Cross-border seat transfers and the companies and associations Code: the impact for Dutch-Belgian entities

The entry into force of the companies and associations Code (hereafter: “CCA”) has transformed the regulatory framework governing companies in Belgium, particularly affecting those with ties to the Netherlands. The shift from focusing on the actual seat to the statutory seat has created new challenges for entities that previously relied on the former method for cross-border operations. Understanding these changes is crucial for ensuring compliance and facilitating future corporate actions, such as mergers and liquidations. 

I. Context: the shift from actual to statutory seat

Historically, when Dutch legal entities wanted to relocate their seat to e.g. Belgium, they could do so by relocating their actual seat (“werkelijke zetel”) to Belgium. Due to the principle of incorporation however under Dutch law, the company still maintained its registration in the Dutch Chamber of Commerce (in Dutch: “Kamer van Koophandel”). The principle of incorporation implies that a company is governed by the law of the country where it is incorporated, regardless of where its actual operations take place.  Consequently, the company was both of Dutch and Belgian nationality. However, based on the International Private Law Code at that time, from a corporate law perspective, the company had to fulfill the obligations in accordance with Belgian law. From a Belgian tax perspective, the actual seat theory implied that as from the move of the actual seat to Belgium, the company became subject to and had to abide by the Belgian tax legislation.

Since the entry into force of the CCA, the “statutory seat”-principle applies, meaning that from a corporate law perspective, the company’s seat as stated in its articles of association determines which national law governs the company. The actual location where the company’s management operates – often called the “real seat” or “actual seat” – no longer affects the applicable company law. This shift is important for businesses that previously relied on the real seat approach when considering cross-border moves or restructuring. 

Building on this evolution, the European Union introduced a harmonized framework for cross-border conversions through the Mobility Directive. This created a formal procedure enabling companies to transfer their registered office to another Member State while preserving their legal personality and continuity. As a result, cross-border conversions are now subject to a clear and uniform procedure rather than relying solely on private international law principles or the “real seat” or “statutory seat” theory. 

II. Current challenges for Dutch Belgian entities which have transferred the actual seat prior to the entry into force of the European cross border conversion legislation

1. A. Implications of the statutory seat principle

Entities that moved their actual seat to Belgium before the entry into force of the CCA were not able to transfer their statutory seat, as this only became legally possible with the introduction of the harmonized EU framework for cross-border conversions. As a result, these entities still have their statutory seat in, for example, the Netherlands. Under the statutory seat principle, this means that from a corporate law perspective, they are technically considered Dutch companies again, despite operating from Belgium.

This situation creates significant legal and operational challenges. For instance, if such an entity wishes to liquidate or merge, the statutory seat remaining in the Netherlands prevents the initiation of a Belgian liquidation process. To align their legal status with their operational reality, these companies must now undertake a formal cross-border conversion under the Mobility Directive.

Adding to the complexity, there is a discrepancy between corporate law and tax law: while the statutory seat principle governs company law, Belgian tax law still applies the actual seat theory. Consequently, these entities are treated as Belgian tax residents but remain subject to Dutch corporate law, creating a dual compliance burden and procedural hurdles.

1. B. Navigating the cross-border conversion procedure

To address the challenges, entities must consider the cross-border conversion procedure provided under European law. This procedure enables the transfer of a statutory seat from one Member State to another while preserving the company’s legal identity. In practice, this involves an emigration from e.g. Belgium and immigration into e.g. the Netherlands (or vice versa), ensuring that the corporate status is aligned and that the company no longer has issues with its corporate nationality. Without this formal conversion, Belgian-Dutch companies cannot deregister from the Belgian Crossroads Bank for Enterprises following liquidation, nor can they complete other corporate actions smoothly. Moreover, from a corporate law perspective, these entities are technically not “Belgian” companies whatsoever, as their statutory seat remains abroad. This reinforces the need for a cross-border conversion to align their legal status with their operational reality.

III. Practical steps for compliance and future planning

To effectively manage these challenges, companies should consider the following actions:

• Review current structures: conduct a comprehensive review of current statutory and actual seat registrations to ensure they align with the operational realities of the business.
• Engage legal advisors: consult with legal experts who are well-versed in both Belgian and Dutch corporatelaw. Their guidance will be crucial in navigating compliance requirements and understanding the implications of the CCA on existing structures.
• Initiate the conversion procedure: for entities with a statutory seat in the Netherlands and a actual seat in Belgium, initiating the cross-border conversion procedure is necessary. This step will help formalize the entity's status and facilitate future actions, such as mergers or liquidations.

IV. Conclusion: preparing for the future

The CCA has introduced a fundamental shift in the rules governing cross-border seat transfers, creating both challenges and opportunities for companies. By understanding these changes and taking proactive steps - particularly through the European cross-border conversion procedure - companies can ensure compliance and position themselves for smooth future operations.

If you have any questions or need assistance, please feel free to reach out to our team for support.