Set Up a Wholly Owned Subsidiary in India from Belgium

How to Set Up a Wholly Owned Subsidiary in India from Belgium

A Wholly Owned Subsidiary (WOS) is the ideal corporate structure for Belgian companies seeking complete operational control over their Indian operations. A WOS is a Private Limited Company incorporated in India under the Companies Act, 2013, where the Belgian parent company holds 100% of the equity shares. This structure provides the Belgian parent with full management control, limited liability protection, and the ability to conduct any lawful commercial activity in India independently.

Belgium-India economic ties have been strengthening rapidly, with bilateral trade reaching USD 12.91 billion in FY25 and Belgian FDI inflows to India totalling USD 4.02 billion since 2000. The landmark Belgian Economic Mission to India in March 2025 — led by HRH Princess Astrid with over 330 delegates — resulted in 37 bilateral agreements spanning semiconductors, clean energy, defence, healthcare, and advanced materials. Major Belgian companies like Solvay, Bekaert, DEME, Umicore, Tractebel, and John Cockerill have established significant operations in India, demonstrating the strategic importance of the Indian market for Belgian businesses.

A WOS structure allows Belgian parent companies to manage intellectual property, control profit repatriation, and make independent strategic decisions without the complexities of a joint venture. For Belgian companies planning substantial investment in India — whether in manufacturing, technology, services, or the diamond trade — a WOS is the most effective entry strategy. This guide covers every aspect of the process, from FDI regulatory requirements through to post-incorporation compliance.

FDI Route and Regulatory Requirements

Belgian companies establishing a WOS in India benefit from the automatic route for Foreign Direct Investment. Under this route, the Belgian parent can invest directly without seeking prior approval from the Reserve Bank of India or the Indian government. The investment is simply reported post-facto through prescribed RBI filings.

100% FDI Under Automatic Route

India permits 100% FDI through the automatic route in most sectors, making it straightforward for Belgian companies to establish a WOS with complete ownership. Key sectors open for 100% automatic route FDI include:

• Manufacturing (all categories, including auto components, chemicals, and steel)
• Information technology and IT-enabled services
• Clean energy and renewable technology
• Pharmaceutical manufacturing (greenfield projects)
• Food processing and agro-based industries
• Infrastructure and construction development
• E-commerce (marketplace model)
• Gems and jewellery processing

Sectors with FDI Restrictions

• Defence: Up to 74% under automatic route; above 74% requires government approval and access to modern technology.
• Telecom: 100% permitted, with automatic route up to 49% and government approval beyond.
• Insurance: Up to 74% under automatic route.
• Banking (private sector): Up to 74% under automatic route.
• Multi-brand retail: Up to 51% with government approval only.

Press Note 3 — Not Applicable to Belgium

Belgium is exempt from Press Note 3 (2020) restrictions, which impose additional government approval requirements on investments from countries sharing a land border with India. Belgian investments face no such screening.

FEMA and NDI Compliance

All WOS formations must comply with the Foreign Exchange Management Act (FEMA) and the Non-Debt Instrument (NDI) Rules. Critical requirements include pricing of shares at or above fair market value as determined by a registered valuer using DCF or other internationally accepted methods, adherence to sectoral caps, and timely reporting of all foreign investment transactions.

DTAA Benefits for Belgian Investors

The India-Belgium Double Taxation Avoidance Agreement has been in effect since October 1, 1997. A significant Amending Protocol was signed on March 9, 2017, and came into force on June 26, 2025. This updated protocol aligns the treaty with OECD BEPS (Base Erosion and Profit Shifting) standards and introduces modern anti-abuse provisions.

Treaty Rates for WOS Transactions

• Dividends: Withholding tax capped at 15% (domestic rate: 20%). When the Indian WOS distributes profits to the Belgian parent, 15% is withheld in India and the parent claims a foreign tax credit in Belgium.
• Interest: Capped at 10% (domestic rate: 20%). Relevant for inter-company loans from the Belgian parent to the Indian WOS.
• Royalties: Capped at 10% (domestic rate: 10-20%). Covers technology licensing, brand licensing, and intellectual property fees.
• Fees for Technical Services: Capped at 10%. Applies to management fees, consulting charges, and technical support from the Belgian parent.

2025 Protocol — Key Changes

The updated protocol introduces several important provisions:

• Principal Purpose Test (PPT): Treaty benefits are denied if one of the principal purposes of an arrangement is to obtain treaty benefits. Legitimate Belgian investors with genuine business substance are not affected.
• Enhanced Information Exchange: Both countries can request and share tax information more freely, aligned with OECD Common Reporting Standards.
• Improved Mutual Agreement Procedure: Disputes can be resolved more efficiently through competent authority consultations between Indian and Belgian tax administrations.

Transfer Pricing for WOS

All transactions between the Belgian parent and the Indian WOS must comply with India's transfer pricing regulations. Inter-company transactions — management fees, royalties, cost-sharing arrangements, and goods transfers — must be at arm's length prices. If aggregate international transactions exceed INR 1 crore, the WOS must prepare transfer pricing documentation and file Form 3CEB. Given India's rigorous transfer pricing enforcement, Belgian companies should invest in comprehensive benchmarking studies.

Document Requirements and Authentication

Both Belgium and India are members of the Hague Apostille Convention. Belgium was one of the founding signatories in 1961, and India acceded in 2005. Documents from Belgium are authenticated through the apostille process, which is significantly faster than embassy legalisation.

Documents from the Belgian Parent Company

• Extract from the Crossroads Bank for Enterprises (Kruispuntbank van Ondernemingen / Banque-Carrefour des Entreprises) confirming the Belgian parent's registration — apostilled
• Board resolution of the Belgian parent authorising the formation of an Indian subsidiary, specifying investment amount, proposed directors, and business activities — apostilled
• Memorandum of Association (statuts coordonnes / gecoordineerde statuten) and Articles of Association — apostilled. If in French, Dutch, or German, a certified English translation must be provided
• Latest audited financial statements of the Belgian parent
• Power of Attorney in favour of the authorised Indian representative — apostilled
• Declaration of source of funds
• Beneficial ownership declaration identifying ultimate beneficial owners above 10% threshold

Documents for Directors of the Indian WOS

• Passport copies of all proposed directors (notarised and apostilled for Belgian directors)
• Proof of residential address (bank statement or utility bill, not older than 2 months) — notarised and apostilled for Belgian directors
• Digital Signature Certificates (DSC) for all directors
• Passport-size photographs
• PAN card of the Indian resident director (if already existing)

Language Considerations

Belgium has three official languages — Dutch (Flemish), French, and German. Corporate documents from Belgian companies may be in any of these languages. All documents submitted to the Indian Ministry of Corporate Affairs and RBI must be in English. Belgian companies should arrange certified English translations by a sworn translator (traducteur jure / beedigd vertaler) before apostille. The translation and original are typically apostilled together.

Step-by-Step Registration Process

The WOS registration follows the standard Private Limited Company incorporation process through SPICe+, with additional requirements for parent company documentation and RBI compliance.

Step 1: Belgian Parent Board Approval

The board of directors of the Belgian parent must formally approve the establishment of an Indian subsidiary through a board resolution. This resolution should specify the authorised capital, initial investment quantum, proposed directors, registered office location, and business objects. The resolution must be notarised, translated into English (if not already in English), and apostilled.

Step 2: Obtain Digital Signature Certificates

All proposed directors obtain Class 3 DSCs from Indian certifying authorities. Belgian directors complete the process through video-based verification without travelling to India. Timeline: 1-2 working days.

Step 3: Apply for DIN via SPICe+

Director Identification Numbers for up to three directors are applied for within the integrated SPICe+ form. The company must have a minimum of two directors, with at least one being a resident of India (182 days residency in the preceding financial year).

Step 4: Reserve the Company Name

Submit the proposed name through SPICe+ Part A. For a WOS, the name often includes the Belgian parent's brand, followed by "India Private Limited" — for example, "Solvay India Private Limited." Name approval takes 2-3 working days.

Step 5: File SPICe+ Part B for Incorporation

Submit the incorporation form with e-MOA, e-AOA, and integrated applications for PAN, TAN, GST registration, EPFO, and ESIC. The authorised capital should reflect the planned investment.

Step 6: Receive Certificate of Incorporation

The ROC issues the Certificate of Incorporation upon successful verification. Timeline: 7-15 working days.

Step 7: Open Bank Account and Receive Capital

Open a current account with an Authorised Dealer (AD) bank in India. The Belgian parent remits the share subscription amount via SWIFT transfer from its Belgian bank (typically through banks like KBC, BNP Paribas Fortis, ING Belgium, or Belfius). The AD bank issues a Foreign Inward Remittance Certificate (FIRC).

Step 8: Allot Shares and File FC-GPR

Allot shares to the Belgian parent within 60 days of receiving the investment. File Form FC-GPR on the RBI's FIRMS portal within 30 days of allotment. Attach the valuation report, FIRC, KYC documents, and board resolution for share allotment. This filing confirms the foreign investment with the RBI.

Timeline and Costs

Total estimated timeline: 4-8 weeks from Belgian parent board resolution to fully operational WOS.

Total estimated cost: INR 1,00,000-3,00,000 (approximately EUR 1,100-3,300) including government fees, professional fees, translation, apostille, and valuation costs. The actual capital investment amount is determined separately based on the business plan.

Post-Registration Compliance

An Indian WOS has comprehensive ongoing compliance obligations across multiple regulatory bodies.

MCA Filings

• Annual Return (MGT-7): Filed within 60 days of the AGM.
• Financial Statements (AOC-4): Filed within 30 days of the AGM.
• Board Meetings: Minimum 4 per year, maximum gap of 120 days.
• Annual General Meeting: Within 6 months of the financial year end.
• Statutory Audit: Annual audit by a qualified Chartered Accountant is mandatory.

RBI and FEMA Compliance

• FLA Return: Annual Return on Foreign Liabilities and Assets, due by July 15.
• FC-GPR: Filed within 30 days of every fresh share allotment to the Belgian parent.
• ECB Reporting: Required if inter-company loans are received from the parent.
• FEMA compliance: Continuous monitoring of cross-border fund flows.

Tax Compliance

• Corporate Tax Return: Due by October 31 (November 30 for transfer pricing cases).
• GST Returns: Monthly or quarterly depending on turnover.
• Transfer Pricing Report (Form 3CEB): Mandatory if international transactions with the Belgian parent exceed INR 1 crore.
• TDS Returns: Quarterly filing for all tax deducted at source.
• Advance Tax: Quarterly instalments (June 15, September 15, December 15, March 15).

Common Challenges for Belgian Companies

Multilingual Document Preparation

Belgian corporate documents may be in Dutch, French, or German. The translation, notarisation, and apostille process adds time and cost. Belgian companies should factor in 5-10 extra days for document preparation compared to English-speaking countries. Engaging a sworn translator (traducteur jure) early in the process helps avoid delays.

Capital Structuring and Valuation

Shares in the Indian WOS must be issued at or above fair market value as determined by a registered valuer. For a newly formed WOS with no operating history, the valuation is typically based on net asset value plus projected cash flows using the DCF method. Belgian companies should work with a qualified FDI advisor to ensure the valuation supports both Indian regulatory requirements and Belgian accounting treatment.

Transfer Pricing Enforcement

India has one of the most active transfer pricing regimes globally. Belgian parent companies that charge management fees, royalties, technology fees, or shared service costs to their Indian WOS must maintain comprehensive benchmarking studies and documentation. The Indian tax authorities frequently scrutinise these transactions, and adjustments can result in significant additional tax demands plus interest and penalties.

Resident Director Requirement

At least one director must have resided in India for a minimum of 182 days. Belgian companies without an existing Indian presence typically use a resident director service initially and transition to a locally hired executive as operations grow.

Diamond and Gems Sector Specifics

Given the significant diamond trade between Belgium (Antwerp) and India, Belgian companies in this sector should be aware of special regulations including SEZ rules for gems and jewellery, customs and import duty structures for rough and polished diamonds, Kimberley Process compliance, and the specific banking arrangements for the diamond trade.

Permanent Establishment Risk

Belgian companies must ensure that the Indian WOS does not create a Permanent Establishment (PE) risk for the parent. If the WOS habitually acts as a dependent agent concluding contracts on behalf of the Belgian parent, additional tax liability may arise in India for the parent company.

Frequently Asked Questions

What is the advantage of a WOS over a branch office for a Belgian company in India?

A WOS is a separate Indian legal entity with limited liability, meaning the Belgian parent's liability is limited to its investment. A WOS can conduct any lawful business activity, raise equity funding in India, and offers better credibility with Indian customers. A branch office, by contrast, is not a separate legal entity, cannot engage in manufacturing, and has more limited permitted activities.

Can the Belgian parent provide loans to its Indian WOS?

Yes. The Indian WOS can receive External Commercial Borrowings (ECB) from the Belgian parent under RBI regulations. The interest rate must comply with the all-in-cost ceiling, the loan must be for permitted end-uses, and reporting must be done through the ECB-2 return on the FIRMS portal.

Do we need to translate all Belgian documents into English?

Yes. All corporate documents submitted to Indian authorities (MCA, ROC, RBI) must be in English. Documents in Dutch, French, or German must be translated by a certified sworn translator before notarisation and apostille.

How are profits repatriated from the Indian WOS to the Belgian parent?

Profits are typically repatriated as dividends after the board declares a dividend and the AGM approves it. The Indian WOS deducts withholding tax at 15% (under the DTAA) and remits the net amount through the AD bank. The Belgian parent claims a foreign tax credit in Belgium for the Indian tax withheld.

What is the FC-GPR filing and why is it important?

FC-GPR (Foreign Currency — Gross Provisional Return) is filed on the RBI's FIRMS portal within 30 days of allotting shares to foreign investors. It reports the foreign investment to the RBI. Late filing attracts penalties of Late Submission Fee (LSF) applies per the current RBI Master Directions on Foreign Investment; consult an AD bank for the applicable amount at the time of filing.

Does the Belgian parent need to visit India to set up the WOS?

No. The entire incorporation process can be completed remotely. DSCs are obtained via video verification, and apostilled documents are couriered. However, in-person visits may be preferred for bank account opening (for KYC) and for initial meetings with local service providers and advisors.