actions resulting from a distribution agreement are time-barred ten years as from the end of the agreement.

(ii) that such an increase was realised through its marketing efforts; and(iii) that customers will continue to buy the supplier’s products after termination of the

distribution agreement.

These conditions must be cumulatively fulfilled.

Cour de Cassation case law has held that, for the purpose of determining whether a distributor is entitled to a clientele and goodwill indemnity, a court can take into account all elements that are at its disposal at the time of rendering a judgment, in particular the situation of the distributor following termination of the distribution agreement.

When a distributor successfully meets the burden of proof, recent case law often grants a clientele and goodwill indemnity with as basis of calculation the distributor’s (average) gross profits in the preceding one- to three-year period (as opposed to net profits, semi-gross profits or amounts ex aequo et bono) related to the terminated distributorship.

2. Expenditures benefiting the supplier subsequent to the termination of the distribution agreement and incurred by the distributor in the course of the distributorship

Advertising costs are normally not recoverable expenditures, unless the distributor meets the burden of proof that such expenditures would still have a positive effect on the supplier after termination of the distribution agreement.

3. Indemnity for severance pay to employees becoming redundant due to termination of the distribution agreement

A distributor is entitled to an indemnity for severance pay if he/she is forced to dismiss employees as a direct consequence of termination of the distribution agreement. Redundancy payment is only due for employees allocated to the terminated distributorship and not for employees who worked for another distributorship, or as part of the global activities of the distributor. Redundancy payments that have already been included in non-compressible costs as part of the indemnity in lieu of notice cannot be taken into consideration when granting a complementary indemnity.

The distributor will in principle not be entitled to an indemnity for severance pay if the notice period to be granted to the redundant employees is the same as or less than the notice period granted for termination of the distribution agreement.

c) Termination of distribution agreements falling outside the scope of the Distribution ActIf the Distribution Act does not apply but Belgian law is applicable (either pursuant to an explicit choice of law or as a result of the application of conflict of law provisions), the distribution agreement will be governed by general principles of Belgian contract law.


As far as arbitration is concerned, the Belgian Cour de Cassation has confirmed the position of Belgian courts that had deemed arbitration clauses not providing for the Distribution Act as the governing law for international distribution agreements (falling within the scope of the Distribution Act and agreed before termination of the distribution agreement) not to be enforceable. Therefore, an arbitration clause providing for the application of foreign (non-Belgian) law or providing for the application of Belgian law but excluding the Distribution Act shall not be enforceable.

8.4 Franchising

8.4.1 GeneralDespite several legislative drafts, Belgium still has no specific legislation on franchise agreements.

However, the Act of 19 December 2005 regarding pre-contractual information within the framework of commercial co-operation agreements specifically governs the pre-contractual phase of, inter alia, franchise agreements (see Section 8.4.5 below).

In the absence of a specific legislative framework relating to the contractual phase of franchise agreements, general principles of Belgian contract law govern franchise agreements.

Furthermore, specific laws or provisions may apply to certain aspects of the contractual franchise relationship. These laws and provisions include amongst other things:

• Articles 2 and 3 of the new Belgian Competition Act of 10 June 2006, as co-ordinated on 15 September 2006;

• Articles 101 and 102 of the Treaty on the Functioning of the European Union;• competition rules applicable to vertical agreements;• the Belgian Market Practices and Consumer Protection Act of 6 April 2010;• the Distribution Act of 27 July 1961;• the Agency Act of 13 April 1995.

Finally, reference must also be made to the European Code of Ethics for Franchising, to which the Belgian Franchise Federation is a party.

8.4.2 DefinitionWithout any legislation in Belgium on franchise agreements, we cannot refer to any definitions in this field. Traditionally, franchise agreements are considered as ‘undefined’ contracts (i.e. contracts that do not fall within a specific category under Belgian civil law).

8.3.10 Jurisdiction (courts/arbitration), governing law and conflict of lawsSubject to directly applicable international and EU rules of law, the Distribution Act governs all disputes regarding the unilateral termination of a distribution agreement falling within the scope of the Distribution Act, and Belgian courts are explicitly granted jurisdiction by the Distribution Act.

In case of a distributorship covering the whole or part of the Belgian territory, the distributor will always be able to initiate legal proceedings against the supplier before the Belgian courts, either before the courts of its own domicile (or registered office) or before the courts of the supplier’s domicile (or registered or operational offices). A Belgian court must apply the Distribution Act, unless the distributorship does not cover the Belgian territory and the parties have not explicitly provided that the Act would be applicable to the agreement.

One must bear in mind that all issues unrelated to the termination of the agreement fall outside the scope of the Distribution Act.

As the Distribution Act is mandatory (dwingend/impératif) and is not of internal/international public order (interne/internationale openbare orde/ordre public interne/international), the parties cannot derogate in writing from its provisions, at least not until notification of the intent to terminate has taken place.

As regards international jurisdiction and conflicts of law, and alongside the Belgian Act of 16 July 2004 containing the Belgian Private International Law Code (the ‘PIL code’), the possibly relevant EU and international law provisions include:

(i) as regards jurisdiction, EC Council Regulation 44/2001 of 22 December 2000 on jurisdiction, recognition and the enforcement of judgments in civil and commercial matters);




Scholarly opinion and recent case law have held that these Acts are not applicable to franchise agreements as soon as:

• a genuine know-how is transferred to the franchisee;• a common name and a continued assistance is placed at the disposal of the

franchisee.

8.4.4 FormationBesides the provisions of the Civil Code governing pre-contractual liability, the Act of 19December 2005 regarding pre-contractual information within the framework of commercial co-operation agreements specifically governs the pre-contractual phase of, inter alia, franchise agreements and sets forth a number of formal requirements that apply when entering into a franchise agreement (see Section 8.4.5 below).

Reference can also be made to Article 5 of the European Code of Ethics for Franchising, which provides for written contractual arrangements in connection with the franchise relationship and for a translation by a sworn translator into the official language of the country the individual franchisee is established in.

Under Belgian law, there are no language requirements, although in the context of legal proceedings, a court may request the parties to provide a Dutch or French translation of the franchise agreement.

8.4.5 Pre-contractual relationship: the Act of 19 December 2005 regarding pre-contractual information within the framework of commercial co-operation agreements (the ‘Act’)

8.4.5.1 GeneralThe Act, effective from 1 February 2006, governs the pre-contractual phase of, inter alia, franchise agreements.

8.4.5.2 Definition - ScopeThe Act applies to:

(i) commercial co-operation agreements,(ii) entered into between two parties,(iii) each of which acts individually in its own name and for its own account,(iv) whereby one party grants the right to the other party,(v) which in return pays a remuneration (of any nature whatsoever and whether directly

or indirectly),

However, when confronted with franchise agreements, Belgian courts often refer to the definition set out in Article 1 of the European Code of Ethics for Franchising.

Article 1 of the European Code of Ethics for Franchising defines ‘franchising’ as follows:

‘Franchising is a system of marketing goods and/or services and/or technology, which is based on a close and ongoing collaboration between legally and financially separate and independent undertakings, the Franchisor and its individual Franchisees, whereby the Franchisor grants its individual Franchisee the right, and imposes the obligation to conduct a business in accordance with the Franchisor’s concept. The right entitles and compels the individual Franchisee, in exchange for direct or indirect financial consideration, to use the Franchisor’s trade name, and/or trademark and/or service mark, know-how, business and technical methods, procedural system, and other industrial and/or intellectual property rights, supported by the continuing provision of commercial and technical assistance, within the framework and for the term of a written franchise agreement, concluded between the parties for this purpose.’

Essential elements of a franchise agreement include:

(i) an agreement between legally and financially separate and independent undertakings; (ii) the franchisor’s transfer of know-how to the franchisee;(iii) the franchisor’s licensing of intellectual property rights to the franchisee;(iv) the franchisor’s obligation to provide the franchisee with continued commercial and

technical assistance;(v) the franchisee’s obligation to conduct a business in accordance with the franchisor’s

concept; (vi) the franchisee’s obligation to use a common name or shop sign, and to present the

contractually defined premises in a uniform way; and(vii) the franchisee’s obligation to pay remuneration to the franchisor when entering into or

during the franchise agreement (such as an entrance fee and royalties).

8.4.3 Different categories of franchise agreementsThere are a variety of franchise agreements, including industrial franchises (i.e. the manufacturing of goods), distribution franchises (i.e. the sale of goods), services franchises (i.e. the supply of services) and so-called master franchises.

When entering into a distribution franchise agreement, a franchisor must bear in mind that some Courts apply the Distribution Act and the Agency Act to such franchise agreements.


(v) pre-emption rights or purchase option for the benefit of the party granting the right, including rules of valuation of the business upon exercise of these rights.

• The information necessary to allow the beneficiary of the right to make a correct assessment of the commercial co-operation agreement, such as:

(i) the intellectual property rights on which a licence is granted;(ii) a track record regarding commercial co-operation and experience in using the

commercial formula outside the framework of a commercial co-operation agreement;(iii) the history, status and forecast of the market and market share of the network both

generally and locally;(iv) if applicable, for each of the preceding three years, the number of people that have

been part of the Belgian and international network, including the expansion forecast for the network;

(v) if applicable, for each of the preceding three years, the number of commercial co-operation agreements entered into, the number of commercial co-operation agreements terminated by the person granting the right and by the beneficiary of the right, and the number of commercial co-operation agreements that were not renewed on the expiry date; and

(vi) the expenses and investments to be made by the beneficiary of the right both at the beginning and during the term of the commercial co-operation agreement, including their fate upon termination of the commercial co-operation agreement.

8.4.5.5 SanctionsFailure to (timely) comply with any of the detailed obligations listed in the Act may result in the nullity either of a specific clause or of the entire commercial co-operation agreement.

Only the beneficiary of the right has the right to invoke such nullity. This party’s right to invoke nullity of the entire commercial co-operation agreement expires two years following the date of its conclusion.

This two-year period does not, however, apply to non-compliance with the obligation to list ‘important contractual clauses’ in the separate document. There is no time limit for the beneficiary of the right to invoke nullity of a specific clause of the commercial co-operation agreement, except for the ten-year statute of limitations.

8.4.5.6 ConfidentialityBoth parties involved in a commercial co-operation agreement are bound by an obligation of confidentiality. The obligation of confidentiality relates to all information received with a view to entering into a commercial co-operation agreement. Neither party is allowed to use the information outside of the framework of the commercial co-operation agreement they

(vi) to use a commercial formula,(vii) for the sale of products or the rendering of services.

The right to use a commercial formula may take one of the following forms:

(i) a common sign,(ii) a common trade name, (iii) transfer of know-how, or (iv) commercial or technical support.

The Act only relates to the pre-contractual phase of commercial co-operation agreements falling within its scope. While the Act was essentially worded to cover the pre-contractual phase of franchising agreements, its scope is in reality much broader.

8.4.5.3 Duty to make information availableThe party granting the right to use a commercial formula (e.g. a franchisor) must provide the other party (e.g. a franchisee) with:

(i) a draft agreement, and(ii) a separate document containing specific information.

The information to be provided must be made available either in written form or on a durable and accessible medium. The information must be communicated to the party that has been granted the right at least one month prior to the conclusion of the commercial co-operation agreement.

During this one-month period, the parties may not enter into any kind of contract. Also, during such period, neither party is allowed to request or pay any amount or guarantee.

8.4.5.4 Contents of information to be made availableThe aforementioned separate document containing specific information consists of two parts:

• The important contractual clauses, to the extent that these are meant to be incorporated into the commercial co-operation agreement, such as:

(i) the method of calculation and revision of the remuneration to be paid;(ii) the consequences of not meeting obligations (e.g. targets);(iii) terms and conditions of non-compete clauses;(iv) term and renewal conditions of the commercial co-operation agreement; and




are to conclude. However, the Act does not specify any kind of penalty in case of breach of this obligation of confidentiality. In the explanatory note accompanying the Act, the Minister made it clear that liability rules of general civil law apply.

8.4.5.7 Interpretation ruleAll provisions of a commercial co-operation agreement and all information that must be communicated to the beneficiary of the right must be drafted in a clear and comprehensible manner. In case of doubt on the precise meaning of a provision or of specific information, the interpretation most favourable to the beneficiary of the right shall prevail.

8.4.5.8 Mandatory natureThe Act’s provisions are of a mandatory nature. This implies that no party involved in a commercial co-operation can derogate from or waive the protection offered by the Act. Such waiver or derogation is deemed to be invalid and unenforceable.

8.4.5.9 Governing law and jurisdictionAccording to the Act, the pre-contractual phase of the commercial cooperation agreement is subject to Belgian law and falls within the jurisdiction of the Belgian courts when the beneficiary of the right carries out the activities arising out of the commercial co-operation agreement predominantly in Belgium. This is, however, subject to the application of international treaties and EU law, which take precedence.

8.4.6 Contractual relationshipGeneral principles of Belgian contract law govern the performance of a franchise agreement (i.e. the contractual relationship).

8.4.7 Jurisdiction (courts/arbitration), governing law and conflict of lawsFor franchise agreements with an international dimension, the Belgian Code of Private International Law (the ‘PIL code’) specifically addresses the jurisdiction of Belgian courts, governing law and the conditions for the effect in Belgium of foreign judgments in international matters. The PIL code is, however, subject to the application of international treaties and EU law, which take precedence.

As regards international jurisdiction and conflicts of law, and alongside the PIL code, the possibly relevant EU and international law provisions include:

(i) as regards jurisdiction, EC Council Regulation 44/2001 of 22 December 2000 on jurisdiction, recognition and the enforcement of judgments in civil and commercial matters;


Even if the outcome of this search is negative, the patent can still be granted if the applicant so requests. The actual validity or invalidity of a patent will, however, be ultimately decided by the Courts.

There are no requirements with respect to the nationality of the applicant for a patent. Belgium has ratified the following international treaties:

• the Convention on the Unification of Certain Points of Substantive Law on Patents for Invention entered in Strasbourg, 27 November 1963;

• the Patent Cooperation Treaty (‘PCT’), done at Washington on 19 June 1970, amended on 2 October 1979, and modified on 3 February 1984, and Regulations under the PCT (as in force on 1 January 1985);

• the Convention on the Grant of European Patents (European Patent Convention (‘EPC’), implementing Regulations and Protocols, entered in Munich on 5 October 1973.

9.2.1.1 PatentabilityAs mentioned above, there are three main requirements for patentability. First, there has to be an invention that can be distinguished from a discovery. An invention can be a working method or a product. Sometimes it is not altogether clear whether something must be regarded as an invention or a discovery. Important criteria are the inventiveness of the maker and the amount of inventive work that was needed to reach the specific result. When the working method or the product is merely the result of coincidence, this working method or product cannot be qualified as an invention.

The second requirement is novelty. Novelty is negatively defined, i.e. everything that is not considered to be state of the art is new. State of the art is, in general, anything that is published or made public anywhere and in any manner before the day of filing the application.

Thirdly, the invention should be industrially applicable. If the invention is a working process, industrial applicability implies that the method should be repeatable. If the invention is a product, industrial applicability implies that this product should be reproducible. Moreover, a person “skilled in the art” (i.e. a person with normal skills and knowledge in the relevant technical field) should be able to apply the invention without undue burden. Whether or not such efforts should be considered an undue burden depends on the kind of invention.

9. Intellectual property rights

9.1 Introduction

In this section we address various questions that may arise for investors considering how best to protect their intellectual property, such as patents, trademarks, copyrights, databases, models and designs. Belgium is a party to several international treaties in the field of intellectual property rights (the Berne Convention for the Protection of Literary and Artistic Works, the Paris Convention for the Protection of Industrial Property (the ‘Paris Union’), and the Agreement on Trade- Related Aspects of Intellectual Property Rights (‘TRIPS’)). Consequently, in Belgium, foreign nationals of a party to these treaties are usually granted the same protection as Belgian nationals.

9.2 Patents

A patent grants an exclusive and temporary right to exploit an invention (product or process) that is new, that involves an inventive step and that is capable of industrial application. Computer programs “as such” are excluded from patentability in both the European Patent Convention and the Belgian Patent Act. In practice, however, several patents related to computer programs have been granted, based amongst others on the reasoning that any invention that makes a contribution to the solution of a “technical problem” is patentable, even if a computer program is used in it.

Registration of a patent can take place on the basis of various legal instruments: these can be national (Belgian Patent Act), European (European Patent Convention and Unitary Patent Regulation) or international (Patent Cooperation Treaty).

9.2.1 Registration under Belgian lawThe Belgian Patent Act of 28 March 1984 contains the statutory regulations on the exclusive right of the inventor (or their assignee) to a new product or process. The application for registration of the invention as a patent must describe the invention in a way such that an expert is able to “carry it out” (i.e. the principle of sufficient disclosure). Prior to the grant of a patent, the Industrial Property Office (Dienst voor de industriële eigendom/Office de la propriété industrielle) will carry out a so-called ‘novelty search’.


procedure (and a single examination/search procedure). The EPC currently counts 38 member states (the 27 EU Member States plus Albania, Croatia, Iceland, Liechtenstein, Switzerland, Macedonia, Serbia, Norway, San Marino, Monaco and Turkey). However, a patent issued under this procedure does not form one single right, but consists of a bundle of national patents to which each national law applies and which have to be validated separately in each designated member state. Only the pre-grant phase is harmonised.

A European patent application may be filed at the European Patent Office (‘EPO’) in Munich, in its branch in The Hague or in its office in Berlin, or (unless excluded by the law of the contracting state) at the central industrial property office of a contracting state. Such “European patent” is valid for twenty years.

The rules for patentability of inventions under the EPC are similar to those contained in the Belgian Patent Act.

The right to a European patent belongs to the inventor or their successor in title. If the inventor is an employee, the right to a European patent is determined in accordance with the law of the state in which the employee is mainly employed.

Oppositions to the granting of a patent are to be filed within nine months of the publication mentioning the grant of that patent.

9.2.3 Registration as a Unitary Patent (UP)In December 2012, the European Parliament and the Council reached an agreement on the so-called Unitary Patent Package. This package consists of three legal instruments:(i) The Unitary Patent Regulation (‘UPR’) creating a single European Patent, which

provides uniform protection throughout the territory of the European Union (with the exception of Spain and Italy, which oppose the UP language regime);

(ii) A Regulation establishing the language regime applicable to this Unitary Patent (a UP can be filed in English, French or German; machine translation services will ensure translation in all other European languages);

(iii) An International Agreement establishing a single and specialised Unified Patent Court (‘UPC’), signed by the participating member states (all EU member states with the exception of Spain and Poland) on 19 February 2013. The UPC will be seated in Paris, with satellite courts in London (chemical and pharmaceutical patents) and Munich (mechanical engineering patents).

Patent holders will be able to request unitary effect within the EPO framework within one month after publication of the patent grant. A “Unitary Patent” will be valid for twenty years.

Industrial applicability is understood to also include any agricultural use. In essence, biological processes by which plants or animals can be created are not patentable. However, microbiological methods and products are patentable. Discoveries, scientific theories and mathematical methods are not patentable because they lack technical character. Business methods, aesthetic creations, schemes, rules and methods for performing mental acts, playing games or doing business, computer programs, and presentations of information are also not patentable as such.

9.2.1.2 DurationA patent is valid for twenty years from the day of filing at the Industrial Property Office. Under certain specific conditions, an extension can be obtained for patents relating to medicines or to plant protection products (e.g. insecticides).

9.2.1.3 Assignment and licensePatents may be assigned or licensed. The Belgian Minister tasked with the matter may grant a compulsory licence on a number of grounds. Assignments and licences are effective vis-à-vis third parties only after registration of a written instrument at the Industrial Property Office. The patent holder may, also on behalf of the licensees, take (legal) action in the case of an infringement by third parties. A licensee may intervene in an action initiated by the patent holder to obtain compensation for the licensee’s own loss and/or damage.

9.2.1.4 Employee rulesThe Belgian Patent Act does not contain any provisions on inventions by employees. Based on case law and scholarly opinion, it is generally accepted that an employer is entitled to the patent rights with respect to any invention created by an employee within the scope of his/her employment agreement. If the employee created the invention outside the scope of his/her employment agreement but with the use of the employer’s material or intellectual means, the invention will be considered “mixed”. If, however, the employee created the invention outside his/her employment contract and with his/her own means, the employer has no patent rights. It is recommended that employers insert a clear provision on patent rights of the employer/employee on inventions within the employment agreement, for instance specifying that the employer will be entitled to patent rights for any invention created by the employee within the field of the company’s activities (see also Section 7.6.3).

9.2.2 Registration under the European Patent Convention (EPC)It should be noted that the majority of patent applications in Belgium are made within the framework of the EPC. Since 1977, this Convention has offered a central application


Although this procedure for obtaining a patent is unique, the granted patent remains national. Unlike under the system of the European Patent Convention, the conditions for patentability are not unified.

However, if one or more EPC contracting states are listed in the patent application, the request for these states will be considered as a request for a European patent and the procedure will continue accordingly.

9.2.5 Competition/EC TreatyThe national exercise of intellectual property rights may, in specific circumstances, contravene the rules governing competition and the free movement of goods in Belgium and the EU. For example, the exercise of intellectual property rights, especially patent rights, may amount to an abuse of a dominant position within the meaning of Section 3 of the Belgian Competition Act or Section 102 of the EC Treaty. Likewise, the freedom to refuse to enter into agreements concerning these rights (e.g. licensing agreements and settlements of alleged infringements) is limited by the Belgian and EU principles of free competition.

9.3 Trademarks

A trademark can be any sign capable of distinguishing the products or services of an undertaking from those of other undertakings. Trademark protection is in principle limited to the territory for which the trademark was registered. Protection of a trademark in Belgium can be obtained via a Benelux registration (Section 9.3.1), via an extension of an international registration to the Benelux countries (Section 9.3.2) or via a European Community Trademark registration (Section 9.3.3).

9.3.1 Benelux registration

9.3.1.1 RegistrationThe Benelux Treaty on Intellectual Property (BTIP) (‘Benelux verdrag inzake intellectuele eigendom / Convention Benelux en matière de propriété intellectuelle’) provides for trademark protection throughout the three countries of the Benelux. It is not possible to obtain a trademark for the Belgian territory only.

The BTIP defines a trademark as any sign, such as denominations, drawings, prints, stamps, typefaces, figures, forms of products or packaging and all other signs (including

Once the Unitary Patent Package enters into force, not only the pre-grant phase but also the post-grant phase will be harmonised at European level. No further validation requirements will therefore need to be fulfilled. The UP will automatically cover the entire EU territory (except for Spain and Italy). However, this also means that when a UP lapses or is invalidated, transferred or limited, this will automatically affect the entire territory as well.

Also new is the possibility for the patent holder to make a transnational offer for licence by filing a statement with the EPO, notifying any interested party that he is prepared to grant a licence for his invention. A patent holder will still be able, at his own discretion, to grant licences for either the whole or only a part of the territory of the participating member states.

However, it will be the national law of the member state in which the patent holder is domiciled (or holds a place of business) that will determine the acts against which a unitary patent provides protection and thus the existence of an infringement (for non-EU patentees, German law will apply).

Besides the unitary effect, the main advantage of the UP for businesses will be the considerable reduction of the costs of obtaining a pan-European patent. These costs would go down to about 5.000 EUR instead of 36.000 EUR.

The Unified Patent Court will be a court common to the participating member states, having exclusive jurisdiction for invalidity proceedings relating to Unitary Patents. It will consist of a central division and several local or regional divisions. The new court should prevent contradictory court rulings with regard to the same patent in different member states and reduce the costs of patent litigation.

Provided that at least thirteen member states have ratified the court agreement and provided that the necessary amendments to the Brussels I Regulation have entered into force, the Unitary Patent Package will enter into force as from 1 January 2014. It is expected that the first Unitary Patents will be granted by 1 January 2015 (if the aforementioned date of entry is met).

9.2.4 Registration under the Patent Cooperation TreatyAnother important treaty is the Patent Cooperation Treaty of 1970 (‘PCT’). The purpose of this treaty is to simplify the procedure for acquiring a patent for different countries at one and the same time (also outside the EU). In the application, the applicant may list the countries in which he/she wishes to obtain patent protection. Applications in all countries indicated bear the date of acceptance of the first application.


9.3.1.2 FeesInformation about fees (anteriority search, filing, renewal, modifications, opposition, other) may be found on the website of the BOIP (www.boip.int).

9.3.1.3 ProtectabilityIn spite of registration, any interested party, including the Public Prosecutor, can invoke invalidity of a trademark in cases where there is an absolute ground for refusal of registration (see above) or if the trademark is similar to a collective trademark for similar goods that expired less than three years ago. Subject to certain conditions, the holder (or the former holder) of a trademark, alone or together with any interested party, can seek the invalidation of a later trademark if (subject to certain conditions):

(i) the trademark is identical to a previously registered trademark and is registered for identical goods or services;

(ii) the trademark is identical or similar to a previously registered trademark for identical or similar goods or services and there is a likelihood of confusion on the part of the public that includes the likelihood of association; or

(iii) the trademark is identical or similar to a previously registered well-known trademark.

Under more or less the same conditions, the holder of an earlier trademark can claim the cessation of infringements against his trademark rights.

9.3.1.4 Duration and terminationThe registration of a trademark is valid for ten years and can be renewed indefinitely for successive ten-year periods, provided the request for renewal is made within six months prior to the expiration date.

Trademark protection ends in the following cases:

(i) voluntary cancellation or expiration of the period of validity (no renewal), or invalidation by a court decision upon the request of an interested party;

(ii) non-use of the trademark for a period of five years (except if re-use occurs at least three months prior to the introduction by a third party of a request to declare the lapse of a trademark);

(iii) the trademark has become a general name for the products for which the trademark was registered; or

(iv) the trademark has become misleading with regard to the kind, quality or geographical origin of the product.

patronymic names), capable of being represented graphically and that is used to distinguish the goods and services of one undertaking from those of others.

Protection of a trademark under the BTIP is obtained through registration either with the Benelux Office for Intellectual Property (the BOIP) at The Hague or its affiliated national Trademark Offices in Brussels or Luxembourg, or through an international registration (see below). The BTIP does not impose any restrictions on the nationality of the applicant.

The BOIP refuses registration on absolute grounds, amongst others, if the sign:

(i) does not comply with the definition of a trademark under the BTIP;(ii) lacks distinctive character;(iii) consists solely of sign(s) or wording(s) that can be used to indicate the type, the

quality, the quantity, the origin etc. of the goods;(iv) consists solely of sign(s) or wording(s) that have entered the common language as

the generic name for such goods;(v) is contrary to public order or morality; (vi) is likely to mislead the public;(vii) relates to wines and/or spirits and contains a geographical indication in spite of a

different origin;(viii) is a flag, weapon, emblem, protected by the Paris Convention.

However, within two months of the notification of the refusal of registration, the applicant can appeal the decision of the BOIP, as the case may be, before the Brussels Court of Appeal, The Hague Court of Appeal or the Luxembourg Court of Appeal.

Upon request of the applicant, the BOIP undertakes a novelty examination, searching for prior corresponding registrations in order to verify whether the trademark is “available”. The applicant is not bound by the results of the search.

Third parties can file an opposition with the BOIP against an application within two months of its publication. Such an opposition must be based either on the fact that the opposing party holds an earlier trademark or on the claim that the trademark for which the application is made can cause confusion with a well-known trademark of the opposing party. If the grounds for opposition are upheld, the BOIP will refuse registration of the trademark applied for. An appeal against such a refusal can be filed before the Brussels Court of Appeal, The Hague Court of Appeal or the Luxembourg Court of Appeal, depending on the domicile (or registered office) of the defendant or its representative.


Benelux), by simply filing one application directly with their own national or regional trademark office. Further countries may be subsequently designated. An international trademark registered in this manner is equivalent to an application or a registration of the same trademark made directly in each of the countries listed by the applicant.

The duration of protection is, in principle, 20 years (under the Agreement of 1967) or 10 years (under the Protocol), and is renewable. Everyone entitled to a national registration has a priority right for an international registration valid for six months after registration of the initial national trademark.

9.3.3 Community trademarksThe Community trademark was introduced by Council Regulation (EC) No 40/94 of 20 December 1993, now replaced by Council Regulation (EC) No. 207/2009 of 26 February 2009. A Community trademark can be obtained through a single application made to the Office for Harmonisation in the Internal Market (Trademarks and Designs and Models) (‘OHIM’) in Alicante, Spain.

Once registered, the Community trademark covers all the EU Member States – or none if the trademark is considered invalid in any one of the EU Member States. Any third party may oppose such a registration based (for instance) on an earlier national trademark registered in one of the Member States. If that third party succeeds, registration of the Community trademark will be refused for the entire EU, as it is a single registration.

The Community trademark registration is valid for 10 years and can be renewed for successive 10-year periods. Everyone entitled to a national registration has a priority right for an EU registration valid for six months after registration of the initial national trademark.

When conducted in Belgium, disputes relating to a Community trademark are brought before the Courts of Brussels.

9.4 Copyright (or author’s right)

Beyond typical literary and artistic works, copyright protection now extends to almost any intellectual (human) creation that is expressed in a certain form and is original.

9.4.1 Legal frameworkIn Belgium, the legal basis for the protection of literary and artistic works is set down in the Copyright and Neighbouring Rights Act of 30 June 1994 (the ‘Copyright Act’) (Wet betreffende het auteursrecht en de naburige rechten/Loi relative au droit d’auteur et aux droits voisins), based on the Berne Convention.

9.3.1.5 Assignment and licenseA trademark may be assigned or licensed irrespective of the transfer of the owner’s business or a part thereof.

An assignment is valid only if made in writing and for the whole Benelux. In order to be effective against third parties, registration with the BOIP is necessary.

A trademark licence, however, does not need to be granted in writing nor for the whole Benelux. But again, in order to be effective against third parties, registration with the BOIP is mandatory.

A licensee may join the holder of the trademark in a claim for damages in the case of trademark infringement. A licensee can only claim damages independently from proceedings initiated by the holder of the trademark if the licensee has been granted such a right.

9.3.1.6 Collective Benelux trademarksA separate section of the BTIP is dedicated to the collective trademark. A collective trademark serves to distinguish common features of products or services originating from different undertakings that use the trademark under the supervision of the ‘holder’ of the trademark. A well-known example of a collective trademark is the wool logo. The ‘holder’ of the collective trademark is usually an association of undertakings in a particular branch of trade. The holder cannot use the collective trademark for goods or services that originate from its own undertaking(s).

The use of a collective trademark is governed by a set of regulations, drawn up by the ‘holder’ of the collective trademark. Such regulations, and any changes, must be filed with the BOIP.

Only the ‘holder’ of the collective trademark can initiate proceedings, though the users of the collective trademark may join the holder in such proceedings.

9.3.2 International trademarksThe Madrid Agreement of 14 July 1967 concerning the International Registration of Marks and the Protocol of 27 June 1989 (together the ‘Madrid Agreement’) provide for the international registration of trademarks with the offices of the World Intellectual Property Organisation (‘WIPO’) in Geneva.

The Madrid Agreement offers trademark owners the possibility to have their trademark protected in several countries that are members of the Madrid Union (including the


Moral rights cannot be assigned, nor can the right to exercise them in the future be waived globally.

The Copyright Act grants authors the exclusive right to communicate their work to the public and to reproduce it and thus the right to oppose any unauthorised communication or reproduction by a third party (economic rights).

9.4.3 DurationCopyright protection remains in force for 70 years after the author’s death. A work of a foreign artist not living in a Member State of the EU or EEA that is protected on the basis of the Berne Convention and not directly on the basis of the Copyright Act, is protected in Belgium for the duration of the relevant rights in the country of origin, but no longer than the duration of the Belgian protection.

9.4.4 Assignment and licenseUnder the Copyright Act, economic rights can be assigned or licensed. Contracts that relate to or include the assignment or license of rights should be made in writing, as the Copyright Act provides that, with respect to the author, all contracts are to be proved in writing. For each form of exploitation of the work, the remuneration of the author as well as the scope and duration of the assignment/licence should be explicitly indicated. An assignment for an unknown form of exploitation is void.

When contracting with the assignee (instead of the author), compliance with the aforementioned formal requirement is less crucial.

An assignment does not affect the author’s moral rights, which include the right to be named as the author and the right to oppose any modification or alteration of the work that could harm the author’s honour or reputation.

9.4.5 Employees’ works – commissioned workWhen an employee creates works in the scope of an employment contract, the employee is deemed to be the author. However, subject to an express agreement, the transfer of the economic rights in these works in favour of the employer is possible and facilitated.

With respect to works that are computer programs, unless otherwise agreed, the employer is considered to be the assignee of the economic rights for such works if they are produced in the scope of an employment contract.With respect to commissioned works, subject to an explicit agreement, the economic rights can be transferred to the principal, insofar as is required by the purpose of the commissioning of the works. When the principal is active in the advertisement sector, or any non-cultural sector, such assignment is facilitated.

9.4.2 ProtectabilityThe following are protected under the Copyright Act:

(i) literary, scientific and artistic works in the broadest sense;(ii) translations, adaptations, arrangements of music and other alterations of a literary or

artistic work, without prejudice however to the author’s rights in the original work;(iii) databases that, by reason of the selection and arrangement of their contents,

constitute intellectual creations. However, the protection does not extend to the works, data or elements contained in such databases, which may retain their own individual protection; and

(iv) computer programs (these are understood as being literary works and are protected under a specific Act of 30 June 1994, implementing the EC Directive of 14 May 1991, now replaced by Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009).

By contrast, the contents of announcements such as historical facts, news or geographical facts are not protected and can be freely used.

The Copyright Act protects only intellectual (human) creations, that is, works that are original, i.e. are the author’s own intellectual creation, and which have taken “shape”. An idea or a concept not embodied in a form cannot be protected under the Copyright Act.

Neighbouring rights (also called related rights or connected rights) are rights “neighbouring” the rights of authors. The Copyright Act grants neighbouring rights to four categories of beneficiaries: performers, film producers, phonogram producers and broadcasters.

Contrary to the Anglo-Saxon copyright system, only a natural person (and not a legal entity) can be considered the creator of a work under the Copyright Act. There is no concept of ‘works made for hire’ in Belgium, except arguably for (industrial) designs.

Copyright arises as soon as a literary, scientific or artistic work is created. No formal requirements, such as registration, deposit, notice or any other formality, have to be met in order to establish or maintain a copyright in Belgium.

The Copyright Act makes a distinction between an author’s “moral” and “economic” rights.

Moral rights granted to the author under the Copyright Act are:(i) the right of divulgation;(ii) the right to claim authorship; and(iii) the right to maintain the integrity of the work.


(iii) the design is in conflict with a design that was registered prior to the registration in question;

(iv) the design contains an older trademark that is used without the consent of the trademark holder;

(v) the design contains a work protected by copyright that is used without the consent of the copyright owner;

(vi) the design contains a flag or a coat of arms; or(vii) the registration does not sufficiently reveal the distinguishing features of the design.

In addition, any third party may claim invalidation of the design registration if registration of the design was not made by the designer or his/her successor in title.

9.5.3 DurationThe protection under the BTIP lasts five years and can be renewed for four consecutive five-year periods. The maximum protection period is therefore 25 years.

9.5.4 Assignment and licenseAn assignment must be in writing and must refer to the whole Benelux. A licence can be limited in time and territory. Licences may be granted in writing, but this is not required. However, in order to be enforceable against third parties, the licence must be registered with the BOIP. This requirement also applies in the case of seizure or pledge of a design.

9.5.5 Employee rulesUnless otherwise agreed, the employer is considered to be the creator if a design is created by the employee in the framework of an employment contract.

9.5.6 Copyright (or author’s rights)A design may also be protected by copyright if it meets the requirements of the Belgian Copyright Act (see section 9.4 above).

9.5.7 Community designsUnder Council Regulation 6/02/EC of 12 December 2002 on Community Designs (entered into effect on 6 March 2002), a design may be protected as an ‘unregistered Community Design’ or as a ‘registered Community Design’. Just as under the BTIP, the design must be new and have individual character in order to be protected as a Community Design. Both kinds of Community Designs grant protection throughout the EU.

A design will be protected as an ‘unregistered Community Design’ if it is made available to the public. Such is the case if the design has been published, exhibited, used in trade, or

9.4.6 MiscellaneousCollecting societies, which act as intermediaries for the collection and distribution of authors’ rights, are strictly regulated by the Copyright Act.

9.5 Protection for (industrial) designs

9.5.1 Benelux registrationThe Benelux Treaty on Intellectual Property (BTIP) (‘Benelux verdrag inzake intellectuele eigendom / Convention Benelux en matière de propriété intellectuelle’) protects the appearance of a product, provided this appearance is new and has individual character. The exclusive right to a design (‘tekeningen en modellen / dessins et modèles’) is acquired by the first registration of that (industrial) design with the Benelux Office for Intellectual Property (BOIP) in The Hague (if a Benelux right is sought) or with the International Bureau in Geneva (if an international right is sought). If the application meets all the formal requirements, registration is accepted without further examination.

It bears noting that in Dutch and French, a distinction is drawn between two-dimensional designs (‘tekeningen/dessins’, literally ‘drawings’) and three-dimensional designs (‘modellen/modèles’, literally ‘models’).

9.5.2 ProtectabilityAs mentioned above, the appearance is protected if the design is new and has individual character.

A design is considered new if no identical design has been made available to the public before (i) the date of filing of the registration application or (ii) the date of priority, where such priority is based on an application for registration of a design filed not more than six months earlier in one of the countries of the Paris Union. Designs are deemed to be identical if their features differ only in immaterial details.

A design is considered to have individual character if the overall impression it produces on the informed user differs from the overall impression produced on such a user by any design available before the date of filing of the registration application or – if priority is claimed – the priority date.

Any interested party can assert that the registration is invalid if the abovementioned grounds are not met. Invalidity can also be invoked, among other cases, if:

(i) the design is necessary to obtain a technical effect;(ii) the design is contrary to public order or morality;


10. Data protection

10.1 Introduction

Data protection law has the aim of enabling the processing of data, including personal data, while safeguarding the rights (notably to privacy) of the individuals to whom such data may relate. It therefore strives to achieve a delicate balance between various fundamental rights and freedoms.

At European level, the cornerstone of this area of law is Data Protection Directive 95/46/EC, which was adopted by the European Parliament and the Council in 1995 with a view to harmonising data protection legislation throughout the EU.

The premise of the Data Protection Directive is that the establishment and functioning of an internal European market requires not only that personal data be able to flow freely from one Member State to another, but also that the fundamental rights of individuals be safeguarded. It was considered that in order to remove barriers to cross-border flows of personal data, the level of protection of the rights and freedoms of individuals with regard to the processing of such data must be equivalent in all Member States.

The Belgian Data Protection Act of 8 December 1992 on the protection of privacy in relation to the processing of personal data, until then already ensuring a certain level of protection, was therefore modified by the Act of 11 December 1998 so as to implement the Data Protection Directive.

In its current form, the Belgian Data Protection Act provides for obligations to be observed by the controller of personal data, notably with respect to the use of such data and the safeguarding of the data subject’s rights.

The controller is the natural or legal person who determines the purposes and means of the processing of personal data, while the processor is the natural or legal person contractually bound to process personal data on behalf and upon instructions of the controller.

Personal data are data relating to individuals, i.e. any information relating to an identified or identifiable natural person (referred to as a “data subject”), and may cover both facts and opinions about such person.

otherwise disclosed. The duration of the ‘unregistered’ protection is three years from the date the design was first made public within the EU. The protection covers copying only.

A Community Design registration can be obtained from the OHIM (Office for Harmonisation in the Internal Market). Registration lasts five years and can be renewed for four consecutive five-year periods, i.e. registration shall last a maximum of 25 years. The holder of a registered Community Design has the exclusive right to use it and to prevent any third party from using it without his/her consent.

A Community Design may also be protected by copyright.

9.6 Databases

A database is defined as a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means.

Databases are protected by the Belgian Copyright Act as well as by the Database Act of 31 August 1998 implementing the Database Directive of 11 March 1996.

A database that, by reason of the selection or arrangement of its contents, constitutes the author’s own intellectual creation, is protected as such by copyright (see Section 9.4 above). However, copyright protection only benefits the “author” of the database, and not the “maker” of the database. The latter is understood to be the natural person or legal entity who takes the initiative and the risk of the investment through which the database comes into existence.

The Database Act gives the maker of a database a form of protection that is not provided by copyright.

A database will be protected under the Database Act if the maker of the database is able to demonstrate that there has been a qualitatively and/or quantitatively substantial investment in either the obtaining, verification or presentation of the contents. The maker of the database will in effect obtain a sui generis right which allows the maker to prevent third parties from extracting or re-using the whole or a substantial part of the database. The duration of protection is 15 years as from 1 January of the year following the year in which the database was first made available to the public.


necessary for the accomplishment of the purposes for which they have been obtained or further processed.

c) Transparency principleThe controller must provide the data subject, no later than at the moment on which the data are obtained, with at least the following information:

(i) name and address of the controller;(ii) purpose(s) of the processing;(iii) the existence of a right to object to the intended processing if personal data are

obtained for purposes of direct marketing; and(iv) other relevant information, such as the addressee(s) of the data and the existence of a

right to access and rectify the personal data that relates to the data subject.

If personal data are not obtained from the data subject (but through another party), the controller or his representative must provide the data subject with at least the same information (unless the data subject is already aware of such information).

10.3 Rights of the data subject: right of access, rectification and opposition

The data subject has (inter alia) the following rights:

(i) the right to obtain specific information (see above) when his or her personal data are obtained;

(ii) the right to object to the processing of personal data for direct marketing purposes;(iii) the right to obtain a copy of all personal data subject to processing and to obtain

rectification of inaccurate personal data; and(iv) the right to obtain the deletion of all personal data or the prohibition to use such data

when incomplete or irrelevant in the light of the purpose(s) of the processing, when the recording, communication or storage of these data is prohibited, or when the data are stored for longer than permitted.

10.4 Confidentiality and security of processing

The controller is required to implement appropriate technical and organisational measures to protect personal data against accidental or unlawful destruction or accidental loss, alteration, unauthorised disclosure or access and against all other unlawful forms of processing. If data processing is sub-contracted to a processor, the parties must conclude

Data processing means any operation or set of operations performed on personal data, whether or not by automatic means.

Processing of personal data is only covered by the Data Protection Directive and the Belgian Data Protection Act if it is automated or if the processed data form part of a filing system or are intended to form part of a filing system structured according to specific criteria on a functional or geographical basis, so as to permit easy access to the personal data in question.

The applicable law is determined by reference to the controller’s place of establishment. The concept of establishment is not defined by the Data Protection Directive or the Belgian Data Protection Act.

10.2 General principles for lawful data processing

The controller is required to comply with the following general principles:

a) Legitimacy of the processingPersonal data may only be processed when:

(i) the data subject has unambiguously given his or her consent;(ii) processing is necessary for the performance of a contract to which the data subject is

a party or in order to take steps at the request of the data subject prior to entering into a contract;

(iii) processing is necessary for compliance with an obligation to which the controller is subject by or by virtue of an act, decree or ordinance;

(iv) processing is necessary in order to protect the vital interests of the data subject;(v) processing is necessary for the performance of a task carried out in the public interest

or in the exercise of official authority vested in the controller or in a third party to whom the data are disclosed; or

(vi) processing is necessary for the protection of the controller’s legitimate interests or the interests of the third party to whom the data are disclosed, except where such interests are overridden by the interests for fundamental rights and freedoms of the data subject who can claim protection under the Data Protection Act.

b) Legitimate purposes, data quality and proportionality principlePersonal data may only be collected for specific, explicit and legitimate purposes and may not be further processed in a manner that is incompatible with such purposes. The controller must ensure that the processed personal data are adequate, relevant, not excessive, accurate and up to date and that they are not stored for longer than is


consent after he/she has been given such information. This rule applies for instance to so-called “tracking” cookies, which allow the tracking of the movements of a web user on a website or even across various websites.

a written agreement containing appropriate contractual provisions to ensure adequate protection of the data and determining both parties’ liability with respect to the processing.

10.5 Prior notification and public nature of the processing

Before carrying out any wholly or partially automatic processing operation or set of operations, the controller must file one or several notifications (depending on the purpose(s) of processing and their compatibility with each other) with the Privacy Commission (for further information, visit www.privacycommission.be). The Privacy Commission keeps a public register of all notifications filed and such public register is accessible free of charge.

10.6 Transfer of personal data

Personal data can freely circulate within the EU as long as the provisions of the Data Protection Act are observed. However, personal data that are intended for processing after transfer to a country outside the EU may only be transferred if the third country in question ensures an adequate level of protection.

Derogations from this rule are allowed, for example in the event where the data subject has given his or her unambiguous consent to the transfer or when the controller and processor or co-controller execute and implement a set of standard contractual clauses drafted by the European Commission, which in practice require the processor or co-controller to ensure such adequate level of protection, or when the processor or co-controller are part of the Safe Harbour.

10.7 Rules regarding the use of cookies

On 10 July 2012, Belgium modified its Telecommunications Act of 13 June 2005 in order to implement (amongst other things) the new cookie rules required by Directive 2009/136/EC of 25 November 2009.

Under the new cookie rules, if there is a so-called “technical” cookie (e.g. a cookie that is necessary to provide a service explicitly requested by the user), no consent and no information is required specifically for the cookie.

If there is a non-technical cookie, however, the user must have been given information in accordance with the Belgian Data Protection Act, and the user must has given his/her


Immovable by purpose, includes certain intangible rights in rem in relation to immovable assets.

11.2.2 Rights in remRights in rem are property rights recognised by law. A right in rem grants a direct right over the asset to which it relates without requiring the intervention of any other party. It is distinct from a mere contractual right which grants the holder the right to request from another person the performance or non-performance of a certain action or the delivery of a certain asset.

Only those rights that are recognised as such by law are rights in rem. The parties cannot agree contractually to create, alter or otherwise extend the scope of rights in rem beyond what is legally provided or permitted by law.

The principal rights in rem under Belgian law with the their main features are described briefly below.

11.2.2.1 OwnershipOwnership (eigendom/propriété) is the most complete right of enjoyment of property, provided the owner uses the right in a way which is not prohibited. Ownership of land includes the ownership of all that which is on and below the surface soil of the land, unless otherwise provided for in specific laws or regulations. An owner of property may use it, collect the income generated by it and the right to dispose of it, without prejudice to any mandatory rules of law.

Ownership of immovable property can be acquired directly by (i) acquisitive prescription, i.e. the continued possession of the property for, in principle, 30 years, or (ii) accession (recht van natrekking/droit d’accession), i.e. buildings, plants and works on or under the ground are presumed to be the property of the owner of the land, unless otherwise agreed and proven.

It can also be acquired indirectly pursuant to a transfer of ownership by contract, such as sale or purchase, by gift, by inheritance or by decision of a court, e.g., a decision of adjudication following an attachment (beslag/saisie).

Private property is a marketable asset and can be sold or otherwise transferred. Between parties, title will pass as soon as an agreement is reached on the identity of the property and the price. Unless otherwise stipulated, the risk is transferred simultaneously with the title. However, to make a transfer (like a purchase) enforceable against third parties, and more particularly against any creditors of the transferor/seller, the title has to be

11. Real Estate, Town Planning and Environment

11.1 Investing in Real estate

The aim of this chapter is to give a brief guide for real estate investors in Belgium. In the first part, we summarise the various entitlements associated with the purchase of real estate. In the second part, we deal with some of the key legal aspects of town planning and the environment that are relevant to commercial real estate development.

11.2 Entitlements to real estate

11.2.1 Immovable propertyBelgian law distinguishes between two types of property; movable and immovable property. The qualification of an asset as movable property or immovable property is important for determining, amongst other things, the requirements and possibilities for its disposal, the creation of security interests and the modalities regarding such security interests.

Property can be immovable by its nature, use (destination) or purpose (objet).

Land, buildings, windmills and watermills are immovable by their nature. The prevailing view is that any works or parts that are not destined to be moved and are attached to land or buildings on a non-temporary and usual basis, are qualified as immovable by their nature, even if they could be removed without causing any damage. This means that, once construction materials are incorporated into a building, they become immovable. Other structures that are considered immovable by nature, because they are appurtenant to land or buildings, are water pipes, other pipelines and container cranes which are fixed to the ground and used for loading and unloading ships. Unless otherwise provided, these constructions are presumed to belong to the owner of the land to which they are appurtenant.

Immovable by their use, includes assets which belong to the land or the owner of a building on the land, and that serve either the economic operation of the land or building or are ancillary to the land or building on a durable basis, despite the fact they are movable by nature, e.g. manufacturing machinery in a production plant.


Just as for transfers of ownership, the creation or transfer of a right to build must be executed as a deed before a notary and must be registered and transcribed in the Mortgage Register of the judicial district in which the relevant property is situated. Upon its transcription in the Mortgage Register, the creation or transfer of a right to build will become enforceable against third parties.

11.2.2.3 Long term leaseA ground lease (recht van erfpacht/droit d’emphytéose) is a right in rem that grants the long term lessee the right to use a building or to collect income from a building as if it was the owner. The long term lessee must pay an annual installment (canon/ground rent) as recognition of the right of ownership of the owner. The reversionary rights (tréfonds) remain with the owner of the property. Both the long term lease and the residual property rights constitute transferable assets.

A long term lease is a temporary right in rem that can be granted on land and/or on existing buildings. Its minimum duration is 27 years and its maximum is 99 years. The legal provisions regarding duration are mandatory.

A long term lease can be terminated in the same manner as a right to build. Unless specified in the agreement, the bankruptcy of one of the parties should not lead to the termination of a long term lease.

In the same way as a right to build, a long term lease, and any constructions built pursuant to a it, can be mortgaged, sold or otherwise transferred within the limits of the contract granting the long term lease.

Similarly to the creation and transfer of an ownership right and a right to build, the creation and transfer of a long term lease must be executed as a deed before a notary. The notary will subsequently register the deed so that it can be transcribed into the relevant Mortgage Register thereby making the creation or transfer enforceable against third parties.

11.2.2.4 UsufructUsufruct (vruchtgebruik/usufruit) is the right to enjoy a property, which is owned by another person (the bare owner). The usufructuary is entitled to all the profits, benefits, and advantages which the property may produce. However, the usufructuary may not alter the purpose of the property (e.g., a residential property may not be transformed into a shop without the bare owner’s consent) and must administer the property well.

Usufruct is constituted by law (e.g., inheritance), by acquisitive prescription, by agreement or by will.

transcribed in the Mortgage Register (Hypotheekkantoor/Bureau de Conservation Hypothécaire) of the judicial district in which the property is situated.

The transcription into the relevant Mortgage Register usually requires the intervention of a notary public since only authenticated deeds or acts can be transcribed. Moreover, before being transcribed, the notarial deed has to be registered and registration duties paid. A transcription as such does not constitute evidence of ownership. It only makes the transfer enforceable against third parties.

In practice, in the case of a sale of commercial property, the parties will first enter into a private sale agreement (koopcompromis/compromis de vente), in which they agree on appointing a notary responsible for drafting the purchase deed. In addition to the commercial terms agreed between the parties, private sale agreements usually also provide that the ownership and risk will only be transferred upon execution of the deed before the notary.

11.2.2.2 Right to buildThe right to build (recht van opstal/droit de superficie) is the right to own a building or a construction, existing or to be built, on the land of another person. During the term of the right to build, the beneficiary will be the owner of the building erected by it. The right to build as such, is an exception to the right of accession.

Where ownership is a perpetual right, the right to build is essentially a right in rem which islimited in time. By law, a right to build may not be contracted for a term in excess of50 years. Any right to build which is established for a longer period will be reduced to50 years. There is no minimum duration for the establishment of a right to build. A right to build can be renewed. It will in principle end upon expiry of its term. However, it can also be terminated by mutual consent, or it can be dissolved in the case of default of one of the parties.

Upon termination of a right to build, the owner of the land becomes the owner of the buildings and must compensate the beneficiary of the right to build for the value of the buildings erected, unless otherwise agreed.

A right to build, as well as any constructions built pursuant to this right, is a transferable asset and as such, can be sold or mortgaged. Any such disposal will be subject to the limitations provided in the contract granting the right to build. Accordingly, the entitlement of the purchaser or mortgagee will also necessarily end at the expiration of the building right, and as such, must necessarily be less than 50 years.


and accessory right which cannot be sold, otherwise transferred, attached or mortgaged separately from the dominant property.

Easements can be derived from the natural condition of estates (e.g., the easement of drainage of natural water), or can be established by law (e.g., a right of access for the benefit of a property that has no access to the public highway, by usage.

11.2.3 Public and private domainProperty owned by the Federal State or political subdivisions thereof, i.e. the regions, communities, provinces, municipalities or other administrative authorities, constitute domain assets.

Domain assets are subdivided into two categories: ‘private domain assets’ and ‘public domain assets’. State-owned property designated for the ‘use of all’, constitutes part of the public domain assets. They are not tradable and their use is strictly limited to the benefit of all. However, private domain assets are saleable. They can be disposed of, be subject to acquisitive prescription or be let, in the same way as any other privately owned assets.

The private use of a public domain is traditionally granted by way of a domain concession. Domain concessions are not rights in rem. They only confer contractual rights on the beneficiary for the private use of the public domain. The authorities granting the concession have extensive power and usually impose wide ranging conditions on the concession holder. In principle, the authorities may revoke the concession at any time or even unilaterally modify its terms. In such circumstances, the deprived beneficiary would have no recourse other than a claim for compensation in the case of a breach of the principles of good governance.

A domain concession is, in general, granted intuitu personae, so that any transfer to a third party requires the prior approval of the concession authority. As a result, the authorities can make their approval of such transfer subject to new conditions. Therefore, a concession agreement is considered a sui generis (unique) administrative agreement, the conditions of which are determined by the particularities of the premises concerned.

A domain concession is usually granted for a fixed term. During the term of the concession, the concession holder is the owner of the buildings it erects on the concession land. At the end of the concession agreement, the ownership of these constructions is transferred to the concession authority without compensation to the concession holder.

It is a temporary right which terminates upon the usufructuary’s death (for an individual) or upon its dissolution (for legal entities), even if the usufruct has been contractually granted for a longer duration. A usufruct may only be granted to a legal entity for a maximum duration of 30 years.

This means that the property must finally return to the bare owner, a descriptive statement of the property subject to the usufruct should be drafted before execution of the usufruct. As a general rule, the usufructuary must also provide sufficient guarantees securing this restitution. The usufructuary can however be released from both obligations.

Although a usufruct is linked to the person of the usufructuary, it does not prevent the latter from transferring or mortgaging the right of usufruct, unless otherwise stipulated. The transferee’s or mortgagee’s title will, however, be precarious, as the usufruct will terminate upon the termination of the (original) usufruct.

To be enforceable vis-à-vis third parties, any usufruct in relation to immovable property which is not acquired through prescription will also need to be transcribed into the Mortgage Register. For this purpose, the parties must execute a notarial deed and have it registered in the relevant Mortgage Register.

11.2.2.5 The right of use and the right of occupationA right of use (recht van gebruik /droit d’usage) is a right to use the property of another person for the beneficiary’s own personal benefit and/or that of his or her family and within the limits of their needs. The right applies to a residential property.

Similarly to the usufruct, the actual enjoyment of the right of use or occupation is subject to a prior descriptive statement of the property and sufficient guarantees. However, contrary to the usufruct, the right of use and the right of occupation are strictly personal rights. They cannot be transferred or otherwise disposed of. The property may not be let by the beneficiary.

11.2.2.6 EasementsAn easement or servitude (erfdienstbaarheid/servitude) is a right in rem vested on a property for the benefit of another property, referred to as the dominant property. An easement presupposes the existence of two properties owned by different owners.

An easement is, in principle, a perpetual right. It only terminates through prescription (if not used during a 30-year term), or if its exercise is no longer possible due to the condition of the property (or because it no longer serves any purpose). It is an indivisible


Order are exempt from this requirement, examples being garden and patio landscaping (e.g. balconies) and interior works not affecting the structural elements or changing the built surface area (e.g. sanitary or heating facilities).

11.3.1.1 Building permit applicationThe building permit granting procedures, as set out in the respective Town PlanningActs, vary from Region to Region.

The main characteristics which these procedures have in common are set out below.

An application for a building permit must generally be filed with the municipality. In most cases however, the municipality will have to request the prior advice of the regional town planning authority.

Generally, the municipality will have to organise a public inquiry concerning the permit application, allowing any interested parties to file their objections. A limited number of applications require a prior environmental impact assessment (an in-depth investigation as to the effects of the project and anticipated activities on the environment).

The length of the procedure depends on the characteristics of the permit application and generally varies from one to four months. The time limits for the municipality to issue its decision vary in the Flemish Region (75 to 125 days), the Brussels Capital Region (45 to 120 days) and the Walloon Region (30 to 115 days).

Refusals can be appealed to the provincial or regional authorities. In the Flemish Region if the municipality does not decide on the application within the applicable time limit, the building permit is deemed to have been refused and the applicant can lodge an appeal against this tacit refusal.

Like all administrative decisions, decisions granting or refusing building permits must be adequately reasoned. They must also comply with the applicable zoning conditions as well as possible requirements regarding monuments or protection of the landscape.

A permit becomes void if it is not used within two years after being granted. In the Brussels and Walloon Regions, an additional validity period of one year can be applied for. In the Brussels Capital Region, a permit also becomes void if there is an interruption of the works exceeding one year and, in the Flemish Region, if there is an interruption of the works exceeding two years. In the Walloon Region, the permit becomes void if the works are not completed within a period of five years as from the granting of the permit.

11.3 Town planning and environment

Belgium is a federal State consisting of three regions (the Flemish Region, the Walloon Region and the Brussels Capital Region). Each region has autonomous authority with regard to town planning and environmental matters within its territory. Federal state authority in these matters is rather exceptional.

In each of the regions, the general legal framework for town planning and building permit requirements is embodied in a Town Planning Act. Environmental matters, including the related operating permit requirements, are regulated by the regional Environmental Permits Act and their implementing orders.

The Regions have also adopted various special environmental laws: in the areas of waste, soil and ground water pollution, noise, air emissions, and surface water. Compliance with permit requirements and the possible presence of soil or groundwater pollution, asbestos, hazardous materials or ozone-depleting chemicals in buildings and installations requires special attention in an acquisition of assets or shares of a company that owns real estate or benefits from a right in rem over real estate.

To a large extent, regional environmental legislation is influenced by European Community legislation, examples being the legislation on energy performance of buildings, waste management, pollution prevention and the control and handling of hazardous substances. Furthermore, the European Birds and Habitat Directives can have a direct influence on town planning procedures if projects are situated in or near Special Protection Areas or Special Areas of Conservation designated in these Directives.

Below, we outline building permit and environmental permit procedures in general terms and touch upon the legislative framework relating to soil contamination and energy performance of buildings.

11.3.1 Town planning: building permits and zoning plansZoning plans are the main sources of town planning rules and regulations and contain binding conditions on the nature of buildings and activities that can be authorised in any particular area . They can be Municipal, Provincial and Regional.

A building permit is required for the construction or demolition of most buildings, for the planning or the felling of trees, for the modification, the renovation or the extension of existing buildings. A building permit can also be required for the modification of the use or allocation of a property, for example, using an office building as a residential building. Only minor additions to buildings and small constructions which are listed in a Government


within which the permit must be granted. The municipality, the province and in Brussels the Environmental Administration are generally the authorities that have these powers.

The environmental permit procedures contain rules on the documents to be filed with the application, the handling of the application by the relevant authority, the involvement of other authorities in the procedure, the public inquiry period during which interested parties can lodge objections against the application, and possible prior environmental impact assessments to be carried out.

Environmental permits are granted for a fixed period of time (maximum 20 years in the Flemish and the Walloon Regions, and maximum 15 years in the Brussels Capital Region). All regional legislation allows for possible renewal of the permit.

The decision must be taken within a fixed time period after receipt of the application (and receipt of the prior environmental impact assessment if required). The length of this period varies depending on the category to which the operation belongs. An environmental permit is generally granted within 3 to 6 months.

11.3.2.2 SanctionsIn the event of a breach of environmental permit obligations or of the environmental permit conditions, several sanctions can be imposed, such as: (i) administrative sanctions or measures by the different administrative authorities (varying from a warning to a prohibition to operate) and/ or (ii) criminal sanctions subject to actual legal proceedings brought by the Public Prosecutor, including imprisonment and/ or (administrative) fines.

For companies, imprisonment sanctions are converted into fines.

11.3.2.3 Transferability of environmental permitsEnvironmental permits are facility-bound. They remain valid after the facility is transferred to another legal entity. However, in the three regions, such transfers of permits must be officially notified to the granting authority.

11.3.2.4 Combined building and environmental permit procedureIf a project requires both a building and an environmental permit in the Brussels and Flemish Regions, two separate applications will have to be simultaneously filed and both administrative procedures are then coordinated. The environmental permit is suspended until the building permit is granted and vice versa.

For the Walloon Region, a ‘single permit’ can be obtained pursuant to an application concerning both the construction works and the operational activities.

Authorities do not actively verify whether works carried out comply with the building permit conditions. The Walloon Town Planning Act provides that the holder of the permit can ask the municipality for a declaration certifying that works (i) have been completed within the required time limit; and (ii) have been carried out in accordance with the permit delivered.

Purchasers usually appoint a permit compliance surveyor as part of their due diligence process.

11.3.1.2 SanctionsVarious sanctions can apply if there is a breach of a permit requirement or construction, renovation, transformation or change of use of a property is carried out without a permit. These sanctions include: (i) certain administrative sanctions or measures by the administrative authorities (an order to cease the infringement, to reinstate to the initial (authorized) state) and/or (ii) criminal sanctions, subject to actual legal proceedings brought by the Public Prosecutor, including imprisonment and/or (administrative) fines.

For companies, imprisonment sanctions are converted into fines.

Alternatively, the relevant authority can propose an administrative settlement instead of taking measures or requesting the Public Prosecutor to launch criminal proceedings.

11.3.1.3 Transferability of permitsBuilding permits are asset-bound and are not linked with the owner of the real estate. Therefore, in the case of an asset transfer, the building permit remains with the asset and there is no need to arrange for its transfer.

11.3.2 Environmental permitsPursuant to the applicable regional Environmental Permits Act, an environmental permit is required for the operation or modification of industrial plants, large office buildings, shopping centres depending on their technical installations. Operating conditions are set out by the relevant regional government (general or sector-related operating conditions) and by the environmental permit itself (particular operating conditions). They may relate to various environmental matters such as air emissions, water, waste management, soil, noise emissions, waste management and safety.

11.3.2.1 Environmental permit applicationEnvironmental permit procedures vary from region to region. The activities subject to permit are listed by the relevant Regional Government and are divided into three (Flemish and Walloon Region) or five (Brussels Capital Region) categories. The category of activity in question determines which public authority can grant the permit and the time period


The actual soil clean-up works can be carried out after the transfer. The financial guarantee will normally be a first demand bank guarantee. However, it can also be a guarantee issued by a registered insurance company or any other guarantee accepted by OVAM.

All such obligations are incumbent on the transferor but may also, if agreed to by the parties, be carried out by the transferee. The relevant agreement must be submitted to OVAM.

If the aforementioned transfer obligations under the Flemish Soil Decree are not complied with, the transferee can seek annulment of the transfer agreement in court.

11.3.3.2 Brussels Capital RegionThe new Brussels Ordinance on the management of polluted soil was adopted on5 March 2009 and entered into force on 1 January 2010. The implementation Decree (“Uitvoeringsbesluit”) of 24 September 2010, relating to the soil certificate, entered into force on 31 October 2010.

In the Brussels Capital Region, a soil certificate is required prior to the ‘transfer of land’. This certificate is issued by the Brussels Environmental Agency (IBGE/BIM). Furthermore, the Ordinance requires a preliminary soil investigation to be conducted when, amongst other things, there is a transfer of property or rights in rem on land where risk activities take place or have taken place in the past (shutting- down, transfer or renewal of a risk activity), application for a new environmental permit or extension of an existing environmental permit covering a risk activity.

The preliminary soil investigation will be the basis to determine the next steps to be taken. Depending on the type of pollution, it will determine whether a soil clean-up campaign is necessary and whether any alternative protective measures need to be taken. Unless a departure from the standard procedure is agreed to by the relevant authority (generally, such exception includes setting financial guarantees), all soil clean-up must take place before the land is transferred.If the obligations mentioned above, are not complied with, criminal and administrative sanctions can apply. In addition, in certain circumstances, the transferee can claim annulment of the acquisition agreement before the courts.

11.3.3.3 Walloon RegionOn 5 December 2008, the Walloon Parliament adopted a Decree regarding soil management that entered into force on 18 May 2009 (except for article 21 which relates

11.3.3 Soil contamination

11.3.3.1 Flemish RegionThe new Decree of 27 October 2006 on soil remediation and soil protection (the Flemish Soil Decree) entered into force on 1 June 2008. The Flemish Soil Decree imposes certain transfer formalities prior to a transfer of land.

A ‘transfer of land’ is defined broadly and includes inter alia the sale of the property, long term leases, company mergers and de-mergers. However, the establishment of a mortgage, a lease agreement or a share deal are not considered ‘transfers of land’.

Prior to a ‘transfer of land’, the transferor has to submit a recent soil certificate to the transferee. The certificate has an informative character and is granted by the Public Waste Company (“Openbare Vlaamse Afvalstoffenmaatschappij”, hereinafter “OVAM”)8, within 30 days of the request. The content of the certificate must be included in the private transfer agreement and the subsequent notarial transfer deed.

Moreover, to the extent that transferred land is considered ‘risk land’, a prior orientation soil investigation has to be conducted. ‘Risk land’ is land on which one or more ‘risk activities’ take place or have taken place in the past. ‘Risk activities’ are defined in the Environmental Permit Act. Most industrial activities and technical installations of a certain capacity are considered as risk activities.

If ‘risk land’is to be transferred, the transferor must report the proposed transfer to OVAM and file an orientation soil investigation report.

In principle, an orientation soil investigation has a validity of one year.

Depending on the results of the orientation soil investigation, OVAM might impose, within 60 days of receipt of the orientation soil report, the obligation to carry out a descriptive soil investigation.

If soil clean-up is required on the basis of the descriptive soil investigation, the transfer will be subject to (i) OVAM’s prior approval of the soil clean-up works project; (ii) the undertaking of a clean-up obligation; and (iii) the posting of financial guarantees securing payment of the soil clean-up costs.

8 The supervising authority is the Flemish Minister for the Environment.


is drawn between different categories of buildings (mainly residential and non-residential buildings).

11.3.4.2 ProcedureThe procedure and terminology can vary from one region to another but the principles can be summarized as follows.

Energy Performance Proposal (EPP): When applying for a building permit for the construction of a new building or for the refurbishment of an existing building, an EPP is attached to the application.

In the case of new buildings with a useful floor surface area exceeding 1,000 m² a technical and economic feasibility study of alternative systems is also attached. This is also required for large refurbishment renovations.

Declaration of commencement of the works: Before the start of building works or of refurbishment works, the applicant must inform the relevant authority of when works will commence. This declaration consists of information about the building, the proposed EPB criteria and information about the different parties.

EPB application: An EPB application, including all the measures taken to apply the EPB criteria and the results of the EPB calculation, is drafted. The EPB application must be sent to the relevant authority,• in the Flemish Region, within six months of the occupation of the building;• in the Walloon Region, within six months of reception of the works and where there is

no reception, within 18 months of the occupation of the building or of completion of the works;

• in the Brussels Capital Region, within six months of the completion of the build or the refurbishment works or two months after provisional reception.

EPB Certificate: For new buildings, the relevant authority will deliver the EPB Certificate, on the occasion of the EPB-application in the Flemish Region and after receipt of the EPB application in the Walloon and Brussels Capital Regions. This EPB Certificate has a validity of ten years.

For all existing buildings, an EPB Certificate must be drawn up by an authorizedEPB Certification authority prior to:

• the (partial) sale of the building (all regions);• entering into an occupational agreement (all regions);

to the transfer of land, which will enter into force at a date still to be set by the Walloon Government).

In other words, today, specific provisions regarding the clean-up of polluted soil in cases of ‘transfers of land’, are not yet in force.

However, pursuant to Article 20 of the new Walloon Decree dated 5 December 2008, the authorities may at any time impose soil clean-up measures in cases of illegal waste disposal or if there are serious indications that the soil is polluted exceeding the pollution limits defined in the Decree. Furthermore, the authorities may at any time impose clean- up measures upon the polluter, the owner or user of polluted land pursuant to ‘waste’ legislation. Contaminated land is indeed considered as waste and therefore, is subject to the Walloon legislation on waste, and in particular, to articles 42 and 43 of the Walloon Decree on waste of 27 June 1996. Hence, in the presence of waste that constitutes a serious danger for humans and/or the environment, the relevant authority may impose aclean-up plan on the contaminated site, the reinstatement of the site or a financial securityin order to ensure the reinstatement of the site.

Once article 21 of the new Walloon Decree dated 5 December 2008 has entered into force, a ‘transfer of land’ will entail the obligation to conduct a prior soil investigation if the land is considered ‘risk land’.

11.3.4 Energy performance of buildings (EPB)

11.3.4.1 GeneralDirective 2002/91/EC of the European Parliament and of the Council of 16 December 2002, on the energy performance of buildings (the ‘Directive’) was implemented as follows into the legislation of the three regions:

• Flemish Region: Decree of 22 December 2006;• Walloon Region: Decree of 19 April 2007;• Brussels Capital Region: Ordinance of 7 June 2007.

The Flemish Decree is already in force. The Brussels Ordinance and Walloon Decree came partially into force respectively in July 2008 and on 1 May 2010. Meanwhile several implementation Decrees have entered into force in the Brussels and Walloon Region (e.g. The Brussels implementation Decree of 17 February 2011 related to EPB certificates).

The regulations set out the calculation methods to be used for the energy performance as well as the energy performance criteria (‘EPB criteria’) to be met by buildings. A distinction


12. Companies in distress

12.1 Introduction

Belgium has no codified legislation on the restructuring of companies in distress. The legal framework for this consists of a combination of codes and laws covering different disciplines such as commercial law, corporate law, social law, civil law and criminal law and, therefore, requires a multidisciplinary approach.

The objective of this memorandum is to give a brief overview of the different legal proceedings at the disposal of a company in distress, being (1) an amicable arrangement, (2) a reorganisation of the company under court protection or (3) bankruptcy.

Specific attention is paid to the position of the company’s creditors. Voluntary liquidation, which can be an alternative to bankruptcy, provided the creditors agree to it, is not dealt with here. For the purposes of this overview we have also assumed that the debtor is a Belgian, non-listed and non-regulated commercial company with own legal personality.

We have not elaborated on any tax and social law aspects in this overview.

12.2 Amicable arrangement outside judicial reorganisation

A company in distress can enter into an amicable arrangement with two or more of its creditors. To the extent the amicable arrangement (i) has been agreed upon for the purpose of remedying the company’s financial situation or reorganising the enterprise and (ii) has been filed with the relevant commercial court, the amicable arrangement and its implementation will be protected against certain Belgian law claw-back rules that could otherwise apply if the company is subsequently declared bankrupt.

The possible claw-back provisions from which the court could protect an amicable settlement, includes setting aside, payments of debts not yet due, payments in kind of due debts, and acts or payments whereby the counterparty knew that the company was already in a situation of cessation of payment. However, certain other remedies remain available, such as unenforceability or claw-back claims on the basis of fraudulent sub-value contracts entered into in the suspect period or the granting of security interests during the suspect period for existing debts.

• entering into an immovable lease agreement (Brussels Capital Region); and• the grant of rights in rem (with the exception of easements, mortgages and nuptial

contracts) (Walloon and Brussels Capital Regions).

11.3.4.3 InfringementsInfringements of the EPB regulations are sanctioned by administrative fines (amongst other things, if the EPB criteria have not been met; the EPB application is not a correct statement of the facts; and the technical installations do not comply with the EPB criteria). In the Brussels Capital Region, criminal sanctions are also provided for (imprisonment of 8 days to 12 months and/or a penalty ranging from EUR 25 to EUR 25,000 (amongst other things for failing to appoint an EPB Advisor; to declare commencement of works; to draft various documents; to provide an EPB Certificate before the sale or lease of a building or the grant of rights in rem).


(v) a description of the purpose of the request and, as far as possible, the measures and proposals envisaged for restoring the company’s financial situation and implementing a social plan.

The president of the commercial court appoints a judge to investigate and advise on the request. If the company is allowed to pursue judicial reorganisation proceedings, the delegated judge will continue to inform the court on the company’s situation.

Pending a reorganisation order, a company cannot be declared bankrupt or be judicially wound-up. With few exceptions, enforcement procedures against the company’s assets are suspended. Any conservatory attachment by a creditor on the company’s assets, however, is possible until such time as the court makes an order for judicial reorganisation. Such conservatory attachments can be lifted by the court if that would not result in substantial harm to the relevant creditor.

12.3.3.2 Board of directorsThe board of directors remains in charge of the management of the company, albeit under the (limited) supervision of a judge appointed by the commercial court. Only if the board has made obvious and major mistakes or is patently acting in bad faith and a request is made by an interested third party, including the public prosecutor, can a temporary director can be appointed by the commercial court to replace the existing board.

If the company so requests, the commercial court may appoint a judicial administrator to assist the company’s board of directors during the judicial reorganisation proceedings. The exact scope of the administrator’s mandate is determined by the court on the basis of the company’s application. Third parties having an interest (such as creditors) also have the right to request the appointment of such a judicial administrator, in which case however, the costs and fees of the administrator are borne by the requesting party.

12.3.3.3 Reorganisation measuresThe Law on the Continuity of Enterprises provides for three types of reorganisation: (i) the amicable arrangement, (ii) the collective agreement and (iii) the transfer of all or part of the activities.

A company in distress is, in principle, free to choose which of these three options to adopt and may even opt for a different approach for each of its activities. During the judicial reorganisation proceedings the approach initially chosen can even be amended and an proposed amicable arrangement can be transformed into a collective agreement, to finally end up in a transfer under court supervision.

With the exception of certain obligations relating to information and consultation in the context of social law, third parties are not entitled to consult the amicable agreement without the prior consent of the company.

12.3 Judicial reorganisation

12.3.1 Purpose of judicial reorganisation proceedingsThe purpose of judicial reorganisation proceedings is to preserve, under court supervision, the continuity of all or part of a company in distress or all or part of its activities. It grants a company in distress protection against its existing creditors by allowing it either to negotiate an amicable arrangement (see 12.3.3.3. (a)) or a collective reorganisation agreement (see 12.3.3.3 (b)) or by providing for a transfer of all or part of the company’s activities to one or more third parties (see 12.3.3.3 (c)).

12.3.2 Conditions for judicial reorganisationA judicial reorganisation can be obtained if the continuity of the company is threatened in the short or medium term. The going concern basis of a company is considered threatened if, due to losses, the net assets have fallen below half of the authorised share capital.

The fact that the company may already be in a de facto state of bankruptcy does not preclude it from benefiting of judicial reorganisation proceedings.

12.3.3 Judicial reorganisation proceedings

12.3.3.1 Opening of judicial reorganisation proceedingsJudicial reorganisation proceedings are opened by the commercial court at the request of the company in distress. Judicial reorganisation proceedings cannot be opened at the request of third parties, such as creditors or even the public prosecutor (see however 12.3.3.3 (c)) .

Along with its petition (or shortly afterwards), the company has to submit certain documents, including, but not limited to:

(i) a description of the events on which its petition is based and from which it can be deduced that the continuity of the company is threatened;

(ii) the two most recent annual accounts and a recent balance sheet; (iii) cash flow projections;

(iv) a list of creditors; and


(ii) their rights are not suspended for more than 24 months as of the filing of the petition (can be prolonged by another 12 months under certain circumstances).

No other measures can be imposed on such creditors without their individual agreement.

Homologation by the court can only be refused if:(i) the formalities laid down by the Law on the Continuity of Enterprises have not been

complied with; and/or(ii) there has been a breach of public policy (e.g. arbitrary discrimination between different

classes of creditors).

An approved and homologated reorganisation plan can be revoked if not punctually performed (or if it is established that it will not be punctually performed).

Some main advantages of a collective agreement are:(i) in principle the management retains control; and(ii) the plan is binding upon minority creditors, even if they benefit from security and

certain liens, subject to certain limitations.

Possible disadvantages of a collective agreement are:(i) need for legal proceedings;(ii) no protection against certain secured creditors (see 12.3.4.1);(iii) supervision by a court and a delegated judge; and(iv) it will be publicly known that the company is in distress.

c) Transfer of all or part of the activities under court supervisionTo rescue the economic activities of a company (which is the main purpose of the Law on the Continuity of Enterprises), the transfer of all or part of the activities can also be envisaged.

A transfer can take place with or without the approval of the company in distress. Indeed, at the request of the public prosecutor, a creditor or even a third party interested in the acquisition of all or part of the company’s activities, the court can order, in certain circumstances, a court supervised transfer, e.g. (i) if the company is in a state of bankruptcy and has not filed for judicial reorganisation proceedings or (ii) if the judicial reorganisation proceedings have failed (e.g. disapproval, refusal of homologation or revocation of the reorganisation plan, disapproval of the reorganisation plan or early termination of the judicial reorganisation proceedings).

a) Amicable arrangementIn addition to an amicable arrangement outside a judicial reorganisation (see 12.2 above), a company in distress can also seek a solution to its difficulties in negotiations with two or more of its creditors in the framework of a judicial reorganisation procedure, i.e. under the supervision of a delegated judge.

The advantages of an amicable settlement in the context of a judicial reorganisation are:(i) the arrangement, once decreed by the court, will be protected against certain claw-

back provisions;(ii) the management retains control; and(iii) the legal formalities required are extremely simple.

Possible disadvantages are:(i) it does not bind creditors who are not parties to the arrangement;(ii) there will be supervision by the court and the delegated judge; and(iii) it will be publicly known that the company is in distress.

b) Collective agreementDuring the suspension period, a company in distress must elaborate a detailed reorganisation plan describing its situation, the difficulties it is confronted with, how the company proposes to resolve these difficulties (including the transfer of all or part of the activities), how it plans to return to profitability and what sacrifices it will request from its creditors (e.g. grace periods, waiver of interest or even of principal, and/or conversion of debt into equity).

The implementation period of the reorganisation plan may not exceed five years as of the date of homologation of the plan by the commercial court.

The reorganisation plan is subject to the approval of a meeting of creditors and homologation by the court. The reorganisation plan is approved by the meeting of creditors if:(i) it is approved by the majority of the creditors; and(ii) the creditors represent at least one half of the outstanding principal amounts.

Creditors who do not vote and their respective claims, will not be taken into account for the purpose of determining the required quorums and majorities.

The reorganisation plan can bind creditors who have a contractual lien over specific assets, pledgees, mortgagees and the so-called creditor-owners, provided that:(i) interest is paid on the principal amount of their outstanding debts; and


Conservatory attachments to secure Pre-existing Debts are no longer possible, and any attachments made before the reorganisation judgment can, in certain circumstances, be lifted by court order.

12.3.4.2 Existing agreementsDespite any provision to the contrary, existing agreements cannot be terminated by virtue of the filing for, or the opening of, judicial reorganisation proceedings (with the exception of a close-out provision in the framework of a netting agreement).

No contractual default that occurred before the reorganisation judgment can be relied upon by a creditor if the default is remedied within 15 days of the notice of default.

Nevertheless, the company will have the right, even if it is not contractually expressed, to decline to perform an existing agreement during the suspension period if such non-performance is necessary in the context of the proposed reorganisation plan or to enable a transfer under judicial reorganisation. Any damages for such non-performance will be considered as a Pre-existing Debt. The right not to perform, however, is excluded if a reorganisation is achieved by means of an amicable settlement. It also does not apply to employment contracts.

12.3.4.3 Status of debts incurred during the suspension period.New debts arisen during the suspension period (“New Debts”) are not subject to suspension.

To encourage third parties to continue doing business with the company in distress, New Debts have first rank status for payment (subject to certain limitations), should the judicial reorganisation proceedings end in bankruptcy or winding-up and liquidation of the company.

12.4 Bankruptcy

12.4.1 Purpose of bankruptcy proceedingsIn contrast to the Law on the Continuity of Enterprises, Bankruptcy Law prioritises recovering value from the underlying business or assets rather than on rescuing the enterprise.

The protection of creditor’s interests is, therefore, the leading principle throughout the Bankruptcy Law.

In case of transfer of all or part of the activities of the company in distress under court supervision, a judicial administrator will be appointed by the commercial court to organise and effect the transfer in the name and for the account of the company in distress.The judicial administrator acts under the supervision of the delegated judge and it is the court that takes the final decision on the transfer. If several comparable offers are made, the court will give priority to the offer which guarantees employment on the basis of a negotiated social plan.

Certain advantages of a forced sale are:(i) it can be restricted to specific assets; and(ii) it will be binding on all creditors, including secured creditors, subject to certain

exceptions (see 12.3.4.2).

Possible disadvantages are:(i) need for legal proceedings;(ii) loss of control, the court will determine which offer to accept (taking into account

employment issues); and(iii) it will be publicly known that the company is in distress.

12.3.4 Creditors’ rights

12.3.4.1 SuspensionThe commercial court can suspend payments up to 6 months (can be prolonged up to 12 months and in extraordinary circumstances for an additional 6 months).

Co-debtors and guarantors are not protected by the opening of judicial reorganisation proceedings.

During this suspension period, enforcement measures against the company’s assets for debts incurred before the judgment opening the judicial reorganisation proceedings (“Pre-existing Debts”) will be suspended.

However:(i) pledges on receivables which have been specifically pledged to the benefit of third

parties will not be affected by a judicial reorganisation; and(ii) pledges or security assignments of bank accounts and financial instruments that are

subject to the Belgian Financial Collateral Law of 15 December 2004, as well as close-out netting agreements, will not be affected by the opening of judicial reorganisation proceedings and can thus be enforced despite any such proceedings.


12.4.3.2 Board of directorsIf the commercial court makes an order in bankruptcy, the board of directors is relieved of its administration powers over the assets of the company as from 00:00 hours of the day of the bankruptcy order.

The court will appoint one or more bankruptcy trustees (curators/curateurs), chosen from a list composed of specialised lawyers, to liquidate the bankrupt company, and a bankruptcy judge to supervise the bankruptcy proceedings.

12.4.3.3 Bankruptcy proceedingsWhen appointed, the trustee in bankruptcy must take all necessary steps to preserve the bankrupt estate. An inventory of all assets is made.

At the request of the trustee in bankruptcy or any third party with relevant interest, and if it is not prejudicial to the creditors, the court may allow the company to temporarily continue any part of its business. The trustee in bankruptcy is entitled to continue the business pending such a court order.

Claims must be filed in due course and in the form of a written statement setting out the nature and amount of the claim, accompanied by documentary evidence and a statement as to whether or not the claim is guaranteed or secured by a personal surety, a pledge, a mortgage or a lien. The trustee in bankruptcy will verify the claims received in the presence of the bankrupt debtor. At the session at which the minutes of verification of the claims is finalised, the claims will be accepted, deferred or contested. Every 4 months and for 16 consecutive months, supplemental minutes of verification of claims will be filed.

If the trustee in bankruptcy finds that the assets of the company are not sufficient to cover the administration and liquidation costs, the court can close the bankruptcy at the trustee’s request. The creditors regain their individual legal rights against the company and its assets. The company is considered wound-up and its liquidation closed.

If the company’s assets are sufficient however, the trustee in bankruptcy will continue to manage the bankrupt estate by liquidating the company’s assets and distributing the proceeds in accordance with the rights of the creditors.

After selling all the assets, the trustee must call a final meeting of creditors to approve the accounts, including the remuneration of the trustee and other costs. Once all challenges to the proposed accounts have been settled, the commercial court will close the bankruptcy and discharge the trustee in bankruptcy. The company will be considered wound-up and its liquidation closed.

12.4.2 Conditions for bankruptcyAccording to Belgian law, any company which faces (i) a durable cessation of payments and (ii) has lost the trust of its creditors is in a state of bankruptcy. Both conditions must be met.Cessation of payments is where a company can no longer repay its due and payable debts. It is not necessary that the company has stopped all payments. It is sufficient that some important debts remain unpaid. A cessation must be durable. In so far as the company can still turn things round or still has access to sufficient credit, the company is not in a state of bankruptcy.

12.4.3 Bankruptcy proceedings

12.4.3.1 Opening of bankruptcy proceedingsBankruptcy proceedings can be instituted in the commercial court at the request of the debtor or at the request of a third party (including the public prosecutor).

Under Belgian Bankruptcy Law, a debtor who satisfies the bankruptcy conditions must file a petition in bankruptcy, together with certain accounting and other documents, within one month of the date of cessation of payments. The obligation to file is, however, suspended if the company has filed for judicial reorganisation.

Failure to make a timely filing may entail not only the personal liability of the directors for any increase in the level of indebtedness resulting from the delay in filing the petition, but also criminal liability if there was the intention to postpone the bankruptcy.

A third party with the necessary legal interest, such as a creditor with a due and reasonably (certain) claim or the public prosecutor can initiate bankruptcy proceedings by means of a writ of summons served on the debtor. Under the Law on the Continuity of Enterprises, third parties also have the right, as an alternative to bankruptcy proceedings, to request a supervised transfer of all or part of the business of the company (see 12.3.3.3 (c)).

If a recovery appears possible, the court can adjourn its decision for 15 days in order to allow the debtor time to file for judicial reorganisation. A company in judicial reorganisation can, however, as of the 30th day following the petition for admission to the judicial reorganisation proceedings and until the day of the filing of a reorganisation plan, be declared bankrupt if (i) it is established that the company is obviously not in a position to guarantee the continuity of all or part of its activities in accordance with the aims of the judicial reorganisation proceedings, (ii) the bankruptcy conditions are met and (iii) such bankruptcy has been requested.


‘Debts of a bankrupt estate’ refer to expenses incurred by the trustee in bankruptcy, such as the trustee’s fees, court costs and expert’s fees. Such debts will be paid ahead of other debts, (i.e. debts incurred by the company before bankruptcy or as a consequence of the termination of current contracts pursuant to the bankruptcy) although there is some debate as to what extent they should prevail over the claims of special secured creditors.

Creditors with special preferred right (such as the unpaid seller or supplier of services that have preserved certain movable assets, pledgees and mortgagees) have a legal right to the proceeds of those specific movable or immovable assets. They rank ahead of creditors with general preferred rights, who are only entitled to have their debts settled out of the general pool of assets before ordinary creditors.

The law also recognises several classes of creditors with general preferred rights, including the social security and tax authorities and employees. These preferred rights are ranked by law.

12.4.5 Claw-back provisionsAt the request of the trustee in bankruptcy, a commercial court can render (and will sometimes be obliged to do so) certain acts of the bankrupt company unenforceable against the body of creditors.

Certain acts must or can be declared unenforceable if they were carried out by the company at a time when it had already ceased its payments, i.e. during the ‘suspect period’. The day of cessation of payments is assumed to be the date on which the company is declared bankrupt. This, however, can be back-dated by a court order, at the request of the bankruptcy trustee or of any interested third party, up to 6 months before the date of the bankruptcy order if solid and objective evidence clearly shows that the debtor had already ceased payments before the date of the adjudication of bankruptcy. If case a company has been legally and effectively wound-up more than 6 months before the bankruptcy order the court can decide that the real date of cessation of payments was in fact the date of its de facto winding-up, if there was an intention to prejudice the creditors.

The following actions will, for example, be declared unenforceable against the body of creditors if performed during the suspect period:

(i) disposal of assets without consideration and act or agreement whereby the value of an asset and/or services transferred/rendered by the bankrupt debtor is substantially more than the value received in consideration;

12.4.4 Creditors’ rights

12.4.4.1 SuspensionA bankruptcy judgment has the effect of suspending the enforcement of individual creditors’ rights.

However:(i) for creditors holding secured interests on specific movable assets and for mortgagees,

suspension will usually be lifted when the first minutes of the verification of the claims are finalised At the request of the trustee in bankruptcy, however, the suspension may be extended up to one year from the date of the bankruptcy judgment; and

(ii) pledges or security assignments of bank accounts and financial instruments that are subject to the Belgian Financial Collateral Law of 15 December 2004, as well as close-out netting agreements, will not be affected by the opening of bankruptcy proceedings and can, therefore, be enforced immediately.

12.4.4.2 Existing agreementsExisting agreements are not automatically terminated by the bankruptcy of one of the parties, unless otherwise agreed or if the agreement is intuitu personae. The trustee must decide whether to continue any existing contracts.

If he fails to do so, the other party can require the trustee in bankruptcy to take a position. If such a request is made and no decision is taken by the trustee in bankruptcy within 15 days, the contract will be considered as terminated.

12.4.4.3 RankingThe process of liquidating the assets under a bankruptcy and the allocation of the proceeds is a very specialised and intricate area of law.

As a general principle of Belgian bankruptcy law, all creditors are to be treated equally which entails the distribution of the proceeds of the bankrupt estate in proportion to the size of their respective claims.

However, there are 3 groups of preferred creditors to whom this principle does not apply, namely:(i) creditors of the bankrupt estate (mainly for management costs of the bankrupt estate);(ii) creditors with special preferred rights, with a right of recovery, pledgees and

mortgagees; and(iii) creditors with general preferred rights.


13. Arbitration and mediation in Belgium

13.1 Introduction

In the last few years, a growing interest has been shown for Alternative Dispute Resolution (“ADR”) and in particular for mediation and arbitration. The number of alternative proceedings and out-of-court settlements has increased, and litigation practitioners are nowadays confronted with ADR on a regular basis. Recent European (and national) legislative initiatives confirm the sustained growth and popularity of ADR.

We will deal here with mediation and arbitration, and provide an overview of the general rules of these figureheads of ADR.

The Belgian legal framework of both mediation and arbitration can be found in the Judicial Code. Part VI (articles 1676 to 1723) covers the rules with regard to arbitration. Part VII (articles 1724 to 1737) deals with mediation.

Mediation and arbitration are both conventional legal concepts, and provide a very flexible framework for settling commercial or other disputes. They presuppose the intervention of a third party, i.e. respectively the mediator and arbitrator.

Although these legal concepts look similar, certain preliminary distinctions should be drawn. First, mediation is characterized as an out-of-court procedure, whilst arbitration proceedings take place before an arbitral tribunal.

Second, arbitration results in a binding decision (i.e. an arbitral award) rendered by an arbitrator, whereas mediation results in an agreement between the parties through guidance by a mediator.

13.2 Mediation

13.2.1 Legislation and General PrinciplesThe law of 21 February 2005 integrated the rules concerning mediation into the Belgian Judicial Code. These rules are applicable to every mediation process which takes place in Belgium.

(ii) all payments made by the bankrupt debtor, other than in cash or trade paper, such as bills of exchange or cheques (handelspapier / effets de commerce);

(iii all payments made for debts that have not matured; and(iv) security interests (pledges or mortgages granted to secure pre-existing debts.

The court can also declare other acts unenforceable if they took place during the suspect period and if the beneficiary was aware of the cessation of payments by the company. Finally, any acts or payments, whenever performed, that are to the fraudulent detriment of the creditors, can be declared unenforceable (actio pauliana).


This provision of the law fosters a climate of trust for the negotiations, encourages disclosure of the real interests of the parties’, and tends to lead to settlements that are both equitable and palatable to the parties.

Fundamental interests can be revealed during a caucus. Caucuses are confidential meetings that mediators hold separately with each side to a dispute. These meetings give each party the opportunity to redefine or clarify its points of view, identify new avenues, or discuss and evaluate the other party’s proposals in private. The information communicated during the caucus is also covered by mediation privilege.

The Belgian Judicial Code prescribes two sanctions for any party which breaches the confidentiality of the mediation process (e.g. a party which, during judicial proceedings, discloses or submits documents or evidence obtained during mediation). First, any document which is covered by mediation privilege, and which is filed by a party during judicial proceedings will automatically be struck from the record. Second, a judge may order a party to pay damages if it is in breach of mediation privilege.

13.2.3 Different types of mediationsThe Belgian Judicial Code draws a distinction between two types of mediation, namely (i) voluntary mediation, where the parties agree to settle a dispute through mediation, and (ii) judicial mediation, where the parties accept the court’s proposal to mediate.

13.2.3.1 Voluntary Mediation

1) Even during judicial or arbitral proceedings, the parties may agree to try to resolve their dispute through mediation. The mediation may concern the whole or part of the dispute.

The parties are free to decide which organization or which person will guide the mediation and to determine the procedure that will apply. They must agree, with the assistance of the mediator, upon the (procedural) rules (of conduct) applicable to the mediation, e.g. the duration of the mediation process. These rules are set out in a mediation protocol, drawn up and signed by the parties and the mediator.

The mediation costs and fees are payable in equal shares by the parties, unless otherwise agreed.

If a mediation proposal is sent by registered mail and contains a claim, the proposal is deemed to be a formal notice (as defined in Article 1153 of the Civil Code). The proposal is, therefore, taken as the starting point for the calculation of legal interest.

Mediation can be defined as a structured process, whereby two or more parties to a dispute attempt by themselves, on a voluntary basis, to reach an agreement on the settlement of their dispute with the assistance of a mediator. The mediator is bound to conduct the process in an effective, impartial and competent way (Article 3 of Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters).

A mediator does not have authority to impose a solution, and merely tries to guide the parties to finding their own solution to their conflict. Thus, the success of mediation depends upon a mutual willingness to take part in the process and the qualities of the mediator who leads the discussions between the protagonists.

If parties are in a contractual relationship, they can anticipate a possible dispute by inserting a mediation clause into the contract covering any dispute relating to the validity, the execution, the interpretation, the performance or the breach of the contract. If no such clause exists, the parties may agree on mediation once the dispute has arisen.

13.2.2 Conditions and characteristics of mediation

13.2.2.1 The dispute must be arbitrableAny dispute which can be the subject matter of a settlement agreement may be resolved by mediation. Disputes which can be submitted to arbitration can also be settled by mediation. This means that disputes with regard e.g. to public policy matters (such as fiscal matters) may not be resolved by way of mediation.

13.2.2.2 ConfidentialityOne of the main characteristics of mediation is the confidentiality of the process. Belgian legislation ensures this ‘meditation privilege’ through the exclusion of evidence and professional secrecy.

Article 1728 of the Judicial Code provides that all documents drafted and communications made during, and for the purpose of the mediation process are confidential. This implies that these documents and communications may not be used in subsequent judicial, administrative, arbitral or any other kind of proceedings.

The mediator, the parties and their counsel are bound by a duty of confidentiality, i.e. a mediation privilege. Documents or communications covered by such confidentiality may only be revealed with the consent of all the parties.


3) If mediation leads to a settlement agreement, albeit only partial, the parties may ask the Court to homologate it. In the case of a partial settlement agreement, the judicial proceedings are resumed for the purpose of resolving the unsettled part.

The Court may only refuse homologation of a settlement agreement if it is against public policy or, if, being a family matter, the agreement is not in the interests of the under age children.

There is no appeal against a homologated settlement agreement (i.e. a judgment by consent).

13.2.4 Conclusion about mediationThe mediation procedure (and possible resolution) is predicated on a consensual and non-confrontational approach. The parties choose a process where confidentiality and guidance facilitate their reaching a solution which best suits their respective interests, as identified during the mediation process. Moreover, a successful mediation saves considerable time when compared to traditional methods of dispute resolution.

Given these advantages, a successful mediation can lead to continued commercial and/or other relationships between the parties’ (in contrast to e.g. judicial proceedings).

Since a proposal for mediation suspends the limitation period of the creditor’s claim for one month, the latter’s rights are preserved, should mediation fail.

Moreover, the parties will not have jeopardised their legal position in the event of an unsuccessful mediation, because mediation documents and proceedings are covered by confidentiality.

13.3 Arbitration

13.3.1 General PrinciplesVarious definitions of arbitration can be found in the legal literature. It can be defined as a method of dispute settlement in which parties agree to submit their case to one or more persons, the arbitrators, who will settle the dispute and render a decision (i.e. an arbitral award).

The arbitral award is binding on the parties, and may be enforced if necessary.

The proposal suspends the statutory period for taking legal action, for one month.

2) The parties can decide whether to be represented in the mediation, or to participate in person.

3) If the parties come to terms on their dispute, a settlement agreement will be drawn up (and signed) by all parties. In principle, the settlement agreement does not have the same authority as a judgment and, therefore, is not enforceable.

However, if the mediation is led by an accredited mediator, the parties may ask the court to validate and certify the agreement which will then be legally enforceable as if it were a judgment.

The Court may only refuse the homologation of a settlement agreement if it is against public policy or, if, being a family matter,the agreement is not in the interests of the under age children.

There is no appeal against a homologated settlement agreement (i.e. a judgment by consent).

13.2.3.2 Judicial Mediation

1) A Court may order mediation in pending proceedings, provided the case has not been closed for the purposes of making a court order. A Court may make an order for mediation, if it is a requested to do so by the parties, or on its own initiative but with the consent of the parties. The parties must agree on the name of the mediator, who must be accredited.

When the parties jointly request mediation, the period of limitation for pursuing legal action is suspended as from the date on which their request is made.

2) Judicial mediation is conducted in the same way as voluntary mediation.

During mediation, the dispute remains pending before Court. This means that, at any time, the Court may order measures to be taken if they are deemed necessary (e.g. provisional and urgent measures).

At the request (by simple written declaration) of the mediator or one of the parties, the Court may terminate the mediation even before it has run the full term of the period set by the court.


The main arbitration centres are:

• The Belgian Centre for Arbitration and Mediation (CEPANI), which offers several methods for the settlement of disputes (arbitration, mediation, mini-trial…).

CEPANI arbitration has several advantages, such as legal certainty (parties can consult the procedural rules of CEPANI in advance), the CEPANI-Secretariat (a supervisory organ which controls and monitors the correct application of the procedural rules), the existence of accelerated proceedings (for disputes which do not exceed EUR 12,500), etc.

Once a dispute has arisen, the parties sign the Terms of Reference. These terms contain int.al. a brief recital of the circumstances of the dispute and a statement of the parties’ claims.

The arbitration costs are fixed by the Secretariat (see the Scale of Arbitration Costs) on the basis of the amount of the principal claim and of any counterclaim. They include the fees and expenses of the arbitrators, as well as the administrative expenses of the Secretariat.

• The Court of Arbitration of ICC (International Chamber of Commerce) is a highly respected institution, specialized in international and business disputes.

Its more distinctive feature is that the Court must examine the (concept of the) award, drafted by the arbitrators. After this examination, the Court will draw up an opinion on the case and the award. However, the arbitrators are not obliged to comply with the observations of the Court. The observations and recommendations of the Court are merely a guarantee of the quality of an ICC award. In short, the Court organizes and supervises the arbitration procedure.

The costs and the arbitrators’ fees are fixed on the basis of a scale. This scale takes into consideration int.al. the diligence of the arbitrators, the time spent, the rapidity of the proceedings and the complexity of the dispute.

13.3.2.2 Ad hoc arbitrationThe Judicial Code provides a legal framework for ad hoc arbitration, which is primarily governed by the rules determined by the parties (Article 1693 of the Judicial Code).

The advantages of arbitration over other forms of dispute settlement can be summarized as follows:

• Flexibility of the procedure. The parties are free to choose the best qualified arbitrators, the procedural rules to be applied (in the event of an ad hoc arbitration), the language of the procedure and the place of the arbitration;

• Quickness of the procedure. An arbitral award is final and not subject to appeal (with the exception of annulment, see infra). Moreover, the expertise of the arbitrators in certain fields and the availability of the arbitrators contribute to a quick and effective type of dispute settlement;

• Confidentiality of the proceedings. In contrast to judicial proceedings, arbitration is not public;

• An arbitral award is generally more favourably recognized, at international level, (compared to a judgment from a national Court).

Arbitration, however, also presents some disadvantages which can be summarized as follows:

• An arbitral award is not immediately enforceable. Therefore, the most that the successful party can hope for is that the adverse party will voluntarily comply with the arbitral award. If the opposing party is not willing to comply, separate proceedings, before judicial courts, must be initiated to enforce the arbitral award;

• The level of fees that are customarily charged by arbitrators can be dissuasive.

13.3.2 Different types of arbitrationsTwo categories of arbitration exist. The main distinction is made between ad hoc arbitration proceedings and institutional arbitration proceedings.

In the case of ad hoc arbitration, the parties or the arbitrator(s) themselves determine and define the rules applicable to the proceedings (keeping in mind the general rules laid down in the Judicial Code, which provides the legal framework). In the case of institutional arbitration, the rules and the structure are provided and implemented by an Arbitration Centre.

13.3.2.1 Institutional arbitrationAs arbitration is a contractual way to resolve a dispute, the parties may choose to refer a potential dispute to an arbitration centre. In such a case, the (procedural) rules, as drawn up by the centre inquestion, are applicable, and the Judicial Code only applies if the arbitration rules related to a certain matter are not exhaustive.


• In principle, disputes concerning competition law are arbitrable. Companies may resort to arbitration for claims based on the Law of 15 September

2006 concerning the protection of economic competition. However, if a complaint – based on the same facts as the claim brought before an arbitral tribunal – were to be submitted to the Competition Council (see Article 11 of the Law of 15 September 2006), an arbitrator would encounter certain restrictions. In any such case, he may only order provisional measures or render a decision on the merits, if such provisional measures or decision are subject to the approval of the Competition Council.

If e.g. the Competition Council adopts a position which differs from the arbitral award, the latter can be challenged in annulment proceedings.

Claims with regard to European competition law are arbitrable as well. Thus, claims regarding Article 101 (1) (prohibition of agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect or distort trade and competition) and Article 102 (abuse of dominant position) of the Treaty may be submitted to an arbitral tribunal. In addition, the European Court of Justice identified article 101 EC as a matter of public policy, and ruled that article 101 EC would justify the annulment or refusal of enforcement of an award that is counter to it (see Eco Swiss China Time Ltd vs. Benetton International NV).

Note that arbitrators may not rule on matters which are subject to the European Commission’s exclusive jurisdiction (e.g. the exception rules laid down in article 101 (3) of the EC Treaty).

• In bankruptcy matters, a bankrupt party may only conclude an arbitration agreement prior to the bankruptcy order. In such a case, the trustee in bankruptcy must honour the arbitration agreement.

• The arbitrability of the dispute in the field of banking and finance law is recognized by Belgian law (Article 224 of the law of 4 December 1990).

• Most of the disputes related to company law are arbitrable (e.g. disputes regarding the establishment or the dissolution of a company, disputes between shareholders, etc). A company may insert an arbitration clause in the company’s Articles of Association.

However, in order to avoid the risk of paralysis of the proceedings because the procedural rules agreed by the parties, are incomplete, the Judicial Code provides a safeguard. In the absence of an explicit will of the parties, and thus if certain aspects are not covered by the parties’ consent, the arbitral tribunal itself determines the procedural rules.

13.3.3 Conditions for a valid arbitration

13.3.3.1 Capacity (subjective arbitrability)Only parties who have the legal capacity or the right to settle may agree to arbitration (Article 1676, 2 of the Judicial Code). This condition is the so-called subjective arbitrability of the arbitration. Failing this condition, an arbitration agreement is considered null and void. Consequently, any arbitral award resulting from such an arbitration agreement is (or will be declared) null and void as well.

Unless prohibited by special law, public legal entities may conclude arbitration agreements in relation to (i) the conclusion and performance of contracts, and (ii) all other matters defined by law or by royal decree (Article 1676, 2, §2 of the Judicial Code). By the notion public legal entities, it is understood: the Belgian State, the Communities, the Regional Authorities, the Municipalities, etc.

If a public legal entity is party to an arbitration agreement, powers of amiable compositeurs (see infra) cannot be given to the arbitrators. Arbitrators must only apply the legal regulations, and may not resort to equity (Article 1700, 2 of the Judicial Code).

13.3.3.2 The subject of the arbitration (objective arbitrability)A dispute may only be submitted to arbitration if the subject matter in question is arbitrable (i.e. objective arbitrability).

In general, disputes are arbitrable (i) if they are capable of being resolved by settlement, and (ii) if arbitration is not prohibited by law. Disputes concerning nationality, parental authority, marriage and prosecution are thus not capable of being resolved by settlement, and excluded from arbitration.

Arbitration must conform to public policy and rules with respect to public order. However, it is not because a public policy regulation is applicable to a dispute, that an arbitral tribunal may not settle that dispute. On the contrary, the arbitral tribunal may settle such dispute, provided that it applies the public policy principles.

Some subject matters are hybrid and may give rise to questions concerning the objective arbitrability.


• In general, disputes relating to intellectual, industrial and commercial property are arbitrable (e.g. with regard to licence agreements and agreements concerning trademarks). However, disputes relating to compulsory licenses and declarations of lapse of a trademark are not arbitrable.

An arbitral award concerning a non arbitrable dispute may be challenged before national courts through annulment proceedings (Article 1704 of the Judicial Code). In such a case, the national court must also reject the request for exequatur (enforcement).

13.3.3.3 Arbitration agreement and formal conditionsThe most important condition for a valid arbitration is that the parties must consent to it. This consent must be expressed in writing, or in any other way that shows their intention to resort to arbitration (Article 1677 Judicial Code).

The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (to which Belgium is a signatory) requires agreement to be in writing. Such agreement includes arbitral clauses in a contract or an arbitration agreement, signed by the parties or mentioned in an exchange of letters or telegrams (Article 2.2 New York Convention). However, the United Nations Commission on International Trade Law recently recommended that the circumstances enumerated in Article 2.2 of the New York Convention (i.e. an agreement in writing) not be exhaustive (see Recommendation regarding the interpretation of Article 2, paragraph 2 and Article 7, paragraph 1, of the New York Convention, 7 July 2006).

In general, the parties anticipate possible disputes by inserting an arbitration clause in their contract. However, as already explained, the parties may also agree to arbitration once a dispute has arisen.

An arbitration agreement must comply with all the conditions of validity of contracts as prescribed by Articles 1108 and following of the Belgian Civil Code. If e.g. a party’s general conditions contain an arbitration clause and are in compliance with these rules of the Belgian Civil Code, the arbitration clause is valid and may be invoked.

If a contract (containing an arbitration clause) is null and void, the arbitration clause will not automatically be affected by this nullity. A distinction is made between the substantial parts of the contract (which determines the rights and obligations of the parties) on the one hand, and the arbitration agreement (which embodies the parties’ will to deal with possible disputes) on the other hand.

• Concerning employment contracts, Article 1672.2 of the Judicial Code states that an arbitration agreement concluded prior to any dispute that falls under the jurisdiction of a Labour Court will automatically be null and void (see Article 13 Law of 3 July 1978 concerning employment contracts). However, an arbitration agreement is always possible and valid when it concerns an employee whose annual salary exceeds EUR 32,200. Furthermore, an arbitration agreement may be concluded, and is fully valid once the dispute has arisen.

• The above is also applicable to insurance contracts. A clause stating that the parties to an insurance contract undertake to submit disputes which may rise from the contract to an arbitral tribunal, is considered to be null and void. The parties may only agree to arbitration when the dispute has already arisen (Article 36 §1 of the Law of 25 June 1992 on insurance contracts. This rule does not apply in certain situations; see Royal Decree of 29 September 1994).

• In principle, every dispute (if not related to unilateral termination) concerning an exclusive distributorship agreement, is arbitrable.

However, there is some debate as to the arbitrability of a unilateral termination of an exclusive distributorship agreement. According to (mandatory) Belgian legislation, an aggrieved distributor may bring an action against the principal in Belgium, if the distributor suffered damage due to the unilateral termination of the distributorship agreement. If the dispute is submitted to a Belgian court, the latter must exclusively apply Belgian law (Article 4 of the Law of 27 July 1961 concerning the unilateral termination of exclusive distributorship agreements). Moreover, this mandatory Belgian legislation explicitly states that it must be applied despite any and all agreements concluded before the end of the exclusive distributorship agreement (Article 6 of the Law of 27 July 1961).

Article 4 juncto Article 6 of the Law of 27 July 1961 imply, therefore, that the conclusion of an arbitration agreement prior to the ending of the distributorship agreement is not permitted.

Nevertheless, the majority of legal opinions and case law agree that, given the concept of favour Arbitrendum, these provisions do not affect the validity of an arbitration clause in a distributorship agreement, if that clause requires Belgian law to be applied.


Note that the seat of the arbitration does not influence the language of the proceedings. The parties are free to choose the language of the arbitration (as long as the parties’ rights of defense are safeguarded), and do not have to abide by the Belgian law on the use of language in judicial proceedings (i.e. the Law of 15 June 1935). On the other hand, the parties must comply with the Law of 15 June 1935 when requesting the enforcement of an arbitral award (a sworn translation might also be needed).

Also, the seat of arbitration does not determine where the proceedings are held. Unless otherwise agreed by the parties, the arbitral tribunal may hold its hearings and meetings in locations other than the seat of arbitration.

13.3.4.4 Law applicable to the arbitration procedureIn principle, the parties are free to determine the applicable law. Consequently, the arbitration agreement may specify the applicable law, or the parties may agree on it once the dispute has arisen.

In international arbitration, if the applicable law is not specified, the law of the state in which the arbitration takes place, or the general principles of conflict of law are the main references.

13.3.5 ProceedingsThe procedural rules are determined by the parties (or by the arbitral institute), but may not detract from some fundamental principles.

13.3.5.1 Appointment of the arbitratorsAn arbitrator must be competent, impartial and independent (Articles 1680 and 1690.1 of the Judicial Code).

The Judicial Code does not, however, require the arbitrator to be skilled and have any particular qualifications. Generally speaking, however, the parties will seek to appoint the best qualified arbitrators.

Parties may exclude certain categories of persons in their arbitration agreement(Article 1692.1 of the Judicial Code).

An arbitral tribunal must consist of an odd number of arbitrators (Article 1681.1 of the Judicial Code). When it is agreed to appoint more than one arbitrator, each party will be free to choose the same number of arbitrators as those chosen by the other party. The final arbitrator will be chosen by the other arbitrators. This last arbitrator will be the chairman of the tribunal.

13.3.4 Importance and effects of the arbitration agreement

13.3.4.1 The objection of arbitrationA (valid) arbitration agreement binds the parties, which may not then refer their dispute to a national (judicial) court. If the dispute is brought before a national court, the court must decline jurisdiction at the request of one of the parties to the proceedings (i.e. the objection of arbitration) (Article 1679, 1 of the Judicial Code).

The objection of arbitration must be raised before any other plea or defence. Note that the objection of arbitration may not be raised by the national court on its own initiative.

13.3.4.2 Effects vis-à-vis third partiesArticle 1165 of the Belgian Civil Code contains the principle of relativity of contracts. Agreements only bind the signatories, and have no effect on third parties.

The principle of relativity of contracts also applies where there is an arbitration agreement. A third party cannot be compelled to accept arbitration, and is, therefore, not be obliged to submit its claim to the arbitral tribunal. However, an interested third party may request an arbitral tribunal for a third party intervention.

13.3.4.3 The seat of arbitrationGiven that parties may freely determine the scope of the arbitration agreement, they may also determine the seat of the arbitration.

If the parties do not do so, then the arbitrators may. If neither the parties, nor the arbitrator determine the seat of the arbitration, it will be located by default at the place where the award is made – as mentioned in the award (Article 1693, 2 of the Judicial Code).

It is advisable to give careful consideration to the choice of the seat of arbitration, and the effects of that choice should not be underestimated for the following reasons.

Firstly, the court of the seat of the arbitration has jurisdiction to rule on the applicability of the articles of the Judicial Code concerning arbitration, on provisional measures, etc.

Secondly, it is important to locate the seat of arbitration in a signatory state to the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards. This will facilitate the recognition and enforcement of an arbitral award obtained abroad.


13.3.5.4 Interim and protective measures - astreinteAt the request of one of the parties, the arbitral tribunal may order interim or protective measures (Article 1696, 1 of the Judicial Code). However, the arbitrator cannot issue attachment orders (e.g. a conservatory attachment), since attachment proceedings are the prerogative of the judicial courts.

Also, the parties can bring a claim for protective or interim measures before a judicial court (Article 1679, 2 of the Judicial Code). A claim for protective or interim measures that is brought before a national court is not inconsistent with the arbitration agreement, nor does it imply a waiver thereof (Article 1679, 2 of the Judicial Code).

In other words, during arbitration proceedings, one may request the judge, in summary proceedings, for interim or protective measures (the request must satisfy the inherent conditions for summary proceedings, e.g. the urgency of the matter).

The main difference between arbitration and summary proceedings is the timeframe in which the interim and conservatory measures can be enforced. Enforcement of an arbitral award, depends largely upon the will of the parties. If there is no voluntary compliance, it is up to the party seeking enforcement to obtain an enforcement order from the courts.

Belgian arbitrators have several remedies at their disposal to ensure compliance with interim measures. One of these remedies is the so-called astreinte or penalty for non-compliance (i.e. an ancillary order for payment of a pre-determined sum of money for every day or month for as long as the decision is not complied with). Arbitrators have the power to issue astreintes (Article 1709bis of the Judicial Code). This authority is comparable to the powers of a judge; an arbitrator may also rule on the duration and modalities of the astreinte.

However, arbitrators do not have the power to liquidate the astreinte (exclusively within the jurisdiction of judicial courts). The party against which the astreinte is ordered will only be compelled to make payment of this astreinte, once an exequatur of the award ordering the astreinte is obtained.

13.3.6 Arbitral Awards

13.3.6.1 General principlesThe parties may determine the time limit for making an arbitral award, or agree on the method for setting such time limit. They may do so until the first arbitrator accepts his mandate (Article 1698.1 of the Judicial Code). The parties may also agree to extend the time limit.

13.3.5.2 Power of the arbitratorsArbitrators only have the powers which are assigned to them by the parties in the arbitration agreement.

This has several consequences, e.g. the powers of the arbitrators are limited to the scope of the agreement (including ancillary matters such as e.g. legal interest).

Unless otherwise agreed, arbitrators have the same authority as judges: they may order provisional and conservatory measures, rule on the admissibility of evidence and decide upon evidential value, allow an examination of witnesses, order an expert’s examination, organise site visits, order a party to disclose documents, etc (Article 1696 of the Judicial Code).

However, given the confidential nature of arbitration and limitations set by the arbitration agreement (supra), arbitrators must sometimes refer to the national courts:• If the arbitrator has ordered the examination of a witness, but the witness refuses

to show up. Then, the arbitrator may allow the parties to appeal to the court of First Instance (which will appoint a judge-commissioner, who will conduct the examination of the witness) (Article 1696, 4 of the Judicial Code);

• If the arbitrator orders disclosure of documents held by third parties (Article 1696, 5 of the Judicial Code); etc.

13.3.5.3 Amiable compositeurUnless agreed otherwise, arbitrators will make their decisions in accordance with the law (Article 1700 of the Judicial Code). This article implies that the parties may also choose to insert an amiable compositeur clause (except when a public legal entity is party to the arbitration agreement, unless there is a law stating otherwise).

Amiable composition is comparable with (but not same as) equity or ex aequo et bono: the arbitrator will decide according to law and legal principles, but is also authorized to modify or temper the effects of certain legal provisions.

An amiable compositeur clause does not allow an arbitrator to come to a decision which is contrary to legal provisions, but does give the arbitrator the option of adding to, or moderating legal provisions in certain situations.


The President of the court of First Instance has exclusive jurisdiction to hear such a petition. He is not entitled to re-examine the merits of the settled dispute, and will order the exequatur, if the arbitral award:• can no longer be challenged; or• was declared provisionally enforceable notwithstanding appeal; and• is not contrary to provisions of public policy and was objectively arbitrable.

If the exequatur application is rejected, the petitioner may challenge the decision before the court of Appeal. If the exequatur application is granted, the party against whom it is granted may initiate opposition proceedings before the court of First Instance (Articles 1711 and 1712 of the Judicial Code).

The Judicial Code also contains a procedure for foreign arbitral awards in cases where the New York Convention (Article 1719 of the Judicial Code) does not apply.

Please note that the exequatur of an arbitral award is subject to a 3 percent registration duty/transfer tax (Article 148 Transfer Tax Code).

13.3.7.2 New York Convention on the Recognition and Enforcement of Arbitral AwardsIn an international context, one must examine the applicability of the New York Convention of 1958. The Convention applies to the recognition and enforcement of arbitral awards made in the territory of a State other than the State were the recognition and enforcement is sought (Article I (1) of the New York Convention – note that some Contracting States have made reservations regarding certain provisions).

The party seeking recognition and enforcement needs to produce to the relevant national court (i.e. in the case of Belgium, the court of First Instance) (i) the duly authenticated original award or a duly certified copy thereof; and (ii) the original arbitration agreement or a duly certified copy thereof (Article III of the New York Convention). If these formalities are met, the court will grant recognition and enforcement unless one or more grounds for refusal are present (e.g. invalidity of the arbitration agreement, lack of conformity of the arbitration proceedings with the arbitration agreement, inconsistency with public policy, etc. See Article V of the New York Convention).

13.3.8 AnnulmentNotwithstanding a possible appeal (only if provided for in the arbitration agreement), a request for annulment is the only way to challenge an arbitral award.

Article 1704 of the Judicial Code summarises the limited grounds for annulment.

The arbitration agreement will be terminated ipso iure (by automatic operation of law), if an arbitral award is not rendered within the time limit (Article 1698. 4 of the Judicial Code).

The arbitral award may only address the matter(s) which come(s) within the scope of the arbitration agreement. The arbitral tribunal deliberates on the matter(s) submitted to it and makes its final decision or interlocutory decisions by way of one or several awards.

Similarly to the decisions of a judicial court, arbitral awards must be reasoned. If an award does not set out the reasons, as required, it may be nullified.

The chairman of the arbitration tribunal must notify the award by sending a signed copy to each party. This notification is the starting point of the limitation period (of three months, infra) during which the parties may file a claim for annulment (Article 1707.1 of the Judicial Code).

The chairman must deposit the original copy with the clerk’s office of the Court of FirstInstance (unless agreed otherwise).

When the arbitration award is notified to the parties and deposited at the clerk’s office, the arbitrators’ mandate comes to an end (Article 1702.3 of the Judicial Code).

In principle, no appeal lies against a notified arbitral award.

13.3.6.2 Protective attachment orderFor an attachment, one must obtain an order through ex parte attachment proceedings (before the court of first instance). However, an arbitral award which meets the requirements of article 1703 of the judicial code, entitles an interested party to seek an attachment against its debtor.

13.3.7 Enforcement

13.3.7.1 Belgian ArbitrationArbitration is a method of dispute resolution, to which all parties involved must agree. Generally, the parties will spontaneously comply with the arbitral award, that is to say, without the need for proceedings in judicial courts.

If that proves not to be the case, a party to the arbitration agreement can enforce the award through exequatur proceedings. The party against whom enforcement of the arbitral award is sought, has no right to be heard at this stage (Article 1710 of the Judicial Code).


14. Useful addresses

14.1 Official authorities

14.1.1 Europewww.europa.euGateway to the European Union

14.1.2 Belgiumwww.belgium.be• Belgian Federal Parliament: www.fed-parl.be• Belgian Federal Government: www.belgium.be (> About Belgium/Government)

14.1.3 Flemish Community in Belgium and Flemish Region*www.flanders.bewww.vlaanderen.be (Dutch)• Flemish Parliament: www.vlaamsparlement.be (Dutch)• Flemish Government: www.vlaanderen.be/regering (Dutch)

14.1.4 Walloon Region*www.wallonie.be• Walloon Parliament: www.parlement.wallonie.be (French)• Walloon Government: www.gouvernement.wallonie.be (French)

14.1.5 French Community in Belgium*www.cfwb.be (French)• Parliament of the French Community in Belgium: www.pcf.be (French)• Government of the French Community in Belgium:

www.gouvernement-francophone.be (French)

14.1.6 German-speaking Community in Belgium*www.dglive.be• Parliament of the German-speaking Community in Belgium: www.dgparlament.be• Government of the German-speaking Community in Belgium: www.dglive.be

(> Institutions, > Government of the GC)

Except for awards contrary to public policy, and/or if the dispute was not arbitrable, the deadline for introducing an annulment request is three months from notification of the award (Article 1707.1 of the Judicial Code).

13.3.9 Conclusion about arbitrationIn recent years, arbitration has become increasingly common as a method for resolving national disputes. It is also perceived to be the most suitable forum for the resolution of international disputes. This growing preference for arbitration is due to a variety of reasons, among which, the most salient are a) the possibility for parties to choose a neutral forum, b)the right to select arbitrators who are well-versed in the specifics of the industry and/or type of dispute, and c) the possibility of determining the procedure in order to make it more efficient, and more suited to specific (international) requirements.

These advantages tend to outweigh any disadvantages, (including cost) and the benefits become very apparent where a dispute arises out of a large international transaction and involves in-depth knowledge of the industrial and technological environment. In such circumstances, the liberty to determine the procedure and chose the best experts as arbitrators, acts as powerful incentives for the parties to choose the route of arbitration.


• Invest in Walloniawww.investinwallonia.be• Invest in Brusselswww.investinbrussels.com• Federation of Chambers of Commerce and Industry of Belgiumwww.belgianchambers.be• State aidwww.belgium.be (> Economy, > Financing a company)• Competition Authoritywww.economie.fgov.be (> Enterprises & Self-employed, > Competition)

14.4 Corporate

• Crossroads Bank for Enterpriseswww.economie.fgov.be(> Ondernemingen & Zelfstandigen, > Kruispuntbank van Ondernemingen) (Dutch)(> Entreprises & Indépendants, > Banque-Carrefour des Entreprises) (French)• Belgian Official Gazette – Company publications (constitution, articles of association,

dissolution of companies; appointment, resignation or removal of persons authorised to represent a company; online information available as of 1983; full text view available as of January 1997 for companies and as of July 2003 for associations)

www.just.fgov.be(> Rechtspersonen) (Dutch)(> Personnes morales) (French)• Central Balance Sheet Office – Consulting of annual accountswww.nbb.be (> Central Balance Sheet Office, > Consultation of Annual Accounts)• Accounting Standards Commission (CBN – CNC)www.cnc-cbn.be (Dutch or French)• Corporate Governance for listed companies – Corporate Governance Committeewww.corporategovernancecommittee.be• Corporate Governance for non-listed companieswww.codebuysse.be

14.5 Financial

• Banking, Finance and Insurance Commission (CBFA)www.cbfa.be• National Bank of Belgiumwww.nbb.be

14.1.7 Brussels-Capital Region*www.brussel.irisnet.be• Parliament of the Brussels-Capital Region: www.bruparl.irisnet.be• Government of the Brussels-Capital Region: www.brussel.irisnet.be (> Brussels-

Capital Region, > Authorities)Community institutions in Brussels:• Commission of the Flemish Community (VGC)• Commission of the French-speaking Community (COCOF)• Joint Community Commission (COCOM)• www.brussel.irisnet.be (> Brussels-Capital Region, > Community institutions)

14.2 Legal

• Federal Public Service Justicewww.just.fgov.be (Dutch, French or German)• Crossroads Bank for Legislation and Case lawwww.belgiumlex.be

14.3 Business and Trade

• Federal Public Service Economy, SMEs, Self-employed and Energyhttp://economie.fgov.be/ • Federal Public Service Foreign Affairs, Foreign Trade and Development Cooperationwww.diplomatie.belgium.be• Belgian Foreign Trade Agencywww.abh-ace.org- Flanders Investment & Tradewww.flandersinvestmentandtrade.be- Agence wallonne à l’Exportation et aux Investissements étrangerswww.awex.be (French)- Brussels Exportwww.brussels-export.irisnet.be• Invest in Belgiumwww.business.belgium.be• Invest in Flanderswww.investinflanders.be

* Regions deal with matters such as economy, regional development, environment, agriculture, housing,

water, energy, employment, transport, public works and science. Communities are responsible for culture,

education and language.


• National Pensions Office (RVP – ONP)www.onprvp.fgov.be (Dutch, French or German)

14.7.3 Employer organisations• Federation of Enterprises in Belgium (VBO – FEB)www.vbo-feb.be• Flanders – Vlaams Netwerk van Ondernemingen (VOKA)www.voka.be• Wallonia – Union Wallonne des Entreprises (UWE)www.uwe.be (French)• Brussels – Vereniging van Brusselse Ondernemingen – Union des Entreprises deBruxelles (VOB – UEB)www.beci.be

14.7.4 Organisations for self-employed workers• Unie van Zelfstandige Ondernemers (UNIZO)www.unizo.be• Union des Classes Moyennes (UCM)www.ucm.be (French)

14.7.5 Trade Unions• Christian-Democrat Union – Algemeen Christelijk Vakverbond – Confédération des

Syndicats Chrétienswww.acv-online.be or www.csc-en-ligne.be• Socialist Union – Algemeen Belgisch Vakverbond – Fédération Générale de Travail de

Belgiquewww.abvv.be or www.fgtb.be• Liberal Union – Algemene Centrale der Liberale Vakbonden van België – CentraleGénérale des Syndicats Libéraux de Belgiquewww.aclvb.be or www.cgslb.be

14.8 Intellectual property

• Belgian Office for Intellectual Propertywww.economie.fgov.be(> Ondernemingen & Zelfstandigen, > Intellectuele eigendom) (Dutch)(> Entreprises & Indépendants, > Propriété intellectuelle) (French)• Benelux Office for Intellectual Propertywww.boip.int

• NYSE Brusselswww.europeanequities.nyx.com

14.6 Taxation

• Federal Public Service Financewww.minfin.fgov.be• FisconetPlus – Online Tax Databasewww.fisconetplus.be• Double taxation conventionswww.fiscus.fgov.be(> Internationale overeenkomsten) (Dutch)(> Conventions internationales) (French)(> Internationale Abkommen) (German)• Tax Survey – Overview of Belgian tax legislationwww.docufin.be (> Tax Survey)

14.7 Labour and Social Security

14.7.1 Labour• Public Service Employment, Labour and Social Dialoguewww.meta.fgov.be• National Labour Council (NAR – CNT)www.cnt-nar.be

14.7.2 Social security• Federal Public Service Social Securitywww.socialsecurity.fgov.be• Social Security Portalwww.socialsecurity.be• Crossroads Bank for Social Securitywww.ksz.fgov.be• National Social Security Office (NSSO – RSZ – ONSS)www.onssrszlss.be• National Institute for the Social Insurance of Self-employed Persons (NISSE – RSVZ

– INASTI)www.rsvz.be• Overseas Social Security Office (OSSO – DOSZ – OSSOM)www.dosz.be


14.10.2 Flanders• Flemish Regulation Entity for the Electricity and Gas marketwww.vreg.be• Flemish Energy Agencywww.energiesparen.be (Dutch)

14.10.3 Wallonia• Walloon Energy Commissionwww.cwape.be (French)• Energywww.energie.wallonie.be (French or German)

14.10.4 Brussels• Energy Regulation Commission for the Brussels-Capital Regionwww.brugel.be (Dutch or French)• Brussels Institute for Management of the Environment (IBGE – BIM)www.ibgebim.be (Dutch or French)

• European Patent Officewww.epo.org

14.9 Town planning and Environment

14.9.1 Federal• Federal Public Service Health, Food Chain Safety and Environmentwww.health.fgov.be

14.9.2 Flanders• Environment, nature and energywww.milieuinfo.be (Dutch)• Public Waste Agency (OVAM)www.ovam.be• Town planningwww.ruimtelijkeordening.be (Dutch)

14.9.3 Wallonia• Environmentwww.environnement.wallonie.be (French)• Public Environment Agency (SPAQUE)www.spaque.be (French)• Town planninghttp://mrw.wallonie.be/dgatlp/dgatlp/ (French)

14.9.4 Brussels• Brussels Institute for Management of the Environment (IBGE – BIM)www.ibgebim.be (Dutch or French)• Regional land allocation planwww. urbanisme.irisnet.be (French)www.stedenbouw.irisnet.be (Dutch)

14.10 Energy

14.10.1 Federal• Belgian Commission for Electricity and Gaswww.creg.be (Dutch or French)


15. Loyens & Loeff contacts

BrusselsWoluwe AtriumNeerveldstraat 101-1031200 Brusselst +32 2 743 43 43f +32 3 743 43 10

• Management Team Marc Vermylen Xavier Clarebout [email protected]• Corporate: Grégoire Jakhian, Partner [email protected]• Financial law: Marc Vermylen, Partner [email protected]• Competition: Thomas Chellingsworth, Counsel [email protected]• Tax: Enrico Schoonvliet, Partner [email protected]• Indirect tax: Thierry Charon, Partner [email protected]• Employment: Christian Willems, Partner [email protected]• Commercial law: Geert Bogaert, Partner [email protected]• Intellectual Property: Yves Van Couter, Partner [email protected]• Real Estate/Town Planning/Environment: Linda Dedrie, Counsel [email protected]• Companies in distress: Martine De Roeck, Partner [email protected]

16. Loyens & Loeff offices

AMSTERDAMFrederik Roeskestraat 1001076 ED AmsterdamThe NetherlandsT +31 20 578 57 85F +31 20 578 58 00

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ZURICHDreikönigstrasse 558002 ZurichSwitzerlandT +41 43 266 55 55F +41 43 266 55 59



Editor Geert Bogaert

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Loyens & Loeff is an independent full-service law firm

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