Dutch Perspective on ECJ case: Luxembourg Board Member of the Board of Directors is not liable for VAT on profit-dependent director’s remuneration

The Court of Justice of the EU has ruled that a member of the Board of Directors in Luxembourg is not liable for VAT on profit-dependent director’s remuneration.
The ruling states that a board member who does not have personal liability for the company’s debts and does not bear any business risk is not liable for VAT.
This ruling may have implications for Dutch directors who currently invoice VAT.
The ruling also states that profit-dependent remuneration is not considered a taxable service if it can be reduced to zero in the absence of profit.
The case involves a Luxembourg lawyer who serves as an executive director on four different boards.
The lawyer receives fixed amounts and profit-dependent remuneration for his board activities.
The lawyer argues that he is not acting independently because the decisions are made collectively and he has no personal liability.
The question is whether the remuneration received by the lawyer is subject to VAT.
A previous ruling by the Court of Justice of the EU concluded that a supervisory board member in the Netherlands does not perform independent economic activities.
The board member in that case did not act in their own name, for their own account, or bear any business risk.