Tax neutral merger possible in Belgium in case of negative accounting net equity


When a merger is performed between two Belgian legal entities whereby the acquired company has a negative accounting net equity, the question pops-up whether such merger is possible and feasible to perform tax-free.

Given that Belgian law does not explicitly require a positive net equity, it can be assumed a contrario that a merger should be possible from a corporate legal perspective. This position is further supported by a number of technical arguments. Note however that the market value of the acquired company should be positive in order to comply with the requirement that the merger should be to the benefit of the acquiring company. A positive market value is also a requirement from an accounting perspective. 

The Belgian income tax code does not prevent a tax neutral merger in case of a negative net equity. Furthermore, it is explicitly mentioned that reorganisations (including mergers) are possible in case of bankruptcy (in which case there will likely be a negative net equity). This position was confirmed in the past by the Belgian Ruling Commission. 

Should you have any questions, please contact Christophe Rapoye ( or Nancy De Beule (