On 21 December 2023, the Court of Justice of the European Union issued its decision on the "TP v Administration de l'Enregistrement, des Domaines et de la TVA" judgment (C-288/22) and the VAT treatment applicable to board of directors' remuneration.

The Court concluded, based on the case in question, that:

  • a member of the board of directors of a public limited company carries on an economic activity;
  • however, this activity as a member of the board is not carried out independently. In fact, despite the fact that this member is free to arrange how he or she performs their work, receives the emoluments making up his or her income, acts in his or her own name and is not subject to a hierarchical relationship of subordination, he or she does not act on his or her own behalf or under his or her own responsibility and does not bear the economic risk associated with his or her activity.

As this activity is not carried out independently, a member of the Board of Directors cannot be considered as a taxable person for VAT purposes. VAT would therefore not apply to the remuneration paid by the company (outside the scope of VAT).

While this decision provides some clarification, it is important to note that the court's reasoning is based on a series of criteria that may vary depending on the characteristics of the director's mandate. A case-by-case analysis is therefore required to determine whether or not a board member is affected by this decision.

As a result of this decision, there are also questions about possible deregistration for VAT purposes and the regularisation of VAT paid on this activity to date, to which the Registration, Domains and VAT authorities have not yet provided all the answers.

It should be noted, however, that on 22 December 2023 the VAT Administration published Circular No. 781-1, which suspends Circular No. 781 of 30 September 2016 with immediate effect until a judicial decision is taken by the Luxembourg District Court. A flashnews dated 15 January 2024 has also been published on the official website of the Luxembourg VAT authorities with additional details that we may analyze together, if necessary.


Please do not hesitate to contact us if you have any questions and/or would like us to analyse your situation: In Extenso Belux