VAT On Directors' Fees And Other VAT Changes For 2024

The CJEU has held that directors' fees are not subject to VAT, the temporary VAT rate reductions end on 31 December 2023 and a bill of law extends the scope of the reverse charge from 1 January 2024.

Directors' fees

On 13 July 2023, CJEU Advocate General Kokott opined that the activities of independent directors are not subject to VAT since they cannot be viewed as carrying out an independent economic activity for VAT purposes. AG Kokott further emphasised that subjecting directors' fees to VAT would inevitably lead to a distortion of competition between companies required to act through a board of directors and other entities.

On 21 December 2023, the CJEU held that, even though the activity of an independent director would qualify as an economic activity for VAT purposes, it is not carried out independently if the director does not act on its own behalf or under its own responsibility and does not bear the economic risk associated with its activity (TP v