KPMG Legal and Tax September 2013

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KPMG Legal and Tax September 2013

  1. 1. Guest Lecture: Company start-up from a legal and tax perspective September 2013
  2. 2. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 2 Agenda Tax ■ Accountancy ■ Determination of taxable base ■ R&D incentives ■ Financing ■ Foreign expansion Company law ■ Introduction ■ Definition ■ Legal Forms ■ Setting-up a company ■ Commonly used forms ■ Corporate Bodies / Governance ■ Case Study Q&A
  3. 3. Legal
  4. 4. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 4 Introduction: Why start with a company? Four reasons to start with a company - A company as a form of cooperation - Cooperation between labor and capital - Limitation of liability - Tax reasons
  5. 5. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 5 Introduction: A company as a form of cooperation No subordination - common goal
  6. 6. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 6 Introduction: Cooperation labor and capital Interaction creativity - labor and capital
  7. 7. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 7 Introduction: Limitation of liability Share capital VS personal liability
  8. 8. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 8 Introduction: Tax reasons Individual taxation - Corporate taxation
  9. 9. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 9 Definition: What is the definition of a company ? Article 1 Companies’ Code: “A company shall be incorporated by an agreement pursuant to which two or more persons agree to contribute something with as purpose to carry out one or more accurately described activities and to give the shareholders a direct or indirect financial benefit.”
  10. 10. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 10 Definition: Constitutive elements - An agreement - Exceptions: - E-BVBA - NV after incorporation - Purpose is to make profit - Civil purpose / Commercial purpose - Exception: social purpose - In cash - In kind - Labor? - Direct or indirect - Important: Lion clause Plurality Contribution Profit Making Purpose Loss/Profit Participation Article 1 Companies’ Code
  11. 11. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 11 Legal Forms NO LEGAL PERSONALITY Civil law partnership Maatschap La société de droit commun Temporary partnership Tijdelijke handelsvennootschap La société momentanée Silent partnership Stille handelsvennootschap La société interne
  12. 12. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 12 Legal Forms LEGAL PERSONALITY General partnership Liability of partners for debts of the company Vennootschap onder firma (VOF) Société en nom collectif (SNC) Ordinary limited partnership Liability of the general partner for debts of the company Commanditaire vennootschap (Comm. V.) Société en commandite simple (SCS)
  13. 13. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 13 Legal Forms LEGAL PERSONALITY Private limited liability company Besloten vennootschap met beperkte aansprakelijkheid (BVBA) Société privée à responsabilité limitée (SPRL) Cooperative company without limited liability Cooperative company with limited liability Coöperatieve vennootschap met onbeperkte aansprakelijkheid (CVOA) Coöperatieve vennootschap met beperkte aansprakelijkheid (CVBA) Société coopérative à responsabilité illimitée (SCRI) Société coopérative à responsabilité limitée (SCRL) Public limited liability company Naamloze vennootschap (NV) Société anonyme (SA) Limited partnership with a share capital Commanditaire vennootschap op aandelen (Comm. VA) Société en commandite par action (SCA)
  14. 14. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 14 Legal Forms LEGAL PERSONALITY European company Europese vennootschap (SE) Société européenne (SE) European cooperative company Europese coöperatieve vennootschap (SCE) Société coopérative européenne (SCE) Agricultural partnership Landbouwvennootschap (L.V.) Société agricole (S. Agr.) (European) Economic interest grouping (Europees) Economisch samenwerkingsverband ((E)ESV) Groupement d‘intérêt economique (Européen) (GIE (E))
  15. 15. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15 Setting-up a company
  16. 16. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 16 Setting-up a company Think smart… act smarter!
  17. 17. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 17 Setting-up a company Requirements: - Financial plan (liability!) - Deed of incorporation - Share capital / bank account - Registration of the company in the crossroad bank for enterprises - Application VAT-number - Registration company with a social security fund - Registration directors with a social security fund
  18. 18. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 18 Commonly used forms: characteristics Private limited liability company (BVBA) - One or more founders (E-BVBA) - Minimum capital: - € 18.550,00 - paid up with one SH: € 12.400,00 - paid up with two SH: € 6.200,00 - in any case pay up 1/5th per share - Notary deed of incorporation - Conditional transition of shares - S-BVBA? Public limited liability company (NV) - Two or more founders - Minimum capital: - € 61.500,00 - paid up € 61.500,00 at least - in any case pay up 1/4th per share - Notary deed of incorporation - Free transition of shares ↔ shareholders agreement - More flexible financing techniques: - Warrants - Convertible bonds - Solicit funds from the public
  19. 19. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 19 Commonly used forms: characteristics Private limited liability company (BVBA) - Manager(s) (Zaakvoerder(s) – Gérant(s)): - One or more managers - Possibility of Board of managers - Duration mandate: definite or indefinite - Statutory appointment possible Public limited liability company (NV) - Directors (Bestuurders – Administrateurs): - Minimum three directors (exception: two directors in case of ≤ 2 shareholders) - Board of directors - Duration maximum: 6 years - Ad nutum dismissal
  20. 20. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 20 Corporate bodies governing the Public Limited Liability Company - At least 3 directors (Exception: 2 shareholders) - Residuary powers - Convene the General Meeting of Shareholders -Conflicts of interest - Explicit powers in Companies’ Code or articles of association - Approval annual accounts - Discharge of directors - Amendments to the articles of association - Needs to be foreseen in the articles of association - Transfer of powers by the board of directors (exception general management) - At least 2 persons - Needs to be foreseen in the articles of association - Can be a director, but also a non- director - Daily management
  21. 21. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 21 Corporate Governance - Anglo Saxon approach: organization of relationship between owners & managers of the company: - Separation of ownership & control - Protection of the minority shareholders - Creation of Committees, Non-Executive directors,…: - Audit Committee - Remuneration Committee: Golden Parachutes - Nomination Committee - Corporate Governance Statement - Comply or explain - Quid other stakeholders: Corporate Social Responsibility
  22. 22. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 22 Case study
  23. 23. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 23 Case study - Start-up: Spin-off of Ghent University in 1997 - Founder: Thierry Bogaert (CEO) - Employees: 250 - Sector: Agricultural Biotechnology - Worldwide activities: Belgium - USA - South-East Asia - Products: Pesticides – agrotechnology - crop seeds - Legal form: Public limited liability company (NV)
  24. 24. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 24 Case study: Timeline 1997: Start up as Spin-Off of UGent - Initial investors: Gimv and AIST (Agency for Innovation by Science and Technology) - 1999: FMC Corporation Partnership - 2003: Sumitomo Chemical Company Partnership - 2004: Monsanto Partnership – Pioneer Hi-Bred (2004-2008) Partnership - 2005: IPO at Euronext Brussels - successfully raised more than 33 million euro - 2009: Leads agri Partnership 2012: Syngenta (Swiss Biotechnology company) takeover-bid for an amount of 403 million euro
  25. 25. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 25 Case study: Shareholdership
  26. 26. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 26 Case study: Stock price 2005 - 2012
  27. 27. Tax
  28. 28. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 28 Accounting result as starting point The starting point for determining taxable income are the financial statements and accounting result ■ In principle, all Belgian companies are obliged to keep (some kind of) financial accounts ■ Needs to be coherent and documented so that tax authorities can verify
  29. 29. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 29 Balance sheet - liabilities To start a company, funding is necessary ■ Share capital ■ Debt, such as – Shareholder loan – Bank loan – WinWin-loan (only for Flemish SMEs)  These resources compose the ‘liabilities’ side of the accounts  Interaction (Belgian) tax law  Notional interest deduction on equity  Interest cost on debt
  30. 30. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 30 Balance sheet - assets With these resources, operations can be funded and the necessary assets can be developed and acquired ■ Non-current assets – Tangible fixed assets ■ Land/buildings ■ Machinery and equipment (computers etc.) ■ ... – Intangible fixed assets ■ Patents ■ ... ■ Current assets – Accounts receivable – Stock – Cash  These assets compose the ‘assets’ side of the accounts, used in running the business
  31. 31. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 31 Income statement Running the operations leads to revenues and expenses ■ Revenues – Business income – Financial income ■ Expenses – Goods & Services – Salaries – Depreciation – Financial costs ■ Difference = accounting result  Profit & Loss account
  32. 32. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 32 Link between accountancy and taxation Primacy of accounting legislation ■ Accounting rules are applicable for taxation unless the tax legislation provides an explicit deviation ■ Accounting law = basis for taxation Taxable income is determined on the basis of the income statement ■ However: Taxable base ≠ accounting result! ■ Corrections on net income
  33. 33. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 33 Determination of taxable base
  34. 34. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 34 Foreign expansion and taxes ■ Taxable presence in foreign jurisdiction? – Provision of services or negotiations of contracts abroad – Joint venture / partnership – Local company or branch ■ Tax treaty between Belgium and foreign jurisdiction? – Purpose is avoidance of mitigation of double taxation on same income in Belgium and abroad
  35. 35. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 35 Tax attention points regarding funding Debt (loans) ■ Interest remuneration: in principle tax deductible Equity (capital) ■ No interest remuneration, but dividends  not tax deductible ■ But notional interest deduction possible in Belgium Thin capitalization rule ■ If intercompany debt exceeds 5 times equity  interest is not tax deductible without requalification in dividend ■ Requalification of interests into dividends – Loans by individuals who are shareholder of the company (or the spouse or the minor children of these persons) and by individuals or foreign companies being a director if these exceed the equity
  36. 36. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 36 R&D tax incentives 80% Patent Income Deduction (PID) ■ 6,8% income tax on qualifying patent income ■ Intellectual Property (IP) development and overall operational expenses: fully deductible ■ For SME’s, the condition of research center constituting a branch of activity is abolished Wage withholding tax exemption ■ For researchers employed: 75% exemption of the wage withholding tax due the tax authorities (as from 1 July 2013: 80% exemption) Increased investment deduction ■ Only for assets related to R&D –One-off deduction: 14,5% of acquisition or investment value –Spread over depreciation period: 21,5% of the depreciation amount ■ Alternative: R&D tax credit –Refundable if not effectively used after five consecutive assessment periods ■ Full tax exemption qualifying R&D subsidies (e.g. IWT)
  37. 37. Q & A
  38. 38. Thank you Presentation by Gert Cauwenbergh gcauwenbergh@klaw.be +32 2 708 49 85 Koen Van Ende kvanende@kpmg.com +32 2 708 36 72 Thomas Zwaenepoel tzwaenepoel@kpmg.com +32 2 708 38 61
  39. 39. © 2013 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International Cooperative (“KPMG International”).

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