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ARTICLE · 08 JANUARY 2019

Directors' Fees Subject To Luxembourg VAT

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On 30 September 2016, the Luxembourg VAT authorities released the long-awaited Circular on the VAT treatment applicable to directors' fees.

LuxembourgTax
Atoz Tax Advisers
Atoz Tax Advisers
Thibaut Boulangé
Thibaut Boulangé

On 30 September 2016, the Luxembourg VAT authorities released the long-awaited Circular on the VAT treatment applicable to directors' fees. The Circular confirms that directors' services constitute an economic activity and indicates the director's status of VAT taxable person, irrespective of whether this activity is exercised by an individual or by a company.

Directors' services are therefore subject to Luxembourg VAT at the rate of 17 % when invoiced by a Luxembourg director to a Luxembourg company. Consequently, the VAT registration of the Luxembourg directors is now required.

In the event the director would be established outside of Luxembourg, Luxembourg VAT would be due under the reverse charge mechanism by the VAT registered Luxembourg company which benefits from the director's services.

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