General or Limited Partnership: Choosing Between SNC and SComm

What Is a Belgian Partnership?

Belgian law offers two such forms with legal personality. Under the Companies and Associations Code (CSA) of 2019, both derive from the société simple. Unlike that basic form, however, they have legal personality. They can therefore sign contracts, open a bank account and own assets in their own name. Lawyers often describe them as partnerships of persons, since trust between partners matters more than capital.

Two forms exist:

• The general partnership (SNC): every partner answers for debts without limit.
• The limited partnership (SComm): general partners with unlimited liability work alongside limited partners, who only risk their contribution.

Our article on the simple partnership covers the basic form without legal personality.

Setting Up an SNC or SComm

Formation remains light compared with an SRL:

• No minimum capital.
• No mandatory notarial deed: a private deed is enough.
• No financial plan imposed by law.
• At least two partners, including one general and one limited partner in a limited partnership.

Next, the partners file the deed of incorporation with the registry of the enterprise court. Legal personality starts from that filing. The partnership then receives its enterprise number. An extract also appears in the annexes of the Belgian Official Gazette. Finally, an approved business counter records the activities and business units, as our guide to CBE registration explains.

A private deed still needs careful drafting. The partnership agreement sets out management, the entry of new partners and what happens to shares on death. In practice, it often makes any transfer of shares subject to the other partners' consent. Without a continuation clause, the death of a partner can also put the partnership at risk.

The SNC: Full Personal Liability

Here, each partner puts all their assets on the line. The law provides for unlimited, joint and several liability. An unpaid creditor can therefore turn to a single partner for the whole debt. That partner can then claim back the others' shares.

For example, three friends open a restaurant as a general partnership. If the business leaves €90,000 of debts, a supplier can demand everything from the wealthiest partner. This form therefore suits partners who know each other well. It also reassures suppliers, since the partners commit personally.

The SComm: Managing Partners and Investors

This form separates those who manage from those who finance:

• General partners manage and answer for debts without limit, jointly and severally.
• Limited partners bring funds and only risk their contribution.

However, a limited partner must not manage. A limited partner who carries out an act of management becomes jointly and severally liable for the resulting commitments. Still, giving advice or checking the accounts remains allowed in principle.

A Well-Known Use: Family Succession

Parents keep the role of general partners and manage the assets. The children join as limited partners. Thus the family prepares the handover without losing control of decisions. Some entrepreneurs also appoint an SRL as the general partner. The unlimited risk then falls on that SRL rather than on an individual.

Tax: How a Partnership Pays Corporate Tax

Like any entity with legal personality, an SNC or SComm pays corporate income tax. The standard rate stands at 25%. However, an SME can benefit from a reduced 20% rate on the first €100,000 of profit. Several conditions apply, including a director's pay of at least €45,000, or equal to taxable profit if that profit is lower. The FPS Finance publishes the current rules.

Active partners generally fall under the social security scheme for the self-employed. Their self-employed social contributions amount to roughly 20.5% of net income, due every quarter. Their pay then falls under personal income tax, progressive from 25% to 50%. In addition, distributed profits follow the rules on dividend taxation.

Partnership or SRL: Which to Choose?

The difference lies first in liability:

• In an SRL, shareholders in principle only risk their contribution.
• In a partnership, the SNC partners and the general partners stake their personal assets.
• An SRL requires a notarial deed and a financial plan.
• A partnership can start with a private deed.

Thus a partnership appeals for low-risk activity between trusted partners. In contrast, once potential debts grow, the SRL protects better. Both forms pay the same corporate tax. So the choice rests mainly on risk and flexibility.

Common Mistakes

Four mistakes come up often:

• Believing that a partnership shields the managers' private assets.
• Letting a limited partner sign contracts on its behalf.
• Forgetting a clause for a partner's death or departure.
• Starting without a financial plan, even though cash flow decides everything.

Plan Before You Sign

Before signing, put figures on the project over several years. Juristelo builds your forecast and compares a partnership with an SRL using real figures. You then choose your legal form with full knowledge.