07 November 2016 Luxembourg VAT administration addresses tax treatment of directors' remuneration The Value Added Tax (VAT) treatment applicable to directors' remuneration in Luxembourg has been found to be unclear due to the lack of rules, in both Luxembourg and the European Union (EU), concerning the specifics of directors' mandates. In Luxembourg, as well as at the European level, there are questions regarding the independent character of the relationship existing between the director and the Company being managed. Such character as well as whether the director is in charge of day to day management of the company will also drive the direct tax treatment of the remuneration paid to directors, i.e., whether such compensation is to be considered as employment income or as director's fees; whether it is deductible for corporate tax purposes or not; and whether it falls within the scope of VAT. Document ID: 2016-1884 |
