When starting a business, there are some key tax issues to consider.
- Choice of legal entity and country of establishment. Belgium is a small country, close to Luxembourg, France and Holland. Depending on the circumstances, the owners, the organization and the nature of your business, etc. it should be considered whether to establish or not the legal entity in Belgium.
- General income tax questions. How do we have to report the payments made to non-businesses providers (Uber-related tax issues)? What information do we need to collect on our clients/providers to comply with our tax reporting obligation? Are we eligible for specific tax deduction (R&D deduction, notional interest deductions, etc.)?
- Value added tax. Your new business will probably need to collect VAT on the sales of its goods and services. For some businesses VAT can be an important charge and could generate significant obligations and formalities on a day-to-day basis. It is important to determine correctly, from the beginning, the VAT treatment of your activities and the VAT optimization schemes you could put in place.
- Tax Incentives. Belgium has developed several tax incentives for new businesses, such as the “tax shelter” for start-ups (tax deduction for the individuals investing up to 100.000 EUR to acquire up to 30% of the shares in new start-ups), the exemption from payment of a part of the payroll taxes, the exemption for the interests paid to companies lending money to start-ups via crowdfunding platforms, the exemption from patronal payroll taxes on the first employee.
- Stock option issues. Start-ups and new businesses often grant stock options to retain their best employees. Stock option plans are also valued by investors as it is a way to preserve the composition of the team they invested on. If not done in compliance with tax guidelines, such grants of stock options can trigger adverse tax consequences for the company and/or the employees.
- Taxation on founders’ and managers’ revenues. The CEO and more generally the managers of the company will have to structure his/her remuneration in an efficient way in order to avoid heavy taxation on his revenues.
IP / IT
Intellectual Property Rights (IP). For many start-ups, creativity is of the essence – be it technological innovations, big data solutions, graphic or audio-visual expressions, design furniture or jewellery. These creations can be protected under intellectual property rights, such as copyright or design rights (even patents are possible for technical inventions). It is important for start-ups to get their IP strategy straight – right from the start, which entails various aspects:
- Clear agreement among the founders of the start-up (including on trade secrets and confidential information)
- Agreements between the starters (or the start-up if it is already incorporated) and the creators whom they work with
- Contracts with clients
- Contracts with other companies wishing to use the start-up’s creations (licence agreements)
A start-up should also think of its branding and register its preferred domain names and trademarks (verifying whether these are still available!).
Data protection. Many tech start-ups offer digital solutions for small or bigger problems (e.g. from fitness apps to micro finance management tools). Now “data” are everywhere; consequently every tech start-up will have to think how it deals with (personal) data:
- Processing of personal data and the legal obligations which this entails
- Roles of the data controller and processor
- Contractual solutions
- Storage and security
IT contracts. Many tech start-ups develop complex solutions and offer various types of services which require an active contribution from both the start-up and its clients. These roles should be described in quite sophisticated contracts, covering:
- Description of the solution
- Precise description of the obligations of each party
- Price and payment
- Acceptance process
- Management of the project (including possible changes of the solution, management of conflicts)
- Termination and exit
The very first steps when considering the launch of entrepreneurial activities is to consider the incorporation of a company. A company will allow to circumscribe the liability of the founders and foresee the basic rules of functioning (management, decision taking, transfer of shares, entry of new shareholders/investors…). It is highly important to set up all these aspects carefully as from the start not only to set the basic rules of functioning amongst the founders but also in order to anticipate future partnerships, the entry of investors or the sale of the business. The assistance of professionals in this process is of course recommended.
We provide assistance for the whole process of incorporation and amongst other:
- Identification of the ideal corporate form
- Incorporation process
- Articles of association – By-Laws
- Shareholders’ agreement
Financing your business
Financing start-ups is at the core of their development and come very soon into question. There are various ways to finance the company. However it often occurs with professional investors (funds, venture capitalists, business angels …) with whom the founders will negotiate subscription & shareholders’ agreements. These agreements provide inter alia for the protection against dilution, the processing of voting rights and the securing of the founders’ position in the management of the company.
More generally, we advise start-ups in various aspects of company’s financing:
- Subscription & shareholders’ agreements
- Bonds’ issue
- Crowdfunding & Public offering
- Tax shelter & other tax incentive
Depending on the contemplated activity start-ups might need certain permits and can be subject to prudential control.
Some activities are thoroughly regulated (pharma, food, energy, finance…) and one should have particular attention to regulatory restrictions and compliance before the beginning of activities. We provide for assistance and advices in respect with regulatory matters and inter alia:
- Managerial capabilities
- Environmental, health & safety
- Data protection
- Licenses (FSMA, National Bank, Minister of Economy …)
Start-ups are faced from the beginning to the question of the protection of their know-how and trade secrets. It is highly important to ensure that all necessary measures are taken to protect the confidential information as from the very beginning of the project. We can advise you on confidentiality agreements (“non-disclosure agreements” or “NDA”).
All start-ups begin their activities by entering into all kind of agreements (lease, services, supply agreements, etc.). They should be aware of what they are signing and to what extend they can make use of their negotiation power. Drafting general terms and conditions applicable to their existing and future business relations can be very useful in that respect. All start-ups should also protect their business and make sure sensitive information remains confidential. Of course, sharing confidential information with third parties (providers or investors) may sometimes be necessary. In order to prevent any leaks, entering into a written non-disclosure agreement (NDA) is necessary. Furthermore, the selling of goods or services to consumers implies the compliance with consumer protection rules. Start-ups need to know how consumers must legally be informed in order to avoid numerous unfair trade practices.
More generally, we can advise you on the following matters:
- Drafting of tailor-made contracts
- Drafting of the general terms and conditions
- Drafting of Non-disclosure agreements (NDA)
- Advice on the compliance with consumer protection rules (including for e-commerce)