1. Requirement to register certain assets deals with the Belgian Registration Tax Authorities

Asset deals which qualify as a transfer (including a sale or a capital contribution) of a branch of activity or a universality of goods (business as a whole) located in Belgium are subject to a new formality since January 10, 1997. The agreement (or deed) whereby the assets and liabilities are transferred must be registered with the Belgian Registration Tax Authorities within 15 days. This does not apply to share deals.

The registration requirement only applies if the transferor and the transferee are (or will become as a result of the transaction) Belgian V.A.T tax payers.

A transfer of a branch of activity consists of a transfer of all assets (including real estate) invested in a business capable of functioning on its own from a technical and operational point of view.

A transfer of a business as a whole (universality of goods) consists of a transfer of all the business's assets and liabilities (receivable and payable may, however, be excluded from the transfer).

A registration tax (amounting in principle to BEF 1,000) is due upon registration of the agreement.

The agreement must be registered regardless of the nationality of the parties and the law governing the transaction (e.g., an agreement between two US companies governed by US law will have to be registered if this agreement operates a transfer of a branch of activity located in Belgium). If the agreement is not drafted in one of the three Belgian official languages (i.e., French, Dutch or German), the Belgian Registration Tax Authorities may request a translation certified as a true translation by one of the parties.

2. Consequences attached to the registration

Two important consequences flow from the registration formality (or the absence thereof):

(a) The transfer is not enforceable against the Belgian Income Tax Authorities up to the end of the second month following the month during which the agreement is registered. During this period of time, the Belgian Income Tax Authorities may therefore seize or register a mortgage on any of the assets transferred to the transferee if the transferor has outstanding tax liabilities.

(b) The transferee is jointly liable for the tax liabilities due by the transferor at the end of this two-month period. This joint liability of the transferee is limited, either to the amount which the transferee has already paid for the transfer during this two-month period, or to the nominal value of the shares issued as a consideration for the transfer during this period of time. As a practical matter, the transferee should therefore pay the purchase price only after the end of this two-month period.

The new rules with respect to the non-enforceability and joint liability are not applicable if the transferor obtains a certificate from the collector of income taxes certifying that the transferor has no tax liabilities. In this case, the certificate must be registered together with the agreement no later than 20 days after the date of the issuance of the certificate.
The income tax collector has a one-month period as of the filing of the request from the transferor to issue or refuse to issue the certificate. No certificate can be obtained if a tax audit concerning the transferor's tax situation is ongoing or if the Belgian Income Tax Authorities have formally requested the transferor to provide certain information about his tax situation.

The content of this article is intended to provide general information on the subject matter. It is not a substitute for specialist advice.

De Bandt, van Hecke & Lagae - Brussels (32-2) 501.91.80