Selling or Transferring Your Business in Belgium: Complete Guide

The Two Transfer Methods

In Belgium, a business transfer can be carried out using two main methods, each with distinct legal and tax implications.

Share Deal

The buyer acquires the shares of the company. The company retains its legal identity, contracts, assets, and liabilities.

Advantages:

• Complete legal continuity of the company
• Administrative simplicity (no individual transfer of contracts)
• Transfer of licenses and permits
• Capital gains on shares often tax-exempt for individual sellers

Disadvantages:

• The buyer assumes all liabilities (including hidden liabilities)
• Need for thorough due diligence
• Possible joint liability for tax and social debts

Asset Deal

The buyer acquires the individual assets of the business: equipment, inventory, clientele, trademarks, selected contracts, etc.

Advantages:

• The buyer chooses which assets to acquire
• No assumption of hidden liabilities
• Tax deductibility of depreciation on the purchase price

Disadvantages:

• Individual transfer of each contract (counterparty consent required)
• Heavier formalities (publication, creditor notification)
• Less favorable taxation for the seller (taxation of capital gains on assets)

Steps in the Transfer

1. Preparation and Valuation

The first step is determining the value of the business. The most common methods are:

• Asset-based method: revalued net asset value
• Multiples method: EBITDA multiple (typically 3 to 7x depending on the sector)
• DCF method (Discounted Cash Flows): discounting future cash flows
• Mixed method: combination of the above methods

2. Letter of Intent (LOI)

The potential buyer expresses interest through a letter of intent that defines:

• The indicative price and main conditions
• The exclusivity period for negotiations
• Conditions precedent (due diligence, financing, etc.)
• Confidentiality commitments

3. Due Diligence

The buyer conducts a thorough audit of the business:

• Financial due diligence: accounts, cash flow, debts, off-balance-sheet commitments
• Legal due diligence: contracts, litigation, intellectual property, compliance
• Tax due diligence: tax position, reassessment risks
• Social due diligence: employment contracts, collective agreements, labor disputes
• Operational due diligence: processes, key clients, suppliers

4. Negotiation and Transfer Agreement

The transfer agreement is the central document of the transaction. It includes:

• The price and payment terms (earn-out possible)
• Seller representations and warranties (liability guarantee)
• Non-competition clauses (limited duration and territory)
• Conditions precedent and resolutory conditions
• Indemnifications in case of misrepresentation

5. Closing

Closing is the effective completion of the transfer:

• Transfer of shares or assets
• Payment of the price
• Delivery of documents
• Post-closing formalities (publication, notification, CBE)

Tax Aspects

For the Individual Seller

• Share deal: capital gains on shares realized as part of normal management of private assets are in principle tax-exempt
• Asset deal: capital gains are taxed at 16.5% (cessation of activity) or at the progressive rate

For the Corporate Seller

• Share deal: capital gains on shares are exempt if the taxation condition and the holding period condition (1 year) are met
• Asset deal: capital gains are subject to corporate tax (25%)

Conclusion

Considering selling your business? LegalBelgique supports you at every step: valuation, transaction structuring, agreement drafting, due diligence, and closing follow-up. Maximize the value of your transfer with our expertise.