Internatio­nales Steuer­recht

EU: VAT Status of Independent Directors


Should services rendered by an independent director be subject to VAT?

This was the focus of an opinion issued recently by the Advocate General of the Court of Justice of the European Union in a case regarding the VAT treatment of director fees.

On 13 July 2023, the Advocate General Kokott, issued her opinion in the case C-288/22 TP (TP Case). The main question in the TP Case is whether TP, a natural person serving as an independent member of the board of directors of a limited liability company, should be considered as performing an independent ‘economic activity’ from a VAT perspectiveIn other words, should the services rendered by an independent director fall within the scope of VAT and be subject to VAT?

In her opinion, AG Kokott took the position that the VAT status of an independent director should ultimately be assessed on a case-by-case basis. In the TP Case, considering the facts at stake, AG Kokott sustains that TP should not be considered as performing his activity independently and, as such, he should not qualify as a “taxable person” for VAT purposes. Therefore, the services rendered by TP as an independent director should fall out of the scope of VAT.

Read the full analysis by ATOZ Tax Advisers, Taxand Luxembourg, here.

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