The recent changes in the Belgian legislation have been presented to the international public in February, when visit.brussels brought its partners to London. Here is what has been discussed and should be relevant for any association planning to have its presence in Belgium.
The international context, and in particular Brexit, has led all European associations – no matter where they are located – to create strategies to remain “European+UK”, thus making sure that they will not lose members, partners, funding or sponsors. A respective roadmap might therefore been required to deal with the respective matters.
Among them might have been the issue of the headquarters, operational seat or branch of an association. Brussels is already N°1 city in the world of association headquarters and N°2 lobby capital in the world after Washington, with some 25.000 association staff who organise major conventions here: this of course has a knock-on effect on the local hotel, restaurant and service trades.
Beyond meeting matters or recent regulatory changes for hiring incentives, Belgium has been progressive in areas such as company law with the recent adoption of the new Code for Companies and Associations, which also allows a seamless transboundary transfer of companies and associations to Belgium.
With the aim to update of the various regulatory changes and making sure that this opportunity is recognised in the association world, visit.brussels organised seminars in London where experts from different areas explained the advantages which Brussels offers to associations, in particular those in the UK benefiting from EU funding which will inevitably disappear with Brexit.
How to be present in Belgium - New immigration procedure for foreign non-profit organisations
Setting up a presence in Belgium by foreign non-profit organisations (hereafter: “FNPO”) usually corresponds to the following aims:
- maintain/reinforce their relationship with their members established in the European Union (hereafter: “EU”),
- pursue the defence of their non-profit purposes towards the EU institutions, or
- have access to EU grants/funding.
Several factors should lead the choice of a FNPO in a certain direction (e.g. property of assets, extent of the liability, need for membership, number of assets, etc.). Moreover, such a choice shall be carefully made to avoid that the FNPO ends up with a presence or Belgian non-profit vehicle which is not appropriate, useless or even extremely burdensome to manage.
While the Belgian legal system currently offers three options to FNPOs to ensure a presence in Belgium:
- the representation office;
- the Belgian branch office; and
- a Belgian non-profit legal entity (i.e. subsidiary being an association or a foundation),
the new Code for Companies and Associations introduced a fourth option, namely:
4. a new immigration procedure for FNPOs (i.e. cross-border transformation).
This means that, as from May 1st, 2019, FNPOs will be allowed to choose an even more radical way to ensure their presence in Belgium by becoming a Belgian non-profit legal entity in an easy way.
Indeed, this new procedure provides for an automatic transfer of all assets, liabilities and members of the FNPO as well as the continuity of the legal personality of the latter. For some FNPOs, the continuity of the legal personality can be, a decisive advantage if they wish to immediately meet some eligibility criteria for EU grants/funding.
It results from the above that as from May 1st, 2019, Belgian law will offer a wider and more complete range of options to FNPOs. Each option having its own advantages, disadvantages and particularities, we can only encourage and recommend FNPOs to seek the appropriate legal and tax advice when considering a presence in Belgium.
EAG Roadmap to conquering Brexit: audit, evaluate, gear-up.
A change requires to pay attention to all the steps undertaken by an association. Therefore a scheme allowing to properly go through the change in the new international circumstances should be taken into consideration.
The audit phase allows associations to assess the impact of Brexit on their mission, members, strategy & operations.
It is the moment to:
- check if wording needs to be changed in the statutes, mission or member terms (e.g. when these refer to the ‘members of the European Union’);
- seize the opportunity to review the member value proposition and member services (e.g. when needs concerning information on Brexit and demands for partner brokerage increase).
- review how sources of income (membership, grants) are impacted. This goes beyond eligibility of funding, but can also relate to issues such as fluctuating exchange rates or increasing transfer costs.
Once risks and needs for change have been identified, it is time to evaluate what’s possible – and what’s feasible.
While legally possible, not every UK-based European association is willing to move their headquarters across the channel. Moreover, even though statutes can be changed, the timing and the reluctance of key stakeholders may make it difficult to do so within a limited timeframe.
There is not just ‘the one’ solution, but many different options when it comes to remaining European. If EU government relations are of key importance, an association may rent offices and hire staff in Brussels, make use of an address in a business centre, or benefit from the facilities of a Belgian member.
Whatever the outcomes of Brexit are: a thorough evaluation ensures that options, their implications, benefits and risks, costs and timeline are well known.
Once associations have developed their roadmap and contingency plans, it is time to prepare for implementation.
Here, the most important task is to identify internal champions and external partners that ensure that the transition runs smoothly and efficiently. Cultivating internal champions – such as board members, funders, advocacy partners and key members – will help to effectively drive change within the association. At the same time, it’s essential to find the right partners that can help you implement these changes on an operational level.
Your ‘Brexit Team’ is likely to include legal and financial advisors with detailed know-how of the relevant markets. If you plan to spend more time at a new location, you are also advised to find local experts – like local members & peers, ‘sister’ associations, association bureaus, recruitment agencies – that can provide you with deep local insights into how things really work. Association management companies (AMC) offer a gateway and a one-stop-shop to such know-how.
Incentives for hiring in Belgium
When launching a nonprofit in Brussels an organisation will eventually need special expertise to review its personnel policies.
If you set up your association in Belgium, you will automatically benefit for massive social contribution reductions your first 6 employees whatever your statute (branch, subsidiary, representation office, ….):
- full exemption from employers’ contributions for the first hiring, unlimited in duration;
- lump sum reductions in contributions for the 2nd to the 6th employees for 3 years.
The hired employees do not need to be Belgian and offering them an unfixed term contracts is not a requirement. Furthermore, the reductions are not linked to the employees but to the jobs created. So, if the work contracts are terminated, the employer keeps benefiting from the reductions as long as the terminated employees are replaced.
To benefit from the full exemption for the first employee, the first hiring should take place before the 31st of December 2020.
To conclude on a pragmatic note – it is for all the involved parties to make sure that all the recently adopted measures and the new Code are as good in practice as on paper by cutting administrative requirements and bureaucracy for new arrivals to a minimum. This is what counts in the end in the current high-speed, high-mobility world.
This article has been written with the support of visit.brussels’ partners to whom we thoroughly thank for their input and participation at the events.
On behalf of
FAIB – Federation of International and European Associations in Belgium
Adrian Harris, President
Interel – Association Management
Benita Lipps, Head of Association Management