The Simple Company in Belgium: An Underrated but Powerful Legal Form

What Is a Simple Company?

The simple company (formerly "civil partnership") is the most basic form of company in Belgian law. Defined by the Code of Companies and Associations (CCA), it is characterised by the absence of legal personality. It is a contract between two or more persons who agree to pool their contributions with a view to sharing any resulting profit.

Despite its apparent simplicity, the simple company is an extremely powerful legal tool, particularly for succession planning and wealth management.

Main Characteristics

No Legal Personality

The simple company has no legal personality separate from that of its partners. It therefore cannot hold rights or obligations in its own name. Assets contributed to the company remain in joint ownership between the partners.

Simplified Creation

• No notarial deed required: a simple private agreement suffices
• No publication in the Belgian Official Gazette
• No minimum capital
• No mandatory registration at the CBE (unless it carries on a commercial activity)

Unlimited Liability

Partners bear unlimited liability for the debts of the company, but this liability is not joint and several (unless otherwise agreed). Each partner is liable proportionally to their share in the company.

Common Uses

Succession Planning

This is the most common use of the simple company in Belgium. Parents can contribute securities or an investment portfolio to a simple company, gift the shares to their children while retaining control over management and usufruct of income.

This technique allows:

• Transferring wealth during one's lifetime
• Reducing inheritance taxes
• Retaining control over asset management
• Avoiding joint ownership between heirs

Real Estate Wealth Management

The simple company can be used to manage real estate assets among several family members, avoiding the disadvantages of classical joint ownership.

Joint Professional Practice

Some liberal professionals (doctors, lawyers, architects) use the simple company to practise their profession together while retaining their professional independence.

Tax Regime

The simple company is fiscally transparent. It is not subject to corporate tax. Income is taxed directly in the hands of the partners, each for their share, under personal income tax.

However, attention should be paid to the following:

• Investment income (dividends, interest) is subject to withholding tax
• Capital gains on shares realised within normal management of private assets remain in principle exempt
• In case of professional activity, income is taxed as professional income

Drafting the Articles

Although the law does not require any particular form, it is strongly recommended to draft detailed written articles covering:

Conclusion

Want to create a simple company for succession planning or wealth management? LegalBelgique supports you in drafting tailor-made articles adapted to your wealth objectives. Consult our experts today!