ECJ Case C‑420/18 (IO vs NL) – Judgment – Member of Supervisory Board VAT taxable person?

The European Court of Justice gave its judgment in case C-420/18 (IO) on 13 June 2019. The case deals with the question is a member of a supervisory board can be seen as a taxable person.

Unofficial translation

Facts (simplified):

  • IO is employed as a municipal official and is also a member of the Supervisory Board of Stichting E (hereinafter: the foundation).
  • IO receives a gross remuneration for its work as a supervisory director, subject to wage tax and national insurance contributions.
  • Until 01.01.2013, IO was not considered as a taxpayer for VAT, based on the national rule that members of a Supervisory Board who held a maximum of four supervisory directorships were not regarded as a taxpayer for VAT. By decision of 27.06.2012, this approval was withdrawn with a transitional arrangement until 01.01.2013 following the European Commission’s request to adjust the VAT rules for the treatment of members of supervisory boards.
  • According to the Commission, the work of a Commissioner, even if only for one board, should be regarded as an economic activity for VAT.
  • The question is whether IO, for its activities as a member of the Supervisory Board of the foundation, must be regarded as a taxpayer for VAT.

IO, as an individual member of the Supervisory Board, argues that he is subordinate to the Supervisory Board. The Inspector argues that the relationship between the foundation and a member of the Supervisory Board is characterized by equality: there is a contract of assignment and no employment contract.

Preliminary questions:

The ECJ is asked the following questions:

‘Is a member of the Supervisory Board of a foundation, who is in a subordinate position with regard to this Board for his employment and remuneration conditions, but who is not in a subordinate position with respect to the Supervisory Board or the Foundation, performing economic activities independently for VAT?


The European Court rules as follows:

‘A member of the supervisory board of a foundation, who, while exercising his duties as a member of that council, is in no way hierarchically subordinate to the management body or supervisory board of that foundation, but neither in his own does not act in his name or for his own account or under his own responsibility, but acts for the account and under the responsibility of that same council, nor does he bear the economic business risk, since he receives a fixed remuneration that is not dependent on his participation in meetings or of are actually worked hours, does not perform an economic activity independently.

Source: (Dutch version)

Note from the editors: This ruling probably means that the Netherlands will have to review its rules with regard to supervisory boards again.