Court rules that directors in Luxembourg are not VAT taxable persons

• On 21 December 2023, the Court of Justice of the European Union ruled that a director of a commercial company is not a taxable person for VAT.
• This decision contradicts the position of the Luxembourg VAT authorities and will have a substantial impact on directors and the companies they are directors of in Luxembourg.
• Directors should also examine the impact in other EU Member States where they have subsidiaries or directorships.
• The clarification issued by the Luxembourg VAT authorities in 2016 stated that directors are VAT taxable persons, subject to certain exemptions.
• This clarification resulted from different approaches being applied in Luxembourg regarding the VAT status of directors.
• The case that led to the CJEU decision involved a Luxembourgish lawyer who refused to apply VAT on fees received as a director.
• The CJEU clarified that the activity of a director is not considered independent and that fees received are not regarded as remuneration for services provided to the company.

Source: www2.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.

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