Share Deal vs Asset Deal in Belgium

When acquiring or divesting a business in Belgium, the structural choice between a share deal and an asset deal is one of the most consequential decisions in the entire transaction. A share deal transfers ownership of the company itself - its shares - while an asset deal transfers specific assets and liabilities selected by the parties. Each structure carries distinct legal, tax, employment and liability consequences under Belgian law, and the wrong choice can expose a buyer to unexpected obligations or leave a seller with a suboptimal tax outcome. This guide covers the core legal framework, the practical mechanics of each structure, the key differences across tax, employment and liability dimensions, and the strategic factors that determine which route suits a given transaction in Belgium.

A share deal is a transaction in which the buyer acquires the shares of a Belgian company - most commonly a société anonyme (SA) or a société à responsabilité limitée (SRL) - and thereby steps into the position of shareholder. The company itself continues to exist as a legal entity; its contracts, licences, permits, employees, assets and liabilities all remain with the company by operation of law. Nothing is formally transferred at the asset level. The buyer simply owns a different legal vehicle after closing.

From a legal mechanics perspective, a share deal in Belgium is governed primarily by the Belgian Code of Companies and Associations (Wetboek van vennootschappen en verenigingen, or WVV), which entered into force in its current form in recent years and modernised the rules applicable to Belgian private and public companies. The transfer of shares in an SRL requires a deed of transfer and an update of the shareholders'; register held at the company';s registered office. For listed companies or companies with publicly traded securities, additional rules under the Belgian Financial Services and Markets Authority (FSMA) apply, including mandatory bid thresholds and disclosure obligations.

In practice, the share deal is the simpler structure from a transactional standpoint when the target is a clean, well-organised company. The buyer acquires everything in one step without the need to identify, value and transfer each individual asset. However, this simplicity comes at a cost: the buyer also acquires all historical liabilities, including contingent liabilities, tax exposures, pending litigation and environmental obligations that may not be fully visible during due diligence. A thorough legal and financial due diligence process is therefore not optional - it is the primary risk management tool in a share deal.

A common mistake among foreign buyers is to underestimate the depth of due diligence required in Belgium. Belgian companies may carry legacy obligations under social security law, collective labour agreements at the sectoral level, or deferred tax liabilities that are not immediately apparent from the balance sheet. Representations and warranties in the share purchase agreement, combined with a well-structured indemnity regime, are the standard contractual mechanism for allocating these risks between buyer and seller.

An asset deal is a transaction in which the buyer selects and acquires specific assets - and, where agreed, specific liabilities - from the seller. The selling entity retains its legal existence after the transaction; only the identified assets change hands. This structure gives the buyer a high degree of control over what it is acquiring and allows it to leave behind unwanted liabilities, historical tax exposures or underperforming contracts.

Belgian law does not provide a single statutory framework governing all asset deals. Instead, the transaction is assembled from multiple legal regimes depending on the nature of the assets being transferred. Real property requires a notarial deed and registration with the Belgian mortgage register. Intellectual property rights must be transferred in writing and, for registered rights such as trademarks or patents, recorded with the relevant registry. Receivables are transferred under the rules of the Belgian Civil Code, which requires notification to debtors. Contracts require the counterparty';s consent to assignment unless the contract itself provides otherwise or the parties agree to a novation.

One of the most significant features of Belgian asset deal law is the règle du passif occulte - the hidden liability rule - under which a buyer of a business as a going concern may in certain circumstances be held jointly and severally liable for the seller';s debts if the transaction is structured as a transfer of a universalité or branch of activity (branche d';activité). This regime, set out in the Belgian Code of Economic Law and related tax provisions, means that a buyer cannot always achieve a clean break from the seller';s liabilities simply by structuring the transaction as an asset deal. Careful legal structuring and the use of specific contractual protections are essential.

In practice, asset deals are more administratively complex than share deals. Each category of asset requires its own transfer formality, and the process of identifying, valuing and documenting individual assets takes considerably more time and professional resource. For transactions involving a large number of contracts, licences or employees, the administrative burden can be substantial.

For most Belgian M&A transactions, the tax analysis is the single most important factor in choosing between a share deal and an asset deal. The two structures produce fundamentally different outcomes for both buyer and seller.

In a share deal, the seller - if it is a Belgian company - may benefit from the participation exemption (déduction RDT/DBI-aftrek) on the capital gain realised on the sale of qualifying shares. Under Belgian corporate income tax law, capital gains on shares are fully exempt from corporate tax provided the seller has held at least 10% of the shares or an acquisition value of at least EUR 2.5 million, and the shares have been held for an uninterrupted period of at least one year. This exemption makes the share deal highly attractive for corporate sellers. Individual sellers are generally not subject to Belgian capital gains tax on the sale of shares held as private assets, provided the sale is not considered a speculative transaction or a transaction outside the normal management of private assets - a qualification that Belgian tax authorities scrutinise carefully.

For the buyer in a share deal, there is no step-up in the tax basis of the underlying assets. The company';s existing depreciation schedules, tax losses and deferred tax positions carry over. This can be a disadvantage if the assets are significantly undervalued on the company';s books, because the buyer cannot depreciate the acquisition premium against future taxable income.

In an asset deal, the seller is generally subject to Belgian corporate income tax on any capital gain realised on the transfer of each individual asset. Gains on real property, goodwill and other intangibles are fully taxable at the standard corporate rate. VAT may also apply to certain asset transfers, although the transfer of a going concern (universalité or branche d';activité) can qualify for a VAT exemption under Article 11 of the Belgian VAT Code, provided specific conditions are met. Registration duties apply to the transfer of Belgian real property at rates that vary depending on the region - Brussels, Flanders and Wallonia each set their own rates - and these can represent a material transaction cost.

For the buyer in an asset deal, the acquisition price is allocated across the individual assets, and the buyer can depreciate those assets from the new, stepped-up value. This creates a future tax shield that can be economically significant, particularly where goodwill or real property represents a large proportion of the purchase price. Many buyers are willing to pay a higher headline price in an asset deal precisely because of this depreciation benefit.

A non-obvious requirement in Belgian asset deals is the obligation to notify the Belgian tax authorities of the transaction under certain circumstances, and the potential application of the anti-abuse provision in the Belgian Income Tax Code (Article 344 CIR). Transactions structured primarily to obtain a tax advantage without genuine economic substance may be recharacterised by the tax authorities.

Employment law is a critical dimension of any Belgian business acquisition, and the two deal structures produce very different outcomes for employees and their terms of employment.

In a share deal, the employer of record does not change. The company continues as the employer, and all employment contracts, collective agreements, accrued holiday entitlements, pension rights and seniority calculations remain entirely unaffected. Employees do not need to be individually notified of the share transfer, and their consent is not required. From the employees'; perspective, nothing changes on the day of closing. This continuity is generally seen as an advantage by buyers who wish to retain the workforce without disruption.

In an asset deal involving the transfer of a going concern or a branch of activity, Belgian law implements the European Acquired Rights Directive through the Collective Labour Agreement No. 32bis (CAO 32bis). Under this framework, all employees assigned to the transferred business or branch automatically transfer to the buyer on their existing terms and conditions. The buyer cannot cherry-pick which employees to retain, and it cannot offer inferior terms as a condition of the transfer. Both the seller and the buyer are jointly and severally liable for obligations arising before the transfer date for a period defined under the agreement.

In practice, CAO 32bis creates significant obligations for buyers in asset deals. The buyer must inform and consult the works council or trade union delegation before the transfer takes place. Failure to comply with the information and consultation requirements can expose the buyer to claims and delay the transaction. Many underestimate the time required for this process, which can add several weeks to the transaction timeline.

A common mistake in cross-border transactions is for foreign buyers to assume that Belgian employment law mirrors the rules in their home jurisdiction. Belgium has a highly developed system of sectoral collective agreements (paritaire comités), and employees in many sectors benefit from terms that go well beyond the statutory minimum. Identifying the applicable sectoral agreement and understanding its implications for the acquired workforce is an essential step in due diligence for both deal structures.

For transactions where the buyer intends to restructure the workforce after closing, the share deal offers somewhat more flexibility in timing, because the restructuring can be planned and executed after the transaction is complete. In an asset deal, the automatic transfer of employees under CAO 32bis means that any planned redundancies must be carefully sequenced to avoid liability.

If you are evaluating the employment implications of a Belgian acquisition and need guidance on CAO 32bis compliance or workforce structuring, contact info@vlolawfirm.com. We can help structure the setup correctly the first time.

The allocation of historical and contingent liabilities is one of the most practically significant differences between the two structures, and it shapes the due diligence scope, the contractual protections required and ultimately the risk profile of the transaction.

In a share deal, the buyer acquires the company with all its history. Known liabilities are reflected in the purchase price; unknown or contingent liabilities are the subject of representations, warranties and indemnities in the share purchase agreement. Belgian law does not impose a mandatory warranty regime for share sales - the parties are free to negotiate the scope and duration of warranties. In practice, Belgian M&A transactions follow market conventions that have converged significantly with English and international practice, with warranty and indemnity (W&I) insurance increasingly used to bridge gaps between buyer and seller positions.

The key risk areas in a Belgian share deal due diligence typically include: corporate tax compliance and any open assessments by the Belgian Federal Public Service Finance; social security contributions and compliance with the National Social Security Office (ONSS/RSZ); environmental liabilities, particularly for industrial or manufacturing businesses; real property ownership and any charges registered against it; and compliance with sector-specific regulations such as financial services licences or pharmaceutical approvals.

In an asset deal, the buyer';s liability exposure is theoretically more limited because it is acquiring only the identified assets. However, the hidden liability rule (passif occulte) under Belgian law means that a buyer of a going concern or branch of activity may be held liable for certain debts of the seller, particularly tax and social security debts, for a period following the transfer. The Belgian tax authorities and the ONSS have specific statutory rights to pursue the buyer for unpaid obligations of the seller. Buyers routinely request tax and social security clearance certificates before closing to limit this exposure, but the certificates do not provide absolute protection for liabilities that crystallise after the certificate date.

A practical scenario illustrates the point. A foreign buyer acquires the Belgian manufacturing operations of a group through an asset deal structured as a transfer of a branch of activity. After closing, the Belgian tax authorities issue an assessment against the seller for underpaid corporate tax relating to a period before the transfer. Under Belgian law, the buyer may be jointly liable for this assessment up to the value of the assets acquired. Without adequate contractual protections and a thorough pre-closing tax review, this exposure can be material.

A second scenario: a buyer acquires the shares of a Belgian retail company. Post-closing, it discovers that the company has been operating in breach of a sectoral collective agreement, resulting in underpaid overtime for a large number of employees over several years. Because the share deal transferred the company with all its liabilities, the buyer now owns this problem. A well-structured due diligence and a specific indemnity in the share purchase agreement would have allocated this risk to the seller.

The choice between a share deal and an asset deal in Belgium is rarely determined by a single factor. In practice, it reflects the negotiating positions of buyer and seller, the tax profile of the transaction, the nature of the business being acquired and the strategic objectives of both parties.

Sellers generally prefer share deals when they can benefit from the participation exemption or the private individual exemption on capital gains. The share deal produces a cleaner exit, with no residual liability for the assets transferred and no need to wind up the selling entity. For a corporate seller holding shares in a Belgian subsidiary, the tax advantage of the share deal can be very significant.

Buyers generally prefer asset deals when they want to acquire a specific business or set of assets without taking on the target company';s historical liabilities, or when they want to obtain a step-up in the tax basis of the acquired assets. Asset deals are also preferred when the target company has complex corporate governance issues, minority shareholders who are difficult to deal with, or a history of regulatory non-compliance.

In practice, many Belgian M&A transactions involve a negotiation between these competing preferences. The seller';s tax advantage in a share deal may be partially offset by a lower purchase price; conversely, a buyer willing to accept a share deal may negotiate a higher indemnity package or a price reduction to compensate for the additional liability exposure.

Certain transactions are structurally constrained. If the target holds licences or permits that are not transferable to a new entity - for example, certain financial services authorisations issued by the FSMA or pharmaceutical licences - a share deal may be the only practical option because the licence remains with the company. Conversely, if the buyer wants to acquire only a specific product line or geographic territory from a larger group, an asset deal or a partial business transfer is the natural structure.

The Belgian Code of Companies and Associations also provides for a statutory merger or demerger as an alternative to a conventional share or asset deal. These procedures involve a court-supervised process with specific creditor protection rules and are typically used in intra-group reorganisations rather than third-party acquisitions, but they are worth considering where the transaction involves a complex multi-entity structure.

For complex transactions involving multiple jurisdictions, the Belgian structure must be considered alongside the tax and legal rules of the other countries involved. A structure that is optimal from a Belgian perspective may create adverse consequences in the seller';s or buyer';s home jurisdiction, and an integrated cross-border analysis is essential.

To discuss the optimal transaction structure for your Belgian acquisition or divestiture, contact info@vlolawfirm.com. We can assist with documents and filings across the full transaction lifecycle.

Can a buyer in a Belgian share deal avoid all historical liabilities of the target company?

Not entirely. While a share deal does not create the same statutory joint liability exposure as an asset deal under the hidden liability rules, the buyer acquires the company with all its history. Tax assessments, social security claims, employment disputes and environmental liabilities that existed before closing remain the company';s obligations after closing. The standard protection mechanism is a well-drafted set of representations and warranties in the share purchase agreement, supported by specific indemnities for identified risks and, increasingly, a W&I insurance policy. Buyers should not assume that a clean set of audited accounts eliminates liability exposure - Belgian tax and social security authorities have broad powers to reassess past periods, and contingent liabilities may not appear on the balance sheet at all.

How long does a typical Belgian M&A transaction take, and what are the main cost drivers?

A straightforward share deal for a private Belgian company can close in six to twelve weeks from the signing of a letter of intent, assuming due diligence is well-organised and there are no regulatory approvals required. An asset deal involving real property, multiple contracts or a large workforce typically takes longer - ten to sixteen weeks is a realistic estimate - because of the additional transfer formalities. The main cost drivers are legal and tax advisory fees, notarial fees for real property transfers, registration duties on real property (which vary by Belgian region and can be a significant percentage of the property value), and any required regulatory filings. W&I insurance premiums, if used, add a further cost. Professional fees for a mid-market Belgian transaction typically run from the low to mid six figures in EUR, depending on complexity.

Is it possible to acquire only part of a Belgian company';s business through a share deal?

A pure share deal transfers all shares of the target company and therefore the entire business. If the buyer wants to acquire only part of a business, the options are: an asset deal structured as a transfer of a specific branch of activity; a partial share deal if the target has already been structured as a separate subsidiary holding the relevant business; or a pre-closing reorganisation in which the seller hives down the relevant business into a new entity whose shares are then sold. Each of these approaches has different tax, employment and legal consequences under Belgian law. The hive-down followed by a share sale is a common structure in Belgian practice and can combine the seller';s preference for a share deal with the buyer';s preference for a clean acquisition of a defined business.

The choice between a share deal and an asset deal in Belgium involves a careful analysis of tax exposure, liability allocation, employment law obligations and transaction mechanics. Neither structure is universally superior - the right answer depends on the specific facts of the transaction, the profiles of buyer and seller, and the nature of the business being acquired. Belgian law provides a well-developed framework for both structures, but it contains specific rules - from the participation exemption to CAO 32bis to the hidden liability regime - that require expert navigation.

VLO Law Firms advises international clients on corporate transactions in Belgium. We can assist with transaction structuring, due diligence, share purchase and asset purchase agreement drafting, employment law compliance, and regulatory filings. To request a consultation, contact: info@vlolawfirm.com