Making commitments before setting up your business

When preparing to set up your own company, it is commonplace to acquire goods before the launch. Are you permitted to deduct these for tax purposes, or even recover the VAT? This topic can cover several different questions!

I haven't set up my company yet. Can I make "urgent" commitments on behalf of the company at this stage?

You can undertake commitments in the name of and on behalf of the company being set up, or under formation. The company can take over these commitments up to two years before its incorporation. Generally, the company takes over these commitments at the time of the incorporation: this can be mentioned specifically in the final provisions of the incorporation (statutes). If this is not the case, the company then has two years from the date of incorporation to resolve the situation. However, the company cannot take over any type of commitment made on its behalf.

Several conditions must be met. The previously concluded contract must clearly state:

1. that the commitment is undertaken on behalf of the company under formation, specifying exactly which company it concerns (name + legal form);
2. that the transaction is carried out in the name of and on behalf of this company.

In practical terms, the invoice must list the contact details of the buyer, for example: SRL UNDER FORMATION "BERNADETTE & Cie", estimated address of the registered office, stating "VAT: pending".

If the conditions are met, the company takes over the commitment as if it had made the commitment itself.

It is therefore important to keep the purchase document safe, but be aware that the tax authorities only assess this procedure moderately; these situations must remain the exception. Consult your accounting and tax advisor or your notary.

Example:

Lucas is a joiner. He has an opportunity to buy some second-hand machines at a very attractive price a few months before his company is incorporated. He wants to take advantage of this opportunity. 
He can buy them as a natural person, clearly stating to the seller that this is carried out in the name of and on behalf of his future company, currently being incorporated. He pays with his own money. 
When the company is incorporated, it will simply take over the commitment on its behalf and pay Lucas back. He will then provide the company's business number to the seller.
 

What about if I set up a professional activity in my own name, as a "natural person"?

The transfer of your private assets to your company will then be the subject of a document, which must contain a description of the relevant property. As is the case with a company, you can warn the seller that you are acting as a professional and that you do not yet have your VAT number. You will provide the seller with this at a later date.

This document, which can be drafted by the business founder themselves, is identical to a "sales invoice" (It is best to avoid the term "invoice" and use "asset transfer" instead).

Two clarifications must be specified on this "asset transfer":

• IN PLACE OF THE SELLER, the business founder must provide their contact details and write underneath: "acting in a private capacity".
• IN PLACE OF THE BUYER, the business founder must also provide their contact details and write underneath: "acting in a professional capacity"; they must also include their company number (if they know it, or if not, will provide this at a later date).

The assessment cannot simply be done any old way! Please consult our other articles.

What about the VAT to be paid on expenses prior to the creation of the company ?

In terms of VAT, it is possible to deduct the VAT from goods purchased specifically for your new activity, before it is officially launched.

As with other goods purchased while the activity is in operation, the deduction can be made within three years, based on the purchase invoice, without any other formalities.

In order to deduct the VAT, a compliant invoice is always required. This may be very difficult, or even impossible, to obtain from a seller if the purchase dates back several years. It's therefore important to consider this when making the purchase. However, it is logical that your VAT number won't be featured on this document, given that you have not yet been registered for VAT. This is why it is advised that you request the seller state "VAT pending" and provide them with the VAT number once you have obtained one.

Example :

On 11 March 2024, Maxim bought a new computer in order to be better prepared, specifically for managing his new activity. He has a compliant invoice for €1,200 + €252 in VAT. However, no VAT number is stated on this invoice as Maxim did not yet have a company number. In addition, after submitting sound financial records, Maxim obtained a loan and started development work on 24 November 2024. He received various invoices from the contractors in November and December 2024, for €20,000 + €4,200 in VAT.
The activity officially started on 1 January 2025.

Maxim can deduct the VAT from the 2024 invoices in the following way:

• No deduction can be made in 2024 for the computer, given that this was not strictly used for professional purposes as no taxable VAT activities were carried out in 2024. However, assuming that the computer will be used exclusively for professional purposes in the future, the deductible VAT in 2025 will therefore be 4/5 of €252 = €201.60, to be declared in the first VAT return of 2025.
• Concerning the work, all VAT will be deductible given that, although the work was carried out in 2024, this was for the direct purpose of immediately generating VAT taxable turnover. An amount of €4,200 will also be declared in the first VAT return of 2025.

It is advised that you maintain an explanatory table for the auditor!