Set Up a Branch Office in India from Belgium

How to Set Up a Branch Office in India from Belgium

A Branch Office (BO) enables Belgian companies to extend their operations into India without creating a separate legal entity. The Branch Office operates as a direct extension of the Belgian parent company, conducting approved business activities under the parent's name and liability. This structure is ideal for Belgian firms looking to handle export-import operations, provide professional services, offer technical support, or represent the parent company's interests in the Indian market.

India-Belgium bilateral trade reached USD 12.91 billion in FY25, making Belgium India's 5th-largest trading partner in the EU. The relationship spans critical sectors — diamonds and precious stones account for a significant share of trade, complemented by pharmaceuticals, chemicals, machinery, and engineering goods. In March 2025, a landmark Belgian Economic Mission led by HRH Princess Astrid, Deputy Prime Minister Maxime Prevot, and Defence Minister Theo Francken visited India with over 330 delegates, resulting in 37 agreements covering clean energy, healthcare, advanced materials, transport, aerospace, and defence.

A Branch Office requires prior approval from the Reserve Bank of India (RBI) through an Authorised Dealer (AD) Category-I bank, and its activities are limited to specific permitted categories defined by the RBI. This guide covers the entire process from RBI application to ongoing compliance.

FDI Route and Regulatory Requirements

Unlike company or LLP incorporation, establishing a Branch Office in India requires prior RBI approval. The application is submitted through an Authorised Dealer Category-I bank using Form FNC.

RBI Approval Process

The Belgian parent company must submit an application in Form FNC to its designated AD Category-I bank in India. The AD bank reviews the application for completeness, verifies the eligibility of the parent company, and forwards it to the RBI for approval. Upon approval, the RBI issues a Unique Identification Number (UIN) for the Branch Office.

Eligibility Criteria

Under the RBI's 2025 draft regulations, the earlier minimum net worth requirements (USD 100,000) and profit track record conditions have been streamlined. However, the Belgian parent company should demonstrate:

• A track record of profitable operations in Belgium or globally
• Adequate financial strength to fund the Indian Branch Office
• A genuine business case for establishing operations in India
• That proposed activities fall within the RBI's permitted categories

Permitted Activities

A Branch Office in India may undertake the following activities:

• Export and import of goods
• Rendering professional or consultancy services
• Carrying out research work in areas where the parent company is engaged
• Promoting technical or financial collaborations between Indian companies and the Belgian parent
• Representing the parent company in India and acting as buying or selling agent
• Rendering services in information technology and development of software
• Providing technical support to products supplied by the parent company
• Operating as a foreign airline or shipping company

Prohibited Activities

A Branch Office cannot:

• Undertake manufacturing or processing activities (unless located in a Special Economic Zone)
• Engage in retail trading activities
• Conduct any activity outside the approved categories without prior RBI permission

Press Note 3 — Not Applicable to Belgium

Press Note 3 (2020), which imposes additional government security screening on investments from countries sharing a land border with India (China, Pakistan, Bangladesh, etc.), does not apply to Belgium. Belgian companies proceed through the standard RBI approval process without additional security clearance.

DTAA Benefits for Belgian Investors

The India-Belgium Double Taxation Avoidance Agreement, originally signed on April 26, 1993, with the amending Protocol signed on March 9, 2017 (in force from June 26, 2025), has direct implications for Branch Office taxation because a Branch Office constitutes a Permanent Establishment (PE) of the Belgian parent in India.

Permanent Establishment and Tax Implications

A Branch Office is automatically treated as a Permanent Establishment under both Indian domestic law and the India-Belgium DTAA. India therefore has the right to tax business profits attributable to the Branch Office. The Belgian parent must compute the Branch Office profits separately under Indian tax law, and these profits are subject to Indian corporate tax at foreign company rates.

Tax Rates for Branch Office

• Corporate Tax: A Branch Office (as a foreign company) is taxed at 35% plus applicable surcharge and cess on income attributable to the PE in India.
• Dividends: Withholding tax capped at 15% under the India-Belgium DTAA (domestic rate: 20%).
• Interest: Capped at 10% under the DTAA (domestic rate: 20%).
• Royalties and Fees for Technical Services: Capped at 10% (as amended by the 2017 Protocol).

Double Tax Relief

The Belgian parent company can claim credit in Belgium for taxes paid by the Branch Office in India under Article 23 of the DTAA. Belgium generally follows the exemption method with progression for business profits — meaning income taxed in India may be exempt in Belgium but considered for determining the Belgian tax rate on remaining income. Specific consultation with Belgian tax advisors is recommended to optimise the credit mechanism.

BEPS-Aligned Anti-Abuse Provisions

The 2017 Protocol incorporates BEPS measures including the Principal Purpose Test (PPT) and enhanced exchange of information provisions. Belgian companies must ensure the Branch Office has genuine economic substance and that profit attribution follows arm's length principles. The enhanced mutual assistance in tax collection provisions also mean that Indian and Belgian tax authorities can cooperate more effectively in enforcement.

Transfer Pricing Implications

Transactions between the Belgian head office and the Indian Branch Office must comply with India's transfer pricing regulations. Even though they are the same legal entity, Indian law requires arm's length documentation for the attribution of profits to the Branch Office and any charges for head office services, shared costs, or intellectual property usage.

Document Requirements and Authentication

Both Belgium and India are members of the Hague Apostille Convention. Belgian documents must be apostilled for use in India, which is faster than embassy attestation.

Documents from the Belgian Parent Company

• Extract from the Crossroads Bank for Enterprises (Kruispuntbank van Ondernemingen / Banque-Carrefour des Entreprises) — apostilled
• Board resolution of the Belgian parent authorising the establishment of a Branch Office in India — apostilled
• Articles of Association (Statuten / Statuts) — apostilled
• Latest audited financial statements (for the preceding 5 years, if available), filed with the National Bank of Belgium
• Copy of the Annual Report
• Power of Attorney in favour of the authorised representative for the Indian Branch Office — apostilled
• Details of existing branches or subsidiaries in India (if any)
• Activity plan for the proposed Branch Office in India

Documents for RBI Application (Form FNC)

• Completed Form FNC
• Certificate from the Belgian parent's bankers (typically BNP Paribas Fortis, KBC, ING, or Belfius) confirming financial standing
• Proposed organisational structure of the Branch Office in India
• List of directors and key management personnel of the Belgian parent
• No Objection Certificate from the relevant Belgian regulatory authority (if applicable for regulated industries)

Apostille and Translation Process in Belgium

Apostilles in Belgium are issued by the Federal Public Service Foreign Affairs (FOD Buitenlandse Zaken / SPF Affaires etrangeres). Documents must first be notarised by a Belgian notary (notaris / notaire) and then submitted for apostille. Processing takes 2-5 business days. Since Belgian documents may be in Dutch, French, or German, sworn English translations are required for all documents submitted to Indian authorities. This adds 3-5 days and EUR 50-150 per document to the process.

Step-by-Step Registration Process

The Branch Office setup involves both RBI approval and Registrar of Companies (ROC) registration.

Step 1: Belgian Parent Board Resolution

The board of the Belgian parent company must pass a formal resolution approving the establishment of a Branch Office in India, specifying the proposed activities, the authorised representative, and the initial funding arrangement. The resolution must be apostilled and translated into English.

Step 2: Submit Form FNC to AD Bank

File the application in Form FNC with an Authorised Dealer Category-I bank in India. The AD bank reviews the application for completeness and forwards it to the RBI. The application must include all parent company documents, the activity plan, and the banker's certificate.

Step 3: Obtain RBI Approval

The RBI reviews the application and, upon satisfaction, issues an approval letter with a Unique Identification Number (UIN). The approval specifies permitted activities, any conditions, and the validity period. Timeline: 4-8 weeks from complete submission.

Step 4: Register with Registrar of Companies

Within 30 days of establishing the Branch Office, file Form FC-1 with the Registrar of Companies (ROC) under Section 380 of the Companies Act, 2013. This makes the Branch Office a matter of public record. Required documents include the RBI approval letter, charter documents of the Belgian parent (with English translations), and address proof of the Indian office.

Step 5: Obtain PAN, TAN, and GST Registration

Apply for a Permanent Account Number (PAN) in the name of the Belgian parent company (Indian Branch). Apply for TAN (Tax Deduction Account Number) and GST registration if the Branch Office activities are subject to GST.

Step 6: Open Bank Account

Open a current account with the AD Category-I bank in India. The Belgian parent funds operations through inward remittances in EUR or USD. The bank account operates in the name of the Belgian parent company with a Branch Office suffix.

Step 7: Commence Operations

Once registrations are complete and the bank account is operational, the Branch Office can commence approved activities. Operations must begin within 6 months of the RBI approval date.

Timeline and Costs

Branch Office setup from Belgium takes longer than company incorporation due to the RBI approval requirement and the additional translation step for Belgian trilingual documents.

Total estimated timeline: 6-10 weeks from document preparation to operational Branch Office.

Total estimated cost: INR 1,75,000-4,00,000 (approximately EUR 1,900-4,300) including government fees, professional fees, AD bank charges, legal costs, and translation expenses. Ongoing operational funding from the Belgian parent is separate.

Post-Registration Compliance

A Branch Office in India has specific ongoing compliance obligations with the RBI, ROC, and Income Tax Department.

Annual RBI Compliance

• Annual Activity Certificate (AAC): Must be submitted along with audited financial statements to the AD bank within 6 months of the financial year end. The AAC certifies that the Branch Office has conducted only RBI-permitted activities.
• FLA Return: Annual Return on Foreign Liabilities and Assets, due by July 15.
• Profit remittance: Profits can be remitted to Belgium through the AD bank, subject to tax compliance certificates from a Chartered Accountant.

ROC Filings

• Annual return of foreign company: Filed with the ROC annually.
• Financial statements: The Indian Branch Office accounts and copies of the Belgian parent's global financial statements (translated into English) must be filed.
• Changes in parent company: Changes in directors, charter, or registered office of the Belgian parent must be intimated to the ROC within 30 days.

Tax Compliance

• Corporate Tax Return: Filed as a foreign company at 35% plus surcharge and cess.
• GST Returns: Monthly or quarterly depending on turnover.
• TDS Returns: Quarterly filing for tax deducted at source.
• Transfer Pricing Documentation: Required for transactions between the Branch Office and Belgian head office, including cost allocations, management charges, and IP usage fees.
• Advance Tax: Quarterly instalments on June 15, September 15, December 15, and March 15.

Common Challenges for Belgian Companies

Belgian companies face several specific challenges when establishing and operating a Branch Office in India.

Trilingual Documentation and Translation

Belgium's trilingual administrative system (Dutch, French, German) creates additional complexity. All corporate documents — Articles of Association, board resolutions, bank certificates, and financial statements — must be translated into English by sworn translators before submission to Indian authorities. Companies headquartered in Flanders (Dutch-speaking), Wallonia (French-speaking), or the German-speaking community face varying documentation formats. Planning for 7-12 days for apostille and translation (compared to 3-5 days for English-speaking countries) is essential.

Higher Tax Rate vs. Subsidiary Structure

A Branch Office is taxed at 35% plus surcharge and cess as a foreign company — significantly higher than the 22-25% domestic corporate tax rate available to Indian subsidiaries. For Belgian companies planning long-term, high-revenue operations in India, a Private Limited Company or Wholly Owned Subsidiary may offer better tax efficiency.

Restricted Activity Scope

The Branch Office cannot engage in manufacturing or retail trading (unless in an SEZ). Belgian companies in the diamond processing, pharmaceutical manufacturing, or food processing sectors that need production capabilities must incorporate a separate Indian entity. The Branch Office is best suited for commercial representation, after-sales service, consultancy, and import-export facilitation.

Unlimited Liability Exposure

Since a Branch Office is not a separate legal entity, the Belgian parent company bears unlimited liability for all obligations of the Indian Branch Office. Contracts, debts, employee claims, and legal proceedings against the Branch Office can be enforced against the Belgian parent's global assets. This contrasts sharply with a subsidiary structure, which limits liability to the invested capital.

Diamond Trade Compliance

Given the significant India-Belgium diamond trade (Antwerp-Mumbai-Surat corridor), Branch Offices involved in precious stones face additional regulatory requirements including Gems and Jewellery Export Promotion Council (GJEPC) registration, Prevention of Money Laundering Act (PMLA) compliance, enhanced KYC for high-value consignments, and Kimberley Process Certification Scheme compliance for rough diamond imports.

Frequently Asked Questions

Can a Belgian Branch Office in India engage in manufacturing?

No. A Branch Office cannot undertake manufacturing or processing activities in India, unless located in a Special Economic Zone (SEZ). Belgian companies requiring manufacturing operations should establish a Private Limited Company or Wholly Owned Subsidiary.

How is a Branch Office taxed compared to a subsidiary?

A Branch Office is taxed at 35% plus surcharge and cess as a foreign company, while an Indian subsidiary (Private Limited Company) is taxed at 22-25% under the new domestic tax regime. The substantial tax rate difference is a major consideration when choosing between structures.

Do Belgian documents need to be translated for Indian filing?

Yes. All Belgian documents in Dutch, French, or German must be accompanied by sworn English translations for submission to the RBI, ROC, and other Indian authorities. The translation adds approximately 3-5 business days and EUR 50-150 per document to the preparation process.

What is the Annual Activity Certificate (AAC)?

The AAC is a certificate issued by a Chartered Accountant confirming that the Branch Office has conducted only activities permitted by the RBI during the financial year. It must be submitted to the AD bank with audited financial statements within 6 months of the year end. Non-compliance can lead to account freezing and closure proceedings.

Can a Branch Office hire employees in India?

Yes. A Branch Office can hire Indian employees directly. All Indian employment laws apply, including provident fund, gratuity, professional tax, and the four new Labour Codes being implemented. Employment contracts must comply with state-specific regulations.

How long does the complete Branch Office setup take from Belgium?

The total timeline is approximately 6-10 weeks, which is longer than for English-speaking countries due to the additional time required for sworn translation of Belgian trilingual documents. The RBI approval step (4-8 weeks) is the longest component.