ECJ Case: Judgment on Luxembourgish VAT Rules for Director Services (C-288/22)

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The European Court of Justice (ECJ) addressed Case No. C-288/22, focusing on Luxembourgish VAT rules concerning director services. The taxpayer in question provided board of director services to multiple companies, earning fees calculated as a percentage of the companies’ profits. The Luxembourgish Tax Authority imposed a VAT assessment on these fees.


Following a request for a preliminary ruling, the ECJ made the following determinations under EU Directive 2006/112/EC, pertaining to the common system of VAT:


Economic Activity for Board of Directors Members:


  • A member of the board of directors of a public limited company, as per Luxembourgish law, engages in economic activity when supplying services to the company for consideration.
  • This applies if the activity is provided continuously and for an anticipated fee.


Independent Activity Criteria:


  • The activity of a board of directors member is not deemed independent if certain conditions are not met.
  • Independence is negated when the director does not act on their own behalf, lacks personal responsibility, and does not bear the economic risk associated with their activity.
  • Despite the director’s freedom in arranging their work, receipt of fees, action in their own name, and absence of an employer-employee relationship, independence hinges on specific criteria.



Source: Europe.eu

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