Based on previous administrative decisions and guidelines, companies acting as director in Belgium had the choice whether or not to charge VAT on their directors’ fees. That choice has now been abolished by a recent Administrative Decision as a result of advice given by the European Commission: Decision n° E.T.125.180 of 20 November 2014.
By that Decision, the Belgian VAT administration has decided that a company acting as director of another company will be subject to VAT as of January 1st, 2015.
The Decision prescribes that VAT will apply to services terminated after January 1st, 2015 (unless they were paid in advance in 2014). As of that moment, all directors’ fees, as well as “tantièmes”, will be subject to VAT.
The VAT position of a physical person acting as director is, however, not affected, and will remain outside the scope of VAT.
Practical consequences
As a result of the above, all corporate directors receiving any kind of director’s remuneration will still need to VAT register in the course of 2014 and keep VAT accounting records as of January 1st, 2015.
If the company in which the directors are appointed cannot (fully) recover input VAT, the new regime will generate a VAT cost. It might be worthwhile to assess whether the creation of a VAT unit would be beneficial.