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By Oliver R. HOOR and Thibaut BOULANGE, Atoz*
On 30 September 2016, the Luxembourg VAT authorities released the long-awaited Circular on the VAT treatment applicable to directors’ fees. The Circular determines that directors’ services constitute an economic activity and indicates the director’s status as a 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 when invoiced by a Luxembourg established director to a Luxembourg company. This article analyses the direct tax and VAT treatment of directors’ fees and considers the appropriateness of the current regime against the backdrop of the developments in the international tax arena.
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