Global Trustee and Fiduciary Services News and Views Issue 48

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Global Trustee and Fiduciary Services News and Views | Issue 48 | 2017 41
group issued joint recommendations dealing
with VAT on the remuneration of directors
of qualifying investment funds and their
management companies.18
ALFI and ILA recommendations
The document issued by the representatives
of ALFI and ILA deals essentially with the case
of directors of management companies and
provides guidelines to determine the proportion
of the remuneration which relates to:
• The management of the management
company itself (which cannot benefit from the
VAT exemption and should be fully taxable).
• And the proportion of the remuneration
that relates to the management of the funds
(which could benefit from the VAT exemption
if the tasks performed are specific and
essential to the management of the funds).
The recommendations describes what the
roles and responsibilities of a fund director
generally are and provides an indicative list
of tasks that are typically performed by a
director of a management company. The tasks
that tend to be specific and essential to the
management of funds (and could thus be VAT-
exempt) are identified. The recommendations
also identify the tasks that according to the ad
hoc working group are not eligible to the VAT
exemption either because they relate to the
funds (but they are not specific and essential
to their management) or because they relate
to the management company.
The guidelines thus represent only the view of
the ad hoc working group and do not bind the
tax authorities.
Final remarks
With these new rules, it is ever-critical for
directors, managers and any persons in charge
of daily management to get comfortable with
the VAT situation of the legal entities they
manage and with their own VAT obligations
where applicable.
Ongoing VAT compliance monitoring should
now be part of good governance and an item
on the board agenda if this was not the case
before. Together with these new rules, the Tax
Reform also introduced higher penalties for
non-compliance with the VAT obligations and
two new criminal offences for aggravated tax
fraud and tax swindling.
Marie-Isabelle Richardin
Indirect Tax Partner
Fabienne Moquet
Tax Controversy and Disputes Resolution
Services Leader
Julie Kellal
Knowledge Manager
Indirect Tax
PwC Luxembourg
1 Loi du 23 décembre 2016 portant mise en œuvre de la
réforme fiscale 2017 publiée au Mémorial A.
2 Articles 67-1 to 67-4 of the Luxembourg VAT Law.
3 Administration de l’Enregistrement et des Domaines
4 Rapport d’activité 2016 et objectifs 2017 de l’Administration
de l’Enregistrement et des Domaines .
lu/administration/rapports/Rapport-annuel-AED-2016.pdf,
last downloaded on 9 May 2017. Link
5 Article 67-1 of the Luxembourg VAT Law.
6 German case law on the liability of managers for direct
taxes is relevant due to the common origin of the applicable
German and Luxembourg legal provisions.
7 Law of 10 August 1915 on commercial companies, as amended.
8 Article 67-2 of the Luxembourg VAT Law.
9 Administration de l’Enregistrement et des Domaines.
10 Circular 781 of 30 September 2016, Activité d’administrateur
de sociétés
Circ-781/Circ_-N_781-du-30_09_2016.pdf, last downloaded
on 9 May 2017). Link
11
Administrateurs-FAQ/index.html, last downloaded on
9 May 2017. Link
12 In that case, the VAT authority is of the opinion that the
director is not acting independently and is not a taxable
person for the purpose of VAT, his employer has this
capacity and would be liable for VAT.
13 In that case, the VAT exemption provided by Article 44,1,w)
of the Luxembourg VAT Law can apply.
14 Administration des Contributions Directes.
15 Circular LIR n 45/2 – 152/1 – 168/1 of 14 February 2017, Retenue
d’impôt sur les tantièmes
content/dam/acd/fr/legislation/legi17/LIR45_2_14022017.pdf,
last downloaded on 10 May 2017). Link
16 Association of the Luxembourg Fund Industry.
17 Institut Luxembourgeois des Administrateurs.
18 See
of-directors-of-UCIs-and-their-management-companies-
FINAL.pdf, last downloaded on 14 March 2017. Link .