Directors-legal persons will be subject to VAT as from 1 January 2015

28 Nov 2014

In its decision no. E.T. 125.180 of 20 November 2014 the VAT Administration has decided to abolish the optional VAT system for directors-legal persons starting on 1 January 2015.


Directors (including the managing director and members of the executive committee), managers and liquidators act as an entity of the company they represent. If these are natural persons, they are deemed to not act 'independently' for the application of VAT (VAT. Comm. No. 18/531). Hence they are not subject to VAT and the remuneration for their performance is likewise not subject to VAT.

If, however, these directors exercise their mandate through a legal person, the situation is different. A legal person cannot be considered as 'not independent' and should, in principle, be seen as subject to VAT.

The VAT Administration did, however, for practical reasons not demand that the legal person-director registered itself as subject to VAT. In practice this amounted to an optional VAT system for legal persons-directors. This optional system was only applicable for performances executed in the framework of a company mandate. Other performances did not fall under this system and hence were subject to VAT.

Based on an advice of the European Commission, the VAT Administration has withdrawn this optional system as from 1 January 2015.

This means that the remuneration paid starting on 1 January 2015 to legal persons-directors will be subject to VAT. The legal persons concerned will need to request a VAT number before the end of this year (since the request must be lodged before the start of the activity).

Nothing changes for natural persons-directors.


> Action point

Legal persons-directors must request a VAT registration number before the end of the year.

As from 1 January 2015 they also need to demand VAT on the remuneration they receive because of their mandate as director.