The transfer of a business (‘handelsfonds’) allows for considerable contractual freedom. Although this provides interesting opportunities for both parties, it can also lead to greater risks. Moreover, certain legislative obligations are often overlooked, possibly with considerable (financial) consequences. It is therefore important to keep some key aspects in mind, when negotiating a transfer agreement.
First, the parties should realize that due to the lack of a legal definition, significant attention should be given to the contractual description of the business. Typically, this can include aspects such as clientele, the commercial name, industrial and intellectual properties, commercial agreements, furniture and other materials. In principle, the transferee does not take over debts. However, the parties may choose to negotiate a different arrangement. It is important to consider that all contracts of employees will automatically be included in the transfer, following CBA nr. 32bis. The transferee should not negotiate new employment contracts, as the original agreements and conditions will continue to apply. A termination of these contracts, based solely on the takeover itself, will give rise to additional compensation.
Secondly, in the context of a commercial lease agreement, the lessor cannot obstruct the transfer of the commercial lease if that transfer takes place in conjunction with the transfer of a business. This is the case even if it is explicitly prohibited by the commercial lease agreement.
Finally, parties have to be aware of the importance of confirming that there are no tax or social debts before the transfer of a business. For this purpose, several legislative provisions refer to confirmatory certificates, which must be obtained from the administrations concerned. It should be particularly recognized that, besides the – generally well known – certificates for income tax, VAT and contributions to the National Social Security Office (‘RSZ’), transferees should ensure a similar verification regarding contributions to the National Institute for the Social Security of the Self-Employed (‘RSVZ’). And – in case the transferred business includes an immovable property located in Flanders – a certificate related to all Flemish taxes (i.e. property tax, vacancy tax and registration tax) should be obtained from the Flemish tax authorities. All these certificates are to be annexed to the notice of transfer to the administrations. In case of non-compliance with these legal obligations, the transfer will not be enforceable vis-à-vis the administration. Furthermore, the transferee will be held jointly and severally liable for the tax and social debts of the transferor. In order to avoid this liability, it is important to be aware of the fact that the certificates are only valid for a period of thirty (30) days.
For specific questions, you can reach out to the authors of this article or to your regular contact person at Cresco.
Pauline Devos |Associate
Tessa Gijbels | Partner