ECJ Case C-288/22 (Administration de l’Enregistrement, des Domaines and de la TVA) – AG Opinion – Member of the Board of Directors of a Public Limited Company is not a Taxable Person

On July 13, 2023, the ECJ issued the AG Opinion in the case C-288/22 (Administration de l’Enregistrement, des Domaines and de la TVA).

Context: Reference for a preliminary ruling – Value added tax – Directive 2006/112/EU – Taxable transactions – Taxable person – Concept of an independent economic activity – Typological approach – Activities of a member of a board of directors of a legal person – Principle of neutrality of legal form

Article in the EU VAT Directive

Article 9 of the EU VAT Directive 2006/112/EC.

Article 9 (Taxable person)
1. ‘Taxable person’ shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity.
Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as ‘economic activity’. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity.
2. In addition to the persons referred to in paragraph 1, any person who, on an occasional basis, supplies a new means of transport, which is dispatched or transported to the customer by the vendor or the customer, or on behalf of the vendor or the customer, to a destination outside the territory of a Member State but within the territory of the Community, shall be regarded as a taxable person.

Facts

TP, a lawyer, is a member of the board of directors of a number of public limited companies incorporated under Luxembourg law, namely a bank established in Luxembourg, a holding company belonging to a logistics group listed on the Frankfurt stock exchange, and two holding companies belonging to a pharmaceuticals group listed on the Paris stock exchange. As a member of those boards, he takes part in decisions concerning the accounts, risk management policy and the strategy to be followed by the group in question, and in developing proposals to be put to shareholders’ meetings. The day-to-day management of the first two companies is carried out by an executive committee made up of the chief executive officers or executive directors. The business activities of the other two companies do not require an executive committee.
On 28 July 2020, the administration de l’enregistrement, des domaines et de la TVA (Registration Duties, VAT and Estates Authority, Luxembourg; ‘the VAT Authority’), acting on its own initiative, subjected the director’s percentage fees received by TP in 2019 to VAT. By decision of 23 December 2020, the imposition
of tax on the initiative of the VAT Authority was confirmed on the ground that a company director independently carries out an economic activity and thus does
not escape VAT.
TP disputes that his director’s percentage fees are properly subject to VAT. On 26 January 2021, he brought an application to annul the decision to impose tax on the initiative of the VAT Authority before the referring court.

Questions

Is a natural person who is a member of the board of directors of a public limited company incorporated under Luxembourg law carrying out an “economic” activity within the meaning of Article 9 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, ¹ and more specifically, are percentage fees received by that person to be regarded as remuneration paid in return for services provided to that company?

Is a natural person who is a member of the board of directors of a public limited company incorporated under Luxembourg law carrying out his or her activity “independently”, within the meaning of Articles 9 and 10 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax?

AG Opinion

1. Article 9(1) of Directive 2006/112/EC on the common system of value added tax, read in conjunction with Article 10 thereof, must be interpreted as meaning that the existence of an independent economic activity must be determined by means of a typological comparison. The decisive factor in that regard is whether, in the context of the necessary overall assessment, the person concerned, as a typical taxable person does, bears an economic risk personally and acts on his own economic initiative, which it is for the referring court to ascertain.

2. In that regard, it follows from the principle of neutrality of legal form that a natural person who is a member of a body of a company which is required by law and who receives remuneration for that activity as a member of that body cannot in this respect be regarded as carrying out an independent economic activity.

Decision

Summary

Source

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