VAT on directors fees – new detailed guidelines

Written by Christoph Zenner 6 April 2016


In a previous newsflash, we informed you that a company acting as a director (or a liquidator etc.) will no longer be able to invoice its director fees outside the scope of VAT. The entry into force of this decision has been repeatedly delayed.

On 30 March 2016, the Belgian VAT Administration published comprehensive guidelines on how these new rules should be implemented (new administrative decision ET 127.850) and confirmed the entry into force of the new rules as from 1 June 2016.

These guidelines clearly state that any remuneration received by a company in its capacity as director (including ‘tantièmes’) will – as from 1 June 2016 – fall within the scope of the new rules and will therefore be subject to VAT.

Companies acting as directors will have to apply for an individual VAT number in Belgium and comply with the VAT invoicing and VAT filing (and other) requirements. Having to register for VAT will also create the right to recover input VAT on costs and expenses. We believe that good arguments are available to claim (partial) input VAT recovery on past investments as well, even though, from the wording of the decision, it seems to us the authorities take a different viewpoint.

If the recipient, i.e. the company paying the director fees, has a limited right or no right to deduct input VAT, a VAT leakage may arise.

Several possibilities to mitigate this VAT leakage exist, but the concrete way to do so needs to be determined taking into account the specifics of the situation of all parties involved.

Clearly, now is the time to act in order to comply with the new rules and to assess the best scenario to optimise any VAT impact.

Please contact your tax advisor for the proper implementation of the new rules and for specific guidance on how to optimally deal with your company’s situation.

Wouter Villette
Partner
Direct: +32 2 7107302 | Mobile: +32 475 974171
wouter.villette@be.pwc.com

Christoph Zenner
Partner
Direct: +32 2 7107348 | Mobile: +32 476 258538
christoph.zenner@be.pwc.com

Lionel Van Reet
Partner
Direct: +32 2 7104212 | Mobile: +32 497 051181
lionel.van.reet@be.pwc.com

Eric Schmitz
Director
Direct: +32 3 2593263 | Mobile: +32 485 555506
eric.schmitz@be.pwc.com

Bart Vrancken
Director
Direct: +32 9 2688182 | Mobile: +32 479 426318
bart.vrancken@be.pwc.com

Claire De Lepeleire
Director
Direct: +32 2 7107417 | Mobile: +32 475 910868
claire.de.lepeleire@be.pwc.com

Lionel Wielemans
Director
Direct: +32 2 7104460 | Mobile: +32 477 698479
lionel.wielemans@be.pwc.com

Manuel Van Der Veken
Director
Direct: +32 2 7104404 | Mobile: +32 473 910249
manuel.van.der.veken@be.pwc.com

Joost De Bauw
Director
Direct: +32 2 7104347 | Mobile: +32 476 919806
joost.de.bauw@be.pwc.com