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Guidance on VAT for Luxembourg Directors After CJEU Ruling

  • Luxembourg VAT Authorities issued guidance on 11 December 2024 regarding VAT on director fees following the CJEU ruling on 21 December 2023
  • The guidance clarifies the VAT position of directors of Luxembourg companies based on their independence in performing duties
  • A director not acting independently is not considered a VAT taxable person
  • Services provided by a director for consideration and on a regular basis are economic activities but are outside the scope of VAT if not performed independently
  • Independence is defined by acting under one’s own responsibility and bearing economic risks
  • The VAT Authorities provided no general rule for independence, leaving directors to assess their own situations
  • In the TP case, the Luxembourg district tribunal found the director did not act independently and thus was not a VAT taxable person
  • Regularization for directors who should not have been VAT taxable includes a one-shot process through myguichet for Luxembourg-based directors by end of June 2025
  • Non-Luxembourg based directors’ regularization is handled by the companies they served
  • Directors must evaluate their independence and regularize their VAT status in early 2025
  • Input VAT deductions for simple expenses by directors are generally not challenged, but large investments might be analyzed for deductibility
  • No statute of limitations for the years 2018 and 2019 in cases of non-independent directors needing VAT regularization

Source: loyensloeff.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.

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