- Director fees for members of the board of a Luxembourg public limited liability company should not be subject to VAT.
- The EU court ruled on whether VAT applied to director fees for services rendered by a member of the board of directors.
- The court determined that directors must be providing an “economic activity” to be subject to VAT.
- Services considered an “economic activity” include receiving reports, discussing strategy, participating in decisions, and other services outside of daily management.
- The activity must be permanent, with sufficient and continuous remuneration.
- For activity to be independent, the director must perform it in their own name, for their own account, and bear all the risk.
- The consequences of decisions taken by the board must be borne by the company, not the individual directors.
- The Luxembourg tax authorities repealed a circular regarding VAT on director fees and will issue a national decision on the matter.
Source: pinsentmasons.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
