Luxembourg VAT authorities issue a new circular regarding VAT on director fees
11 December 2024
Input newsletter
At a Glance
On 11 December 2024, the Luxembourg VAT authorities issued Circular N°781-2 on director fees clarifying its position after the decision of the District Court of 22 November 2024.
A closer look
VAT status of directors in Luxembourg: Circular from the Luxembourg VAT authorities
As mentioned in our previous newsletter regarding VAT on directors fees in November, the District Court has ruled that the tax assessment issued by the Luxembourg VAT authorities toward Mr. “TP,” a director of different companies, for the tax year 2019 is void and that therefore no VAT was due on the remuneration he received from different Luxembourg “société anonyme” (public limited company) for his activity as a director. (Click here to read the full ruling.)
However, as highlighted in our previous newsletter, several different questions remained open.
Circular N°781-2 issued on 11 December 2024 answers one of the most important ones. Indeed, it clarifies that the terms of the District Court and of the Court of Justice of the European Union (CJEU) in its “TP” case (C-288/22) are broad enough to cover not only a “natural person” (or individual) acting as a director of a Luxembourg “société anonyme” (public limited company) but also any corporate officer who fulfills the conditions laid down by these decisions. This means that “he or she does not act on their own behalf or under their own responsibility and does not bear the economic risk linked to their activity.” It is, however, up to each concerned person to determine if the conditions are met.
Importantly for your planning purposes, the Luxembourg VAT authorities have shared1 that a “non-bureaucratic” procedure allowing for the retroactive regularization of VAT paid on director’s remunerations will be accessible starting 16 December 2024 in MyGuichet.
Despite the Circular, many questions remain unanswered. Concerned persons and companies should already envisage the possible answers and their impact on their respective positions.
We are delighted to invite you to our next webinar about this long-awaited decision of the District Court and its impacts on VAT and Personal Tax. The webinar will take place tomorrow Thursday, 12 December 2024 from 11:00 to 11:45 (CET).
The Deloitte Luxembourg Indirect Tax Team remains at your disposal to discuss the potential impacts on your organization.
