Dutch court of appeal refers for a preliminary ruling on qualification Supervisory Board Member as taxable person for VAT purposes
On 21 June, the Den Bosch Court of Appeal referred to the CJEU for a preliminary ruling regarding the VAT consequences of a Membership of a Supervisory Board. The question is whether a Supervisory Board Member is a taxable person for VAT purposes acting independently, or is carrying out his activity in the context of a relationship of subordination and, therefore, not a VAT entrepreneur.
3 July 2018
The interested party in this case is a Supervisory Board Member of a foundation. Moreover, he is employed as a municipal civil servant. He does not hold any other additional positions apart from his Supervisory Board Membership at the foundation. The Den Bosch Court of Appeal addressed the question whether the interested party should qualify as a VAT entrepreneur in respect of his activities as a Supervisory Board Member of the foundation.
Den Bosch Court of Appeal
The Court of Appeal considers there to be so much doubt about the answer to this question that it prefers to refer the question to the CJEU. The Court of Appeal refers to the Dutch State Secretary for Finance’s repealed position that Supervisory Board Members who have no more than four Supervisory Board Memberships do not qualify as VAT entrepreneurs. Furthermore, the Court refers to the differing position of the European Commission that a Supervisory Board Membership is to be interpreted as an economic activity for VAT purposes, even if individuals hold only one membership. The State Secretary withdrew his position on the back of impending infringement proceedings by the Committee.
The CJEU’s answer to the questions raised by the Den Bosch Court of Appeal can have far-reaching consequences for the current VAT treatment of Supervisory Board Memberships. Particularly for Supervisory Board Members of organisations that are not fully entitled to input tax recovery.
If you have one or more Supervisory Board Memberships, the outcome of these proceedings may have an impact on your VAT entrepreneurship. It may be advisable to file an objection against your own VAT return. When your organisation is not or not fully entitled to input tax recovery, it may also be worthwhile to contact your Supervisory Board Members and have them object against their own VAT returns. You can contact your advisor to discuss the potential consequences of this case.