- On 22 November 2024, the District Court ruled the tax assessment claiming VAT on Mr. TP’s director fees as void.
- Mr. TP had previously refused to apply Luxembourg VAT on his director remuneration in 2019, leading to a dispute with the VAT authorities.
- The court’s decision was influenced by a ruling from the Court of Justice of the European Union (CJEU) on 21 December 2023, stating that directors do not qualify as taxable persons for VAT.
- The CJEU determined that directors do not act on their own behalf or bear economic risk, thus exempting them from VAT.
- Following the CJEU ruling, Luxembourg VAT authorities announced a non-bureaucratic procedure for retroactive VAT regularization on director fees via “MyGuichet.”
- A Circular 781-1 was issued to suspend previous guidance that classified directors as VAT taxable persons until the District Court’s decision.
- The VAT authorities extended the regularization period for VAT paid on director fees back to 2018, instead of just 2019.
- Several unresolved questions remain, including:
- Will the VAT authorities’ interpretation be limited to directors of public limited companies or include other company management?
- How will the new “MyGuichet” procedure function and when will it be available?
- What are the implications for directors who are deregistered for VAT or have left the country?
- Will a new circular be issued, and if so, when?
Source: deloitte.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.
