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Markets and Securities Services |
Luxembourg
38
obligations have been complied with. A fault
could be recognised even if the preparation
of VAT returns is externalised to a third-party
provider, for instance a domiciliation company,
accountant or tax adviser.
Consequence: guarantee call notice
In case of failure in the performance of their
duties, Managers are personally and jointly
liable for the payment of VAT due by the taxable
person they manage.
The VAT Authority is entitled to issue a
guarantee call notice (
décision d’appel en
garantie
) against the defaulting Managers.
This decision to issue a guarantee call notice is at
the discretion of the VAT Authority, which should
be motivated. It implies that if a company is
managed by several Managers, the VAT Authority
can issue a guarantee call notice against one
manager only and not against the others.
The joint liability implies that the Managers who
have received a guarantee call notice cannot
invoke a benefit of discussion or a benefit of
division. It notably means that the Managers
cannot refuse to pay the VAT due by the
company or the fund they manage because the
latter is solvent or because the VAT Authority
has not previously enforced VAT collection from
the company. Indeed, the insolvency of the
taxpayer or the unsuccessful recovery of the
tax by the VAT Authority is not a pre-requisite
to launching the new procedure against the
Managers of that taxpayer.
In the case where there are several Managers,
the Manager who has received a guarantee
call notice cannot ask for a split of the tax
debt between the different Managers. The VAT
Authority is therefore authorised to ask the
payment of the whole amount to one of them.
In this case, the VAT Authority should be able to
explain their choice.
A Manager who receives a guarantee call notice
has the possibility to challenge it. A written
claim duly motivated should be sent to the
director of the VAT Authority within the three
months of the notification date mentioned on
the guarantee call notice.
The claim does not suspend the enforcement
of the guarantee call notice. The Manager shall
pay the VAT payable amount that is challenged
within one month of the notification date.
The Law does not define the term “de facto
manager”. According to case law, a de facto
manager is the person who has the right to
dispose of assets and acts toward third parties like
a person authorised to dispose of assets. Based
on German case law, a de facto manager could, for
example, be a payroll agent having a bank account
authorisation.
6
However, because the Luxembourg
VAT Law catches de facto managers in charge
of the daily management only, we believe that
such an agent would not be liable to VAT under
Luxembourg law under the assumption that he is
not in charge of the daily management.
The limitation to de facto managers in charge
of the day-to-day management will avoid giving
too broad a scope to the new VAT liability.
Luxembourg laws do not provide a definition
of what “daily management” is. Based on case
law, what is within daily management depends
from one company to another and shall be
determined on a case-by-case basis, taking
into account the corporate object, the sector
of activity and the size of the company. As a
general rule, daily management encompasses
two types of acts: acts required within the frame
of the daily life of the company (which are the
daily execution of decisions taken by the board)
and acts of minor importance (which require
a prompt action). So it appears that the daily
management involves a power that is general
and not specific in nature.
It seems that a management executive officer
(
directeur général
), within the meaning of the
new article 60-1 of the commercial companies
law, could be held liable for VAT, as such an
officer is usually in charge of managing the
company’s day-to-day operations.
7
Managers may be held jointly and personally
liable in the event of a company breach of VAT-
compliance obligations or non-payment of the
VAT due from the funds they manage.
8
They
can only be held liable if they have failed in the
performance of their duties (
inéxecution fautive
).
To establish a failure in the performance of
duties, three elements are required: a fault (by
the Manager), a damage (for the Grand-Duchy of
Luxembourg) and a causal link between the fault
and the damage. The fault does not necessarily
require a wilful misconduct and could be
characterised by mere carelessness or negligence.
A fault could notably be recognised when
a Manager has not made sure that VAT