(R)Evolution in the Belgian civil law partnership landscape. What’s new?
The Act of 15 April 2018 reforms Belgian business laws in many aspects, with important consequences for civil law partnerships. Moving forward, these civil law partnerships will be considered as 'enterprises' with all the corresponding obligations thereof.
Below is a brief overview of the consequences of this amendment for civil law partnerships.
1. Civil law enterprises will have to register with the Belgian Crossroads Bank for Enterprises (CBE)
Under the new rules, Belgian civil law partnerships, such as companies, non-profit associations and foundations, will also have to register with the Belgian Crossroads Bank for Enterprises (CBE). The CBE is the online databank of the FPS Economy which contains all relevant information on Belgian enterprises. Upon registration, the Belgian civil law partnerships will receive an enterprise number.
New incorporated Belgian civil law partnerships (incorporated as from 1 November 2018) must register immediately before engaging in any activity.
Belgian civil law partnerships incorporated before 1 November 2018 must register at the latest by the end of April 2019. The obligation to register resides with the Director of the civil law partnership.
A significant downside to the obligation to register with the CBE relates to the loss of discretion; one of the most important features of the Belgian civil law partnerships. In the event that the family name of the members is included in the name of the civil law partnership (incorporated before 1 November 2018) a change of name may be considered before the end of April 2019.
2. Mandatory bookkeeping
As a result of their qualification as ‘enterprises’, Belgian civil law partnerships are required to have a bookkeeping system that corresponds with their size and nature. This implies that for civil law partnerships with an annual turnover that exceeds € 500,000 (excl. VAT), a double-entry bookkeeping has become mandatory. For civil law partnerships with an annual turnover below € 500,000, a single-entry bookkeeping will suffice (i.e. a journal for purchases, sales, a financial journal and an inventory).
The bookkeeping (and all supporting documentation) must be saved by civil law partnerships for a definite period of at least 7 years (only 3 years for certain documents).
For the moment, there is no obligation to file or publish the annual accounts of any civil law partnership.
Belgian civil law partnerships incorporated as from 1 November 2018 must comply immediately. For Belgian civil law partnerships incorporated before 1 November 2018, a distinction is made based upon the date on which the next financial year starts:
(1) if the financial year synchronizes with the calendar year, the new obligations will apply as from 1 January 2020;
(2) if the financial year differs from the financial year, the new obligations will only apply as from the next financial year starting after 1 April 2019;
(3) if the next financial year starts before 1 April 2019, the new rules will only apply as from the first financial year starting in 2020.
3. Joint liability for the Partners of civil law partnerships
The new status of Belgian civil law partnerships also has far-reaching consequences for the members of these partnerships.
The members of the Belgian civil law partnership can be held jointly and severally liable for debts incurred by the civil law partnership as from 1 November 2018. This is an important change since up until now members of civil law partnerships could only be held liable for their individual part. As from 1 November 2018, creditors of the civil law partnership could address the individual members (and their private assets) for debts incurred by the civil law partnerships, even if, for example, they account for only 1 % of the members of the civil law partnership.
Further to comments on the new legislation, some authors have reasoned that this liability could be excluded in the articles of association of the civil law partnership. If so, this would be an important limitation to the liability of the members of civil law partnerships. Time will tell whether this limitation will become applicable, especially taking into account that the Law does not foresee such a possibility. In any case, it is however advisable to adjust the articles of association of civil law partnerships in such a manner. This is even more important in the event that minors are involved in the civil law partnership.
4. Ultimate beneficial owners becomes public in the UBO register
Since Belgian civil law partnerships are defined as enterprises, they are also subject to the new Ultimate Beneficial Ownership (UBO) legislation as recently implemented in Belgian Law.
Any and all Belgian companies and foundations (including civil law partnerships) must register their Ultimate Beneficial Owners in the new Belgian UBO register by 31 March 2019 at the latest.
As both the Authorities and civilians have access to the information published in the UBO-register, this implies, once again, a loss of discretion for civil law partnerships. To protect UBOs (as well as their families) a provision is foreseen that under extraordinary circumstances one can request to limit the accessibility of certain information in the UBO register.
5. Formalities
This new legislation has an important impact on time and resources of civil law partnerships and their members. K law is ready to assist you in facilitating your transition to the new law thereby minimalizing the administrative burden.