You have set up a non-profit organisation? These are the key obligations

Setting up a non-profit organisation: what does it involve?

A non-profit organisation has a charitable purpose and is allowed to make a profit, as long as that profit is not distributed to its members. The establishment itself takes place by means of a private deed (i.e. without a notary) and requires at least two founders. This deed must be filed with the commercial court with jurisdiction over the association's registered office. This can be done on paper or electronically via JustAct. After filing, the non-profit organisation receives its company number, followed by publication in the Belgian Official Gazette.

Depending on the activities, additional obligations may apply, such as a VAT number or social security affiliation when employing staff. Furthermore, a register of members is mandatory (this may be digital, e.g. in Excel) and the ultimate beneficial owners must be registered in the UBO register. Internal agreements should preferably be laid down in internal regulations.

Obligations after incorporation

Managing a non-profit association requires consistency and accuracy. The law provides for several formalities that must be complied with in order to keep the association structurally in order:

• Bookkeeping: Small non-profit organisations may use simplified (single-entry) bookkeeping. Large non-profit organisations are required to use double-entry bookkeeping.

• Appointment of a statutory auditor: Large non-profit associations must appoint a statutory auditor every three years.

• General meeting: A general meeting must be held at least once a year. At this meeting, you approve the annual accounts and grant discharge to the board, among other things.

• Filing of annual accounts: After approval, the annual accounts must be filed with the Commercial Court (micro and small non-profit associations) or with the National Bank of Belgium (large non-profit associations).

• Corporate income tax return (legal entities tax): Every non-profit organisation must file an annual tax return, even if no profits are distributed. Unlike companies, non-profit organisations are only taxed on certain types of income. For many small non-profit associations, a nil return via Biztax will suffice.

• Membership register and UBO registration: The membership register must always be kept up to date, and the UBO registration must be confirmed annually. Any change in the ultimate beneficial owners must be updated in a timely manner (within 30 calendar days).

• Patrimony tax: In certain cases, a non-profit organisation is subject to an annual tax on its assets (an exemption may apply in specific circumstances). Where applicable, both the return and the payment must be completed before 31 March.

• Corporate housekeeping: Any changes relating to the board of directors, address, financial year, etc. must be formally approved by the competent body. The law and/or the articles of association determine whether the decision must be taken by the board or by the general meeting. The changes must then be published. Depending on the situation, additional administrative formalities may be required.

• Social legislation: If the organisation employs staff, it must comply with all relevant social security and employment law obligations applicable to employers.

Failure to comply with these obligations (or to do so in a timely manner) may result in fines and sanctions. The administrative body bears ultimate responsibility for this. Please note: even if the non-profit organisation is no longer active, these obligations continue to apply.

How do you correctly terminate a non-profit organisation?

If a non-profit organisation has achieved its objective or is no longer active, it must be officially dissolved and liquidated. The Code of Companies and Associations provides a clear procedure for this.

This usually takes place in two steps: (1) a decision to dissolve the non-profit organisation and commence liquidation, followed by (2) the closure of the liquidation when the liquidator has completed the liquidation activities.

Below, we summarise the main milestones and points of attention. Always consult the association’s articles of association, as they may deviate from the statutory provisions, for example by providing longer notice periods or requiring that dissolution must always be decided unanimously.

Decision to dissolve (general meeting)

The proposal for dissolution must be explicitly included on the agenda. A vote on dissolution may only be taken if at least two-thirds of the members entitled to vote are present or represented.

If this threshold is not reached, a new general meeting must be convened. The second meeting must be held at least 15 days after the original meeting. At this second meeting, the proposal for dissolution may be voted on regardless of the number of members present or represented.

The general meeting must approve the dissolution by a majority of at least 4/5 of the votes.

Appointment of a liquidator

The general meeting appoints one or more liquidators. If the liquidation is deficit (i.e. there are more debts than assets), the appointment of the liquidator must be confirmed by the Commercial Court.

The minutes of this extraordinary general meeting are signed and filed, together with a statement of assets and liabilities, with the Commercial Court and subsequently published in the Belgian Official Gazette.

The liquidator then settles outstanding debts, collects receivables and sells remaining assets. However, the liquidator may not decide on the allocation of the remaining assets of the association. That decision lies with the general meeting.

Closure of the liquidation (general meeting)

After completing his or her tasks, the liquidator convenes the general meeting again and submits a written final report. Following approval, the liquidation is closed and this decision is published. The company number is then permanently removed by the court registry.

If the liquidation is deficit, the liquidator must first obtain approval of the final report and the distribution plan from the Commercial Court before submitting them to the general meeting.

Distribution of the liquidation balance

The remaining balance (if any) may only be paid out to another non-profit organisation or foundation with a similar charitable purpose. The general meeting decides which institution is eligible and records this in the minutes.

Non-profit organisation without debts?

An accelerated procedure is possible for non-profit organisations without debts. Dissolution, liquidation and closure then take place in a single meeting. A report from an external auditor or company auditor is required.

Judicial dissolution

In a number of specific legal cases, the dissolution of the non-profit organisation can be requested through the courts. This is done by means of a unilateral petition.