■ Choice of Business Entities

· What types of entities can I consider?

Foreign companies (or individuals) establishing a presence in Belgium have the same choices as would a Belgian entity (or individual); Belgian law makes no distinction whatsoever. There are four basic choices: branch; subsidiary; partnership; sole proprietorship. In practice, most foreign companies investing in Belgium either open a branch office or establish a subsidiary. Some individuals operate as an unincorporated sole proprietorship. Partnerships, both general and limited, are a far less common form of doing business than in other countries.

Various groups, in particular trade and other associations, can opt to establish alternative entities, such as not-for-profit associations, economic interest groupings, and related entities.

· How to choose between branch and subsidiary?

The choice for Korean companies between operating as a branch or a subsidiary of the Korean parent entity is a multi-faceted decision, although primarily a tax-based and marketing-based decision.

A branch does not have separate legal corporate entity from the Korean entity. The main advantage is that start-up losses will be consolidated with (i.e. off-set against) profits in Korea, resulting in overall lower taxes. As possible downsides, the assets of the Korean company will be exposed entirely in the event the branch office is held liable for anything, and the annual filing requirements will reveal certain financial information of the Korean entity-an issue in particular for privately-held Korean companies (see further below). Finally, from a marketing viewpoint, a branch office will not be seen as a Korean company.

Ultimately, most foreign companies operating in Belgium do so as a subsidiary of the Korean entity, i.e. a company which has a separate (legal) identity from the parent company. Such subsidiaries can be set up as a stock corporation (naamloze vennootschap--société anonyme), or as a limited liability company (besloten vennootschap met beperkte aansprakelijkheid-société privée à responsabilité limitée).

· What about alternative entities?

Depending on the needs of a particular business entity or group, it may even be more tax advantageous to set up as either a non-profit corporation (association sans but lucratif/vereniging zonder winstoogmerk), a Belgian or European economic interest grouping, or even a philanthropic association. All have separate establishment procedures.