Creating a company without minimum capital in Belgium: is it really possible?

Since May 1, 2019, the Belgian entrepreneurial landscape has experienced a silent revolution: it is now possible to create an SRL with just 1 euro of capital. This removal of the minimum capital of 18,550 euros has raised as many hopes as questions among entrepreneurs. If theoretically you can launch yourcompany without capitalConsequently, the reality turns out to be more nuanced with incompressible costs varying between 1,700 and 2,700 euros excluding VAT. Maître Innocent TWAGIRAMUNGU, an experienced lawyer in Brussels, has been supporting entrepreneurs for almost 20 years in these complex procedures where new freedoms are accompanied by increased responsibilities.

• A detailed financial plan must include projected balance sheets in accordance with the micro-schema of annual accounts (article 3:3 of the CSA) with models established by the Accounting Standards Commission
• Founders holding at least one third of the shares are jointly and severally liable for 3 years, unless proven that the bankruptcy results from unforeseeable circumstances subsequent to incorporation.
• The VVPR-BIS tax regime allows a withholding tax reduced to 20% from the second financial year and 15% from the third, only for small companies (max 50 workers, turnover under €9M)
• Mandatory distribution tests verify that net assets (total assets less provisions, debts and unamortized establishment costs) remain positive and that the company can honor its debts over 12 months

The new Belgian legal framework for creating your company without minimum capital

The Companies and Associations Code has profoundly transformed the company regime in Belgium. ThereSPRL became SRL, abandoning in the process the minimum contribution obligation which often constituted a barrier for many project leaders. This development does not only concern SRLs: cooperative companies also benefit from this flexibility. On the other hand, SAs remain subject to a minimum capital of 61,500 euros, fully paid up upon incorporation. By comparison, the sole proprietorship and the microenterprise allow you to create without any social capital or minimum contribution, thus offering an even more accessible alternative to beginning entrepreneurs.

This new freedom is, however, accompanied by a major counterpart: the obligation to provide adetailed financial plan. This document, the true cornerstone of your company formation, must contain seven essential elements: a precise description of your activity, the identification of your sources of financing, an opening balance sheet as well as forecast balance sheets at 12 and 24 months (established in accordance with the micro-schema of annual accounts provided for in article 3:3 of the CSA), a detailed budget over two years, realistic profitability hypotheses and, where applicable, the name of the external expert who supported you. The Accounting Standards Commission has also established specific models to facilitate this complex task.

The notary will carefully keep this financial plan which can be sent to the court in the event of subsequent difficulties. This requirement aims to hold entrepreneurs accountable and ensure that even acompany without capitalimportant has sufficient initial assets to carry on its activity for at least two years.

Please note:If you are unsure about the legal form suited to your project, be aware that unlike the SRL created with 1 euro, the SA always requires fully paid-up capital of €61,500. For modest projects, sole proprietorship or microenterprise remain viable options without any capital requirements.

The legal risks hidden behind the creation of a company without capital

The removal of the minimum capital does not mean the disappearance of risks. On the contrary, the founders endorse ajoint liability for three yearsif the initial assets prove to be « manifestly insufficient » to ensure the normal exercise of the activity for two years. This notion, assessed according to the criterion of « the reasonably prudent and diligent shareholder », can incur your personal liability up to a minimum of 125,000 euros for small companies. However, founders can escape this liability by proving that the bankruptcy was due to unforeseeable circumstances subsequent to incorporation, with the court then carrying out a marginal analysis of the situation.

It is crucial to distinguish the “founders” – those holding at least a third of the shares – from simple subscribers. Only the former are exposed to this extended liability. Imagine, for example, that you create a consulting company with 1 euro of capital, without providing sufficient cash flow for current expenses. If your company goes bankrupt within three years, the court will review your financial plan and may hold you personally liable for the debts if your forecast was unrealistic.

The new rules also require compliance withstrict distribution testsbefore any dividend payment. The solvency test verifies that net assets remain positive after distribution (net assets are calculated by deducting from total assets provisions, debts and unamortized establishment costs), while the liquidity test ensures that your company will be able to honor its debts for the following 12 months. These mechanisms protect creditors against companies created with symbolic capital. If your company has appointed a commissioner, he or she must verify compliance with these tests.

The concrete consequences for administrators

Directors who violate these rules are exposed to heavy sanctions: mandatory reimbursement of irregular distributions, even made in good faith, and joint liability for the damage caused. An entrepreneur who created hiscompany without capitaltherefore must be extra vigilant in its daily management. More specifically, the founders are automatically responsible for commitments made in the name of the company if the name of the principals was not mentioned, and assume joint liability for all irregularities affecting the constitution.

Practical example:Marc and Sophie together create an IT services SRL with €1 of capital. Marc holds 40% of the shares, Sophie 35%, and an external investor 25%. Only Marc and Sophie are considered « founders » (more than a third of the shares each). They sign an office rental contract for €2,000/month without having planned for this charge in their financial plan. If the company goes bankrupt within the following 3 years with €150,000 in debt, Marc and Sophie can be held jointly responsible for this sum from their personal assets, while the external investor is only exposed to the loss of his initial investment.

Financing your company without capital: creative alternatives

The absence of personal contribution does not condemn your project. THEcontributions in kindconstitute a first alternative: machines, vehicles, patents or know-how can constitute the initial assets of your company. Intangible assets such as patents, customers and know-how may also be the subject of contributions subject to professional evaluation, machines, vehicles and premises constituting the most frequent contributions. Please note, however, that these contributions require the mandatory intervention of a company auditor for their evaluation (the auditor must draw up a detailed report describing each property and its method of evaluation, with obligatory intervention of the notary), generating additional costs representing a significant additional cost to be planned in the budget.

Contributions in industry, although legally possible, present a major tax trap: they deprive you of the VVPR-BIS regime allowing you to benefit from a reduced rate on dividends (20% from the second financial year and 15% from the third instead of 30%). This exclusion can represent a significant additional cost in the long term. Note that this advantageous tax regime is reserved for small companies meeting three criteria: maximum 50 workers, turnover under €9,000,000 and balance sheet total under €4,500,000, with fully paid-up registered shares.

Innovative financing solutions

The Belgian alternative financing landscape has been considerably enriched. THEcrowdfundingvia platforms like Lita or MiiMOSA allows you to validate your concept while creating a community of ambassadors. The tax shelter for start-ups offers a tax reduction of up to 45% to investors who finance your company, making your project more attractive. The approved platforms Spreds (for share subscription) and BeeBonds (for bonds) particularly facilitate access to this tax system.

Micro-credit organizations provide a lifeline for entrepreneurs without:

• Crédal and microStart in Brussels and Wallonia (up to 25,000 euros)
• Hefboom in Flanders with similar conditions
• Startlening for larger amounts (up to 100,000 euros)
• The Starteo loan allowing you to borrow up to €750,000 to take over an existing business

Don’t forget « love money » – financing by those close to you – which, beyond the financial aspect, demonstrates to banks the trust of those around you. Business angels bring much more than capital: their experience and their network can prove decisive for acompany without capitalimportant initial.

Practical advice:Banks generally require a minimum personal contribution of 30% to grant a professional loan. They also analyze your personal credit score as well as your banking history. Before applying for a loan, make sure you have an impeccable record: no recurring overdrafts, no registration with the Centrale des Crédits aux Particuliers, and ideally regular savings demonstrating your management capacity.

The real, incompressible costs of creating a company

Even if you create your company with 1 euro of capital, certain costs remain unavoidable. THEmandatory notary feesrepresent the largest part, followed by registration with the Crossroads Bank for Enterprises (105.50 euros) and activation of your VAT number (70 to 80 euros). The entire process usually takes 3-5 weeks.

Beyond these administrative costs, plan an overall budget of 9,000 to 10,000 euros including your initial working capital requirements. This sum, although modest compared to the old compulsory 18,550 euros, remains necessary to calmly start your activity and avoid the legal pitfalls linked to insufficient initial assets.

The office of Maître Innocent TWAGIRAMUNGU regularly supports Brussels entrepreneurs in the creation of their company, whether or not they have substantial capital. With its expertise since 2005 incompany law and constitution of SRLand in compliance, Maître TWAGIRAMUNGU guides you in the development of your financial plan, the optimal structuring of your contributions and the prevention of legal risks. If you are considering creating your business in Brussels or Belgium, do not hesitate to seek their advice to secure your entrepreneurial project from its foundations.