Luxembourg VAT on Director’s Fees: Case Law and Guidance

• The Luxembourg District Court ruled that directors’ fees are not subject to VAT.
• The court followed the ECJ decision (Case C-288/2), which stated that board members’ activities are considered economic activities for VAT purposes if they are carried out for consideration, on a continuous basis, and for a foreseeable remuneration.
• However, the ECJ also ruled that the activity is not carried out independently if the board member does not act on their own behalf or under their own responsibility and does not bear the economic risk linked to their activity.
• The Luxembourg VAT authorities issued Circular N° 781-2, which acknowledges the ECJ and District Court decisions and provides practical information.
• Board members must assess whether they qualify as a VAT taxable person based on the recent decisions.
• The consequences of the decisions apply to all types of directors, not just those who act for public limited liability companies.

Source: cms.law

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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