Understanding The VAT Implications For Board Members In Luxembourg

Recent judgments from the Court of Justice of the European Union (CJEU) and the Luxembourg District Court have clarified VAT obligations for Luxembourg board members.

On 11 December 2024, the Luxembourg VAT administration issued circular 781-2 to address the implications of these rulings confirming that directors who do not act on their own responsibility and do not bear the risk of the activity exercised should not be considered as a VAT taxable person.

Here is what you need to know:

Key points from the circular

• Economic activity defined: A board member's role qualifies as an "economic activity" if they provide services for payment on a permanent basis with foreseeable remuneration.