Open a Liaison Office in India from Belgium

How to Register a Liaison Office in India from Belgium

A Liaison Office (LO) is a representative office that allows a Belgian company to maintain a presence in India without undertaking any commercial or revenue-generating activities. It functions as a communication channel between the Belgian parent company and Indian businesses, government bodies, and potential partners. For Belgian companies exploring the Indian market — testing demand, building relationships, and understanding the regulatory environment — a Liaison Office offers the lowest-risk, lowest-commitment entry structure.

Bilateral trade between India and Belgium stood at USD 12.91 billion in FY25, with Belgium ranking as the 18th largest foreign investor in India. Over 200 Belgian companies operate in India across manufacturing, IT, pharmaceuticals, and diamond trading. In March 2025, a high-level Belgian Economic Mission led by HRH Princess Astrid visited India with over 330 delegates, culminating in 37 agreements spanning climate, renewable energy, healthcare, and advanced materials. This growing bilateral engagement makes the Liaison Office an attractive first step for Belgian firms entering the Indian market.

A Liaison Office requires prior approval from the Reserve Bank of India (RBI) through an Authorised Dealer (AD) Category-I bank, using Form FNC. The office cannot earn income in India — all expenses must be funded entirely through inward remittances from the Belgian parent company. Belgian companies seeking commercial operations should consider a Branch Office, Private Limited Company, or Wholly Owned Subsidiary instead.

FDI Route and Regulatory Requirements

Establishing a Liaison Office in India is not classified under the standard FDI automatic or government approval routes. It requires direct RBI approval through an AD Category-I bank.

RBI Approval Process

The Belgian parent company submits an application in Form FNC to a designated AD Category-I bank in India. The AD bank reviews the application for completeness and forwards it to the RBI. Under the RBI's 2025 draft regulations (Foreign Exchange Management (Establishment in India of a branch or office) Regulations, 2025), the approval process has been simplified — routine applications are processed by AD banks directly, while the Specific Approval Route applies to cases with security, geopolitical, or sectoral sensitivities.

Eligibility Criteria

The Belgian parent company must demonstrate:

• A profitable track record for the preceding three financial years
• A minimum net worth of USD 50,000 (the 2025 draft regulations propose removing this threshold)
• A clear business rationale for establishing a representative presence in India
• That the proposed activities are strictly non-commercial

Permitted Activities

A Liaison Office is limited to the following non-commercial activities:

• Representing the parent company in India
• Promoting exports from and imports to India
• Promoting technical or financial collaborations between the Belgian parent and Indian companies
• Acting as a communication channel between the parent company and Indian parties

Prohibited Activities

A Liaison Office cannot:

• Earn any income or undertake commercial activities in India
• Enter into business contracts on behalf of the parent company
• Charge fees or commissions for services
• Borrow from or lend to any entity in India
• Acquire immovable property (except leasing for its own office use)

Press Note 3 — Not Applicable to Belgium

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

DTAA Benefits for Belgian Investors

The India-Belgium Double Taxation Avoidance Agreement, signed in 1997 and effective since October 1, 1997, provides important tax benefits. We could not independently verify a distinct 2025 amending protocol to this specific treaty (the specific dates and article claimed elsewhere on this page should be confirmed with the Income Tax Department); more generally, India's treaty network includes anti-abuse provisions such as Principal Purpose Test-style rules applied via the OECD Multilateral Instrument, where applicable.

Liaison Office and Permanent Establishment

Under the India-Belgium DTAA, a Liaison Office that restricts itself to preparatory and auxiliary activities — market research, information gathering, and communication — does not create a Permanent Establishment (PE) in India. This means India generally cannot tax the Belgian parent company's business profits through the Liaison Office. This is a significant advantage compared to a Branch Office, which automatically constitutes a PE.

Key DTAA Rates

• Dividends: Withholding tax capped at 15% under the DTAA
• Interest: Withholding tax capped at 10% under the DTAA
• Royalties: Capped at 10% under the DTAA
• Fees for Technical Services: Capped at 10% under the DTAA

Tax Compliance for the Liaison Office

While the Liaison Office itself does not earn taxable income, it must:

• Obtain a PAN in the name of the Belgian parent company
• File a nil income tax return annually
• Comply with TDS obligations on payments to employees and service providers
• Maintain proper books of account in India

Anti-Abuse Provisions and Economic Substance

Like many of India's tax treaties, the India-Belgium DTAA framework is subject to anti-abuse safeguards, including Principal Purpose Test-style provisions applied through the OECD's Multilateral Instrument where applicable. We could not independently verify the specific 2025 protocol details referenced elsewhere on this page (including a distinct Article 27 on mutual assistance in tax collection) — Belgian companies should confirm the current treaty text with the Income Tax Department, and in any case should ensure their Liaison Office arrangements have genuine commercial substance beyond tax benefits.

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 simpler and faster than embassy attestation.

Documents from the Belgian Parent Company

• Certificate of Incorporation or Extract from the Banque-Carrefour des Entreprises (Crossroads Bank for Enterprises) — apostilled
• Board resolution authorising the establishment of a Liaison Office in India — apostilled
• Articles of Association (Statuts / Statuten) — apostilled
• Latest audited financial statements for the preceding three financial years — apostilled
• Power of Attorney in favour of the authorised person to represent the Liaison Office in India — apostilled
• Activity plan describing the proposed non-commercial activities

Documents for RBI Application (Form FNC)

• Completed Form FNC
• Certificate from the bankers of the Belgian parent company confirming financial standing
• Proposed organisational structure of the Liaison Office
• List of directors and key management personnel of the Belgian parent
• Details of existing offices or subsidiaries in India (if any)

Apostille Process in Belgium

In Belgium, apostilles are issued by the Federal Public Service Foreign Affairs (SPF Affaires etrangeres / FOD Buitenlandse Zaken). Since May 1, 2018, apostilles in Belgium are issued only in electronic format (e-Apostille). The cost is EUR 20 per document. Processing is typically completed within 48 hours. The electronic apostille can be verified online through the Belgian e-Apostille register for authenticity.

Step-by-Step Registration Process

The Liaison Office setup involves RBI approval followed by ROC registration.

Step 1: Belgian Parent Board Resolution

The board of directors of the Belgian parent company passes a resolution approving the establishment of a Liaison Office in India, specifying the scope of non-commercial activities, the authorised representative, and the funding arrangement. This resolution must be apostilled via the Belgian FPS Foreign Affairs.

Step 2: Prepare and Apostille Documents

Gather all required documents — incorporation certificate, articles of association, financial statements, and power of attorney. Submit them to the FPS Foreign Affairs (Rue des Petits Carmes 27, 1000 Brussels) for electronic apostille certification. Allow 48 hours for processing at EUR 20 per document.

Step 3: Submit Form FNC to AD Bank

File the application in Form FNC with an AD Category-I bank in India. The AD bank examines the application for completeness, verifies the eligibility criteria, and forwards it to the RBI. Include all apostilled documents, the activity plan, and the banker's certificate.

Step 4: Obtain RBI Approval and UIN

The RBI reviews the application and, upon approval, issues an approval letter along with a Unique Identification Number (UIN). The approval specifies permitted activities and validity period (typically 3 years, though the 2025 draft regulations propose removing tenure limits). Timeline: 4-8 weeks from submission.

Step 5: Register with Registrar of Companies

Within 30 days of establishing the Liaison Office, file Form FC-1 with the Registrar of Companies (ROC) under Section 380 of the Companies Act, 2013. Include the RBI approval letter, charter documents, and address proof of the Indian office.

Step 6: Obtain PAN and Open Bank Account

Apply for a PAN in the name of the Belgian parent company (Indian Liaison Office). Open a current account with the AD Category-I bank. All operating expenses must be funded exclusively through inward remittances from Belgium.

Step 7: Commence Operations

Once registrations and the bank account are in place, the Liaison Office can begin its approved non-commercial activities. The office must be established within 6 months from the date of RBI approval.

Timeline and Costs

The Liaison Office setup follows a timeline similar to a Branch Office, as both require RBI approval via Form FNC.

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

Total estimated cost: INR 1,00,000-2,50,000 (approximately EUR 1,050-2,650) including government fees, professional fees, AD bank charges, and legal costs. Ongoing operational expenses (rent, salaries, utilities) must be funded entirely by the Belgian parent.

Post-Registration Compliance

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

Annual RBI Compliance

• Annual Activity Certificate (AAC): A Chartered Accountant must certify that the Liaison Office undertook only permitted non-commercial activities during the financial year. Submit AAC and audited financial statements to the AD bank within 6 months of the financial year end.
• FLA Return: Annual Return on Foreign Liabilities and Assets, due by July 15 each year
• Renewal: Under existing rules, approval is typically granted for 3 years. Apply for renewal at least 30 days before expiry. The 2025 draft regulations propose eliminating the tenure limit.

ROC Filings

• Annual return of foreign company filed with the ROC
• Financial statements of the Liaison Office and copies of the Belgian parent's global financial statements
• Changes in the Belgian parent's charter, directors, or registered office intimated to the ROC within 30 days

Tax Compliance

• Income Tax Return: File a nil return annually (Liaison Office does not earn income)
• TDS Returns: Quarterly filing for tax deducted at source on payments to employees and service providers
• Withholding compliance: Ensure proper withholding on all payments made from India

Common Challenges for Belgian Companies

Belgian companies setting up a Liaison Office in India encounter several practical challenges.

Non-Commercial Restriction

The most significant limitation is the strict prohibition on revenue-generating activities. A Liaison Office cannot sign commercial contracts, invoice clients, or earn any income in India. Belgian companies in sectors like diamond trading, pharmaceutical distribution, or manufacturing that need to transact commercially must consider a Branch Office or a Private Limited Company. The transition from Liaison Office to a more permanent structure requires a separate RBI application and cannot happen automatically.

Pure Cost Centre Operations

Since a Liaison Office cannot earn income, it operates entirely as a cost centre funded by the Belgian parent. All expenses — office rent, employee salaries, travel, utilities — must be covered through inward remittances from Belgium. For Belgian mid-sized companies, justifying this ongoing capital commitment without direct revenue attribution can be challenging, especially during the initial years of market exploration.

Diamond Industry Considerations

Belgium (particularly Antwerp) is a global centre for diamond trading, and the India-Belgium diamond trade is significant — gems and jewellery constitute a major portion of bilateral trade. However, a Liaison Office cannot engage in the actual buying, selling, or trading of diamonds. Belgian diamond companies that need to transact in India must establish a separate entity. The Liaison Office can only facilitate introductions, provide market intelligence, and promote collaborations.

RBI Renewal Uncertainty

Under existing rules, the Liaison Office approval is granted for an initial 3-year period. Renewal requires demonstration that the office operated within its permitted scope. Any deviation from approved activities can jeopardise renewal. The 2025 draft regulations propose removing this tenure limit, which would provide greater certainty. Until the new regulations are finalised, Belgian companies should plan for the renewal process.

Anti-Abuse Provisions

India's tax treaty network, including its arrangements with Belgium, is subject to anti-abuse safeguards such as Principal Purpose Test-style provisions. Belgian companies must ensure their Liaison Office arrangements have genuine commercial substance and are not structured primarily for tax benefits, and should confirm the current treaty text and any specific amendment dates with the Income Tax Department. The anti-abuse provisions require careful documentation of the business rationale for the Indian presence.

Frequently Asked Questions

Can a Belgian Liaison Office earn income in India?

No. A Liaison Office is strictly prohibited from earning any income or undertaking commercial activities in India. It can only represent the Belgian parent company, promote trade, and facilitate communication. All operating expenses must be funded through inward remittances from Belgium.

How long is the RBI approval valid for a Liaison Office?

Under existing regulations, the RBI approval is typically granted for 3 years, renewable before expiry. The 2025 draft regulations propose removing this tenure limit. Until the new regulations are finalised, the 3-year renewal framework remains in effect.

Can a Liaison Office be converted to a Branch Office or subsidiary?

There is no direct conversion mechanism. The Liaison Office must be formally closed with RBI approval and settlement of all obligations, and a separate application filed to establish a Branch Office or incorporate a subsidiary. This transition typically takes 3-6 months.

Does a Liaison Office create a Permanent Establishment in India?

Generally, no. Under the India-Belgium DTAA, a Liaison Office that restricts itself to preparatory and auxiliary activities does not constitute a PE. However, if the office engages in activities beyond its approved scope, Indian tax authorities may argue a PE exists, triggering tax liability.

Do anti-abuse provisions in the India-Belgium DTAA affect the Liaison Office?

India's tax treaty network is subject to anti-abuse safeguards such as Principal Purpose Test-style provisions; we could not verify a specific 2025 amending protocol to this treaty as described elsewhere online, so confirm the current treaty text with the Income Tax Department. In any case, Belgian companies must ensure their Liaison Office has genuine commercial substance beyond tax planning. PE determination rules for Liaison Offices remain unchanged.

Can a Belgian diamond company use a Liaison Office?

A Belgian diamond company can use a Liaison Office for market research, promoting collaborations, and facilitating introductions in India's diamond industry. However, the office cannot engage in actual diamond buying, selling, or trading — commercial transactions require a separate entity such as a Branch Office or Private Limited Company.