Opinion of the CJEU Advocate General regarding the VAT treatment of director fees

On 13 July 2023, the Advocate General Kokott of the Court of Justice of the European Union issued her opinion in the case C-288/22 TP on the VAT status of independent directors.

The main question in the TP Case is whether TP, a natural person serving as an independent member of the board of directors of a limited liability company, should be considered as performing an independent ‘economic activity’ from a VAT perspective. In other words, should the services rendered by an independent director fall within the scope of VAT and be subject to VAT?

In her opinion, AG Kokott took the position that the VAT status of an independent director should ultimately be assessed on a case-by-case basis. In the TP Case, considering the facts at stake, AG Kokott sustains that TP should not be considered as performing his activity independently and, as such, he should not qualify as a “taxable person” for VAT purposes. Therefore, the services rendered by TP as an independent director should fall out of the scope of VAT.

We analyse this opinon and its potential implications should the CJEU judges follow the AG opinion.