C-288/22 Administration de l’Enregistrement, des Domaines et de la TVA (VAT – Member of a board of directors)

JUDGMENT OF THE COURT (Third Chamber)

21 December 2023 ( *1 )

(Reference for a preliminary ruling – Taxation – Common system of value added tax (VAT) – Directive 2006/112/EC – Article 9 – Taxable persons – Economic activity carried out independently – Concept of ‘economic activity’ – Concept of ‘independent exercise of the activity’ – Activity as a member of the board of directors of a public limited company)

In Case C‑288/22,

REQUEST for a preliminary ruling under Article 267 TFEU from the tribunal d’arrondissement de Luxembourg (District Court, Luxembourg, Luxembourg), made by decision of 26 April 2022, received at the Court on 29 April 2022, in the proceedings

TP

v

Administration de l’enregistrement, des domaines et de la TVA,

THE COURT (Third Chamber),

composed of K. Jürimäe, President of the Chamber, N. Piçarra, M. Safjan (Rapporteur), N. Jääskinen and M. Gavalec, Judges,

Advocate General: J. Kokott,

Registrar: K. Hötzel, Administrator,

having regard to the written procedure and further to the hearing on 17 May 2023,

after considering the observations submitted on behalf of:

TP, by E. Adam, N. Le Gouellec and K. Veranneman, avocates,

the Luxembourg Government, by A. Germeaux and T. Schell, acting as Agents, and by F. Lerch, avocate,

the Czech Government, by O. Serdula, M. Smolek and J. Vláčil, acting as Agents,

the European Commission, by A. Armenia, M. Björkland and C. Ehrbar, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 13 July 2023,

gives the following

Judgment

Legal context and the dispute

1This request for a preliminary ruling concerns the interpretation of Articles 9 and 10 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1; ‘the VAT Directive’).

2The request has been made in proceedings between TP and the administration de l’enregistrement, des domaines et de la TVA (Registration Duties, VAT and Estates Authority, Luxembourg) concerning an ex officio tax assessment for the purposes of Value Added Tax (VAT), issued by that authority in connection with TP’s activity as a member of the board of directors of several public limited companies incorporated under Luxembourg law.

Legal context

European Union law

3Article 2(1)(c) of the VAT Directive provides:

‘The following transactions shall be subject to VAT:

…

the supply of services for consideration within the territory of a Member State by a taxable person acting as such;

…’

4Article 9(1) of that directive provides:

‘“Taxable person” shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity.

Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as “economic activity”. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity.’

5Article 10 of that directive is worded as follows:

‘The condition in Article 9(1) that the economic activity be conducted “independently” shall exclude employed and other persons from VAT in so far as they are bound to an employer by a contract of employment or by any other legal ties creating the relationship of employer and employee as regards working conditions, remuneration and the employer’s liability.’

6Article 24(1) of that directive provides:

‘“Supply of services” shall mean any transaction which does not constitute a supply of goods.’

7Article 73 of the VAT Directive provides:

‘In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply.’

Luxembourg law

8Article 4(1) of the loi du 12 février 1979 concernant la taxe sur la valeur ajoutée (Law of 12 February 1979 on value added tax; ‘the Law on VAT’) provides:

‘A taxable person under Article 2 shall mean any person who, independently and on a regular basis, in the course of a general economic activity, carries out transactions, whatever the purpose, results or place of that activity.

…’

9Article 5 of the Law on VAT reads as follows:

‘Economic activity shall mean any activity aimed at generating income, and in particular activities of producers, traders or persons supplying services, including mining and agricultural activities, the activities of the professions and activities involving the use of tangible or intangible property for the purpose of obtaining income therefrom on a continuing basis.’

10Article 441-1 of the loi du 10 août 1915 concernant les sociétés commerciales (the Law of 10 August 1915 on commercial companies; ‘the Law of 10 August 1915’) provides:

‘Public limited companies are administered in a timely manner by authorised representatives, both members and non-members, subject to dismissal, paid or unpaid.’

11Article 441-2 of that law states:

‘The company directors must number at least three.

…

They are appointed for a fixed period by the general meeting of shareholders; they may however, initially, be appointed at the time of incorporation of the company …

Their term of office may not exceed six years; they may be dismissed at any time by the general meeting.

…’

12Article 441-5 of that law is worded as follows:

‘The board of directors has the power to carry out all the acts necessary or appropriate to the attainment of the corporate purpose, with the exception of those reserved by law or the articles of association for the general meeting …

[The board of directors] represents the company as regards third parties and in legal proceedings, whether the company is bringing or defending an action. Actions in favour of or against the company are only valid when made in the name of the company.

The limitations imposed on the powers that the preceding paragraphs confer on the board of directors and which result from either the articles of association or a decision of the competent bodies, are unenforceable against third parties, even where they are disclosed.

However, the articles of association may confer standing to represent the company in carrying out its acts, either solely or jointly, to one or more company directors. That clause is enforceable against third parties in the circumstances provided for in Chapter Va of Part I of the loi modifiée du 19 décembre 2002 concernant le registre de commerce et des sociétés ainsi que la comptabilité et les comptes annuels des entreprises (Law of 19 December 2002 on the commercial register of companies and the accounting system and annual accounts of undertakings).

…’

13Article 441-8 of that law provides:

‘No personal obligation arises on the part of the company directors in relation to the commitments of the company.’

14Article 441-9 of the Law of 10 August 1915 provides:

‘The company directors, members of the management committee and the general director are responsible to the company, in accordance with the ordinary law, for carrying out the mandate received by them and any wrongful acts committed in their management.

The company directors and the members of the management committee are jointly liable, either to the company or any third parties, for any loss stemming from the infringement of provisions of the present Law or the articles of association.

The company directors and members of the management committee will be released from that liability, for infringements in which they did not take part, only where no wrongdoing is attributable to them and they have reported those infringements, with respect to the members of the board of directors, at the next available general meeting and, concerning the members of the management committee, at the first meeting of the board of directors after they have become aware of it.’

15Article 441-10 of that law provides:

‘The day-to-day management of the activities of the company and the representation of the company, regarding its management, may be delegated to one or more company directors, managers, and other agents, members or not members, acting alone or jointly.

Their appointment, dismissal and responsibilities are regulated by the articles of association or by a decision of the competent bodies without, however, the restrictions imposed on their powers of representation for the needs of the day-to-day management being enforceable against third parties, even where they are disclosed.

The clause, under which the day-to-day management is delegated to one or more persons acting either solely or jointly, is enforceable against third parties in the circumstances provided for in Chapter Va of Part I of the loi modifiée du 19 décembre 2002 concernant le registre de commerce et des sociétés ainsi que la comptabilité et les comptes annuels des entreprises (Law of 19 December 2002 on the commercial register of companies and the accounting system and annual accounts of undertakings).

Delegation to a member of the board of directors requires the board to account to the ordinary general meeting on an annual basis for any salaries, allowances or benefits awarded or delegated.

The responsibility of the directors arising from that day-to-day management is assessed in accordance with the general rules of the mandate.

…’

16Article 441-11 of that law provides:

‘The articles of association may authorise the board of directors to delegate its managerial powers to a management committee or managing director, without that delegation having a bearing on the general policy of the company or the acts reserved for the board of directors under other provisions of the Law. Where a management committee is established or a managing director appointed, the board of directors shall be responsible for its supervision.

The management committee shall consist of several persons, whether they are company directors or not.

…’

The dispute in the main proceedings and the questions referred for a preliminary ruling

17TP is a member of the board of directors of several public limited companies incorporated under Luxembourg law and carries out many assignments in that regard.

18It is apparent from the decision to refer that, according to TP’s explanations, his activity includes receiving the reports of the senior managers or representatives of the companies concerned, discussing strategic proposals, the choice of operational managers, questions related to the accounts of those companies and their subsidiaries as well as the risks that they face. In some cases, he takes part in the decision-making incumbent on the representatives of the companies in question at the level of the board of directors of the subsidiaries of those companies. He also takes part in the decision-making regarding the accounts of the companies concerned and the proposals to be submitted to shareholder meetings, risk policy as well as decisions as to the strategy to be followed by those companies. In accordance with Articles 441-10 and 441-11 of the Law of 10 August 1915, the day-to-day management of those companies is carried out by a management committee comprising chief executive officers or executive directors or, where the operational activity does not require a management committee, by the permanent representatives of the board of directors or by the members of that board.

19On account of those activities, TP had received, in his capacity as a member of the board of directors the companies concerned, by decision of the general meetings of shareholders of those companies, fees as a percentage of the profits achieved by those companies.

20By reason of those activities, TP received an ex officio tax assessment for the purposes of VAT for 2019, issued on 28 July 2020 by the administration de l’enregistrement, des domaines et de la TVA (Registration Duties, VAT and Estates Authority, Luxembourg).

21By a letter of 2 October 2020, TP lodged a claim with that tax authority against that tax assessment, arguing that the activity of a member of the board of directors of a public company incorporated under Luxembourg law was not an economic activity within the meaning of Article 4 of the law on VAT transposing Article 9 of the VAT Directive, and did not confer the status of a taxable person on such a member.

22By a decision of 23 December 2020, the director of that tax authority rejected TP’s claim on the ground that the members of the board of directors of a public company incorporated under Luxembourg law, such as TP, carried out an independent economic activity and that, accordingly, the percentage fees that they received in that regard did not escape the application of VAT.

23On 26 January 2021, TP brought an action for annulment against that decision before the tribunal d’arrondissement de Luxembourg (District Court, Luxembourg, Luxembourg), which is the referring court.

24The referring court states that, for the purpose of resolving the dispute in the main proceedings, it must determine, in the first place, whether a natural person, a member of the board of directors of public limited companies under Luxembourg law, carries out an economic activity within the meaning of Article 9 of the VAT Directive.

25From that perspective, the referring court asks whether, in the light of the case-law of the Court relating to the concept of ‘economic activity’ referred to by that provision, the percentage fees received by such a natural person constitute the value actually given in return for the service supplied to the recipient and whether there exists a direct link between the service provided and the consideration received.

26In the second place, the referring court, while stating that a natural person such as TP, as a member of the board of directors of public limited companies, is not, under Luxembourg law, bound to an employer by a contract of employment or by any other legal ties within the meaning of Article 10 of the VAT Directive, wishes to obtain clarifications from the Court as to whether such a person is carrying out their activity independently within the meaning of Article 9 of the VAT Directive.

27In those circumstances, the tribunal d’arrondissement de Luxembourg (District Court, Luxembourg) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

Is a natural person who is a member of the board of directors of a public limited company incorporated under Luxembourg law carrying out an ‘economic’ activity within the meaning of Article 9 of the [VAT Directive], and more specifically, are percentage fees received by that person to be regarded as remuneration paid in return for services provided to that company?

Is a natural person who is a member of the board of directors of a public limited company incorporated under Luxembourg law carrying out his or her activity “independently”, within the meaning of Articles 9 and 10 of the [VAT Directive]?’

Consideration of the questions referred

The first question

28By its first question, the referring court asks, in essence, whether Article 9(1) of the VAT Directive must be interpreted as meaning that a member of the board of directors of a public limited company under Luxembourg law is carrying out an economic activity, within the meaning of that provision.

29In the first place, it should be noted that the first subparagraph of Article 9(1) of the VAT Directive provides that the term ‘taxable person’ means any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity. The concept of ‘economic activity’ is defined in the second subparagraph of Article 9(1) of the VAT Directive as covering any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions.

30The Court has stated that an activity can be regarded as an economic activity, within the meaning of Article 9(1) of the VAT Directive, only where the activity corresponds to one of the chargeable events defined in Article 2(1) of that directive (see, to that effect, judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA, C‑846/19, EU:C:2021:277, paragraph 32 and the case-law cited). Among those referred to in Article 2(1)(c) of the VAT Directive are services supplied for consideration within the territory of a Member State by a taxable person acting as such.

31While it falls to the referring court to apply the national provisions that transposed Article 9(1) of the VAT Directive to the circumstances of the dispute in the main proceedings and to carry out the factual assessments and legal classifications necessary in that regard, the Court, when giving a preliminary ruling, may, provide clarification designed to give the national court guidance in its interpretation (judgment of 22 November 2017, Cussens and Others, C‑251/16, EU:C:2017:881, paragraph 59 and the case-law cited).

32In the present case, although it appears from the evidence in the file before the Court, in particular the tasks conferred on TP, as pointed out in paragraph 18 of this judgment, that TP supplied services within the meaning of Article 2(1)(c) of the VAT Directive, the referring court asks whether that supply of services effected for consideration and, more specifically, the question of whether the percentage fees received by a member of the board of directors of several public limited companies may be regarded as a remuneration obtained in consideration of the services provided to those companies.

33In that regard, it should be borne in mind that classifying a supply of services as a transaction ‘for consideration’, within the meaning of the abovementioned provision requires only that there be a direct link between that supply and the consideration actually received by the taxable person. Such a direct link is established if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, the remuneration received by the provider of the service constituting the actual consideration for the service supplied to the recipient (judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA, C‑846/19, EU:C:2021:277, paragraph 36 and the case-law cited).

34On that last point, it should be noted that, in order to be regarded as the value actually given in return for the service supplied, the remuneration must remain reasonable in relation to the service supplied in that it must not remunerate only part of the services supplied or to be supplied to the point of breaking the direct link between the services supplied and the consideration (see, to that effect, judgment of 2 June 2016, Lajvér, C‑263/15, EU:C:2016:392, paragraph 49). That being said, the fact that the price paid for an economic transaction is higher or lower than the cost price and, therefore, a price higher or lower than the open market value, is irrelevant for the purpose of establishing whether it was a transaction effected ‘for consideration’. That circumstance is not such as to affect the direct link between the services supplied or to be supplied and the consideration received or to be received, the amount of which is determined in advance and according to well-established criteria (see, to that effect, judgments of 12 May 2016, Gemeente Borsele and Staatssecretaris van Financiën, C‑520/14, EU:C:2016:334, paragraph 26 and the case-law cited, and of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA, C‑846/19, EU:C:2021:277, paragraph 43).

35In addition, the remuneration may be fixed as the person supplying the services in question deploys his or her activities, provided that the procedures for fixing that amount are foreseeable and capable of ensuring that the person supplying services receives, in principle, payment for the services that he or she provides (see, to that effect, judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA, C‑846/19, EU:C:2021:277, paragraph 44).

36Furthermore, the direct link between the supply of services and the consideration is broken when the remuneration is awarded in a voluntary and uncertain way so that its amount is practically impossible to determine (see, to that effect, judgment of 3 March 1994, Tolsma, C‑16/93, EU:C:1994:80, paragraph 19) or where its amount is difficult to quantify or the circumstances relating to its calculation are uncertain (see, to that effect, judgment of 10 November 2016, Baštová, C‑432/15, EU:C:2016:855, paragraph 35).

37In the present case, even in the absence of a written agreement relating to the remuneration of TP, concluded between TP and the public limited companies of which he is a member of the board of directors, it is apparent from the evidence in the file before the Court that TP received, in return for his activity as a member of boards of directors, a remuneration which seems to have taken the form either of percentage fees awarded to him by the general meetings of shareholders depending on the profits achieved by the public limited companies concerned or, as TP stated at the hearing before the Court, of a lump sum.

38In that regard, a direct link between the remuneration and the activity appears to be established where remuneration in the form of a lump sum is determined in advance. The fact that compensation is determined not on the basis of individualised services, but at a flat rate and annually would not in itself be such as to affect the direct link between the supply of services made and the consideration received (judgments of 22 February 2018, Nagyszénás Településszolgáltatási Nonprofit Kft., C‑182/17, EU:C:2018:91, paragraph 37, and of 13 June 2019, IO (VAT – Activities of a member of a supervisory board), C‑420/18, EU:C:2019:490, point 25).

39In the situation where TP’s remuneration took the form of percentage fees, the referring court will have to ascertain whether, in the light of the case-law cited in paragraphs 33 to 36 of the present judgment, where the public limited company concerned does not achieve a profit or achieves only a small amount of profit, the general meeting of shareholders of that company may nevertheless award TP, based on other factors, a percentage fee amount that may be regarded as being objectively in line with the service provided by TP.

40Furthermore, as for the fact that the percentage fees are awarded by the general meeting of shareholders of the company concerned and even assuming that, under Luxembourg law, such a meeting may be regarded not as a body of that company, but as a third-party body or a separate entity distinct from that company, it must be borne in mind that it is not necessary for a supply of services to be deemed to be ‘for consideration’ within the meaning of the VAT Directive that the consideration for that supply be obtained directly from the recipient thereof, since it may be obtained from a third party, as is clearly apparent from the wording of Article 73 of that directive (see, to that effect, judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA, C‑846/19, EU:C:2021:277, paragraph 40 and the case-law cited).

41In the second place, it is apparent from the case-law of the Court that, the existence of such a supply of services is not sufficient to establish the existence of an economic activity within the meaning of Article 9(1) of the VAT Directive (judgment of 12 May 2016, Gemeente Borsele and Staatssecretaris van Financiën, C‑520/14, EU:C:2016:334, paragraph 28), but that other criteria must also be fulfilled.

42The definition of the concept ‘economic activity’, as recalled in paragraph 29 of the present judgment, shows that the scope of that concept is very wide and that the term is objective in character, in the sense that the activity is considered per se and without regard to its purpose or results. Thus, an activity is generally classified as economic where it is permanent and is carried out in return for remuneration which is received by the person carrying out the activity (judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA, C‑846/19, EU:C:2021:277, paragraph 47 and the case-law cited), which implies that the remuneration itself must be regarded as having a continuing basis (see, to that effect, judgments of 13 December 2007, Götz, C‑408/06, EU:C:2007:789, paragraph 18 and the case-law cited; of 13 June 2019, IO (VAT – Activities of a member of a supervisory board), C‑420/18, EU:C:2019:490, paragraph 27 and the case-law cited; and of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA, C‑846/19, EU:C:2021:277, paragraph 55).

43In order to determine whether a service is supplied in return for remuneration, so that the activity in question is to be classified as an economic activity, all the circumstances in which it is supplied have to be examined (judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA, C‑846/19, EU:C:2021:277, paragraph 48 and the case-law cited).

44In that regard, it should be borne in mind that comparing the circumstances in which the person concerned supplies the services in question with the circumstances in which that type of service is usually provided may be one way of ascertaining whether the activity concerned is an economic activity (judgment of 12 May 2016, Gemeente Borsele and Staatssecretaris van Financiën, C‑520/14, EU:C:2016:334, paragraph 30 and the case-law cited). The question whether the amount of the compensation was determined on the basis of criteria which ensured that it was sufficient to cover the operating costs of the provider of the service may also be a relevant factor (judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA, C‑846/19, EU:C:2021:277, paragraph 49 and the case-law cited).

45In view of that case-law, it should be considered that the appointment of a natural person, such as TP, as a member of the board of directors of a public limited company under Luxembourg law for a renewable term of office of a maximum of six years means that TP’s activity must be regarded as having a continuing basis. The fact that such a term of office may be summarily terminated at any time and without reason, and that its holder may also withdraw from the agreement at any time, cannot, in itself, deprive that activity of its continuing basis where a maximum duration of six years is, ab initio, attached to that term of office.

46In view of that six year duration of the term of office, it can be considered that that remuneration in the form of percentage fees is received on a continuing basis (see, to that effect, judgment of 13 June 2019, IO (VAT – Activities of a member of a supervisory board), C‑420/18, EU:C:2019:490, paragraph 27 and the case-law cited). However, for that continuing basis to subsist, it is important that, where the percentage fees are paid on the basis of the profits achieved by the company concerned, percentage fees may also be paid to members of the board of directors for business years in which the company did not achieve a profit.

47In the light of the foregoing, the answer to the first question is that Article 9(1) of the VAT Directive must be interpreted as meaning that a member of the board of directors of a public limited company under Luxembourg law carries out an economic activity, within the meaning of that provision, where he or she supplies services to that company for consideration, provided that that activity is effected on a continuing basis and for a remuneration for which the procedures for fixing that amount are foreseeable.

The second question

48By its second question, the referring court asks, in essence, whether the first subparagraph of Article 9(1) of the VAT Directive must be interpreted as meaning that the activity of a member of the board of directors of a public limited company under Luxembourg law is carried out independently, within the meaning of that provision.

49As a preliminary point, it must be stated that it is apparent from the evidence in the file before the Court that TP did not have a casting vote within the boards of directors of the public limited companies of which he was a member, that he was not responsible for the representation or the day-to-day management of the business of those companies within the meaning of Article 441-10 of the Law of 10 August 1915, nor did he comprise part of the management committee referred to in Article 441-11 of that law. It is therefore in the light of those circumstances that the Court will examine the issue of the independent nature or not of an activity such as that carried out by TP.

50It must also be observed that, in accordance with the findings made by the referring court and notwithstanding the wording of the second question by that court, it is in the light of Article 9 of the VAT Directive only, and not of Article 10 thereof, that it is necessary to assess that question. As noted, in essence, by Advocate General Kokott in points 23 and 39 of her Opinion, the relationship of employer and employee referred to in Article 10 of that directive is only one relevant criteria for the purpose of assessing the point whether an economic activity is conducted independently, within the meaning of Article 9(1) of that directive.

51In the light of those preliminary clarifications, it is apparent from the case-law of the Court on Article 9 of the VAT Directive that, in order to establish whether a person independently carries out an economic activity, it is necessary to ascertain whether there is an employer-employee relationship in the pursuit of that activity (judgment of 13 June 2019, IO (VAT – Activities of a member of a supervisory board), C‑420/18, EU:C:2019:490, paragraph 38 and the case-law cited).

52In order to assess whether that employer-employee relationship exists, it is necessary to check whether the person concerned performs his activities in his own name, on his own behalf and under his own responsibility, and whether he bears the economic risk associated with carrying out those activities. In order to find that the activities at issue are independent, the Court has thus taken into account the complete absence of any employer-employee relationship, as well as the fact that the person concerned acts on his own account and under his own responsibility, is free to arrange how he performs his work and himself receives the emoluments which make up his income (judgment of 13 June 2019, IO (VAT – Activities of a member of a supervisory board), C‑420/18, EU:C:2019:490, paragraph 39 and the case-law cited).

53In the present case, it is for the referring court to ascertain whether TP arranged freely how he performs his work and that he himself received the emoluments which make up his income.

54As for the question of the employer-employee relationship, the fact that, in his activity of advising and decision-making on a board of directors, the member is free to submit to that board the proposals and advice that he wishes and to vote within it as he sees fit is an indication of the absence of such a relationship. That is also true even if that member must comply with the decisions of that board, since the tasks entrusted to him, such as those recalled in paragraph 18 of the present judgment, consist essentially not in applying or implementing the decisions of those same boards but rather in providing proposals and advice as well as setting out and adopting, together with other members of the boards concerned, the decisions of the latter.

55As for the question of whether such a member of a board of directors acted in his own name, on his own account and under his own responsibility, it is necessary in particular to take into account the national legal rules governing the allocation of responsibilities between the members of the board of directors and the company concerned. In that regard, as Advocate General Kokott stated in essence in points 33 and 34 of her Opinion, the fact that such an allocation of responsibilities is found to be similar or equivalent in the relationship binding an employee to his or her employer is likely to indicate that such members do not act under their own responsibility. The same also applies if their liability in tort is only ancilliary to the liability of the company or of the board of directors as a body thereof.

56Where, following those investigations it appeared that the member of the board of directors does not act under his or her own responsibility, it is also necessary to conclude that, although that person appears to act in his or her own name when presenting advice or proposals to the board of directors and when voting, he or she acts first for that board and, more generally, for the company of which the board is a body, in that that advice, those proposals and those votes, which are primarily capable of triggering the liability of the company, must be set out in the interests of and for that company.

57As for the question of whether the member of the board of directors of a public limited company under Luxembourg law bears the economic risk of his or her activity, it must be stated that, as is apparent from paragraph 43 of the judgment of 13 June 2019, IO (VAT – Activities of a member of a supervisory board) (C‑420/18, EU:C:2019:490), and the case-law cited in that paragraph, the economic risk referred to by the Court in its case-law relates always to the economic risk incurred directly by the person for whom the independent nature of the economic activity must be assessed. Accordingly, the economic risk incurred by such a company by reason of the decisions of the board of directors of which such a person is a member is irrelevant.

58Further to that clarification, it should be noted that where a person such as TP brings his expertise and know-how to the board of directors of a company and votes in that board, he does not appear to bear the economic risk linked to his own activity since, as Advocate General Kokott stated in essence in points 33 and 36 to 38 of her Opinion, it is the company itself that will have to confront the negative consequences of the decisions adopted by the board of directors and that will accordingly bear the economic risk resulting from the activity of the members of that board.

59That conclusion applies in particular where, as in the main proceedings, it is apparent from the national legal context that the members of a board of directors do not assume any personal obligations concerning the debts of the company. It applies even where the amount of the remuneration received by the member of the board of directors in the form of percentage fees depends on the profits achieved by the company. That member does not bear, in any event, a risk of loss arising from his activity as a member of the board of directors, in so far as sharing in the profits of the company cannot be equated with assuming a personal risk of a profit or loss. The abovementioned conclusion applies all the more so where the percentage fees are awarded by the general meeting of shareholders in the form of a lump sum payment that is paid even where the company suffers losses or is being wound up.

60In the light of the foregoing, the answer to the second question is that the first subparagraph of Article 9(1) of the VAT Directive must be interpreted as meaning that the activity of a member of the board of directors of a public limited company under Luxembourg law is not carried out independently, within the meaning of that provision, where – despite the fact that that member is free to arrange how he or she performs their work, receives the emoluments making up his or her income, acts in his or her own name and is not subject to an employer-employee relationship – he or she does not act on their own behalf or under their own responsibility and does not bear the economic risk linked to their activity.

Costs

61Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (Third Chamber) hereby rules:

Article 9(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax

must be interpreted as meaning that the member of the board of directors of a public limited company under Luxembourg law carries out an economic activity, within the meaning of that provision, where he or she supplies services to that company for consideration provided that that activity is effected on a continuing basis and for a remuneration for which the procedures for fixing that amount are foreseeable.

The first subparagraph of Article 9(1) of Directive 2006/112

must be interpreted as meaning that the activity of a member of the board of directors of a public limited company under Luxembourg law is not carried out independently, within the meaning of that provision, where – despite the fact that that member is free to arrange how he or she performs their work, receives the emoluments making up his or her income, acts in his or her own name and is not subject to an employer-employee relationship – he or she does not act on their own behalf or under their own responsibility and does not bear the economic risk linked to their activity.

Signatures

[Signatures]

( *1 ) Language of the case: French.

OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 13 July 2023 ¹

(Reference for a preliminary ruling – Value added tax – Directive 2006/112/EU – Taxable transactions – Taxable person – Concept of an independent economic activity – Typological approach – Activities of a member of a board of directors of a legal person – Principle of neutrality of legal form)

I. Introduction

1This request for a preliminary ruling raises the question, which has been answered quite differently in the Member States of the European Union, ² as to whether the remuneration of a member of a board of directors of a company for its activity as part of a body of a legal person constitutes remuneration for an independent economic activity in accordance with the VAT Directive. While the majority of Member States do not consider that remuneration to be remuneration for an independent economic activity, this is the case in six Member States under certain conditions and is usually the case in one Member State (Luxembourg), although only since 2016. ³ Thus, in Luxembourg, the member of the body must pay VAT and charge it to the legal person of which body he or she is a member.

2In that regard, first, the question arises once again ⁴ as to whether an activity of a body of a company for remuneration is to be regarded as an independent economic activity. In previous cases, this question was answered only for a member of a supervisory board and a managing director (in which cases the response was negative), but not for a member of a board of directors.

3Secondly, the question arises as to the scope of the principle of neutrality of legal form in VAT law. The person concerned receives the remuneration only because he or she has acted as part of a body of the legal person (another taxable person). For many legal forms, such bodies are prescribed by law. Taxable persons who do not require such a body are not liable for VAT in that regard.

4In that respect, the VAT payable by an undertaking varies according to the legal form chosen. In principle, the taxable person (in this case the legal person) may be relieved of the burden of VAT by way of input tax deduction. However, not every taxable person is entitled to the full deduction of input tax. This question is therefore particularly relevant for taxable persons who (also) carry out exempt output transactions. In this case, the fact that the activity of a member of a body of that taxable person is subject to tax entails an additional and definitive cost burden.

II. Legal framework

A. European Union law

5The EU legal framework is formed by Directive 2006/112/EC on the common system of value added tax (‘the VAT Directive’). ⁵

6Article 9(1) of the VAT Directive defines ‘taxable persons’ as follows:

‘“Taxable person” shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity.

Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as “economic activity”. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity.’

7Article 10 of the VAT Directive concerns ‘employed and other persons’ and reads:

‘The condition in Article 9(1) that the economic activity be conducted “independently” shall exclude employed and other persons from VAT in so far as they are bound to an employer by a contract of employment or by any other legal ties creating the relationship of employer and employee as regards working conditions, remuneration and the employer’s liability.’

B. Luxembourg law

8Luxembourg transposed the VAT Directive by the Loi du 12 février 1979 concernant la taxe sur la valeur ajoutée (Law of 12 February 1979 on Value Added Tax). Article 4(1) of that law provides that taxable person is to mean any person who, independently and on a regular basis, in the course of a general economic activity, carries out transactions, whatever the purpose, results or place of that activity.

III. Facts and preliminary ruling procedure

9TP, a lawyer, is a member of the board of directors of several public limited companies incorporated under Luxembourg law. ⁶ As a member of those boards, he takes part in decisions concerning the accounts, risk management policy and the strategy to be followed by the group in question, and in developing proposals to be put to shareholders’ meetings.

10The day-to-day management of two of the companies is carried out by an executive committee made up of the chief executive officers or executive directors. The business activities of the other two companies do not require an executive committee.

11According to TP, the principle set out in Article 441-8 of the Loi concernant les sociétés commerciales (Law on commercial companies) is that ‘no personal obligation arises on the part of the directors in relation to the commitments of the company’. A member of the board of directors can be personally liable only where that member manifestly exceeds the limits of acceptable conduct such that the wrongful act is severable from his or her related function.

12In addition, the implementation of decisions taken by the company is generally entrusted to employees of the company, and not to individual members of the board of directors. Where the directors perform individual tasks outside the scope of the activity of the collegiate body, and are remunerated for those specific activities, they are acting in a capacity other than that of a member of the collegiate body. However, the board of directors collectively discusses possible options and takes decisions, and the position of an individual member may be diametrically opposed to that of the collegiate body.

13TP takes the view that his remuneration as a member of the board of directors is not subject to VAT. He submits that his activity is not carried out independently, but as a member of a collegiate body. The latter represents the legal person and therefore the service provided collectively is deemed to be provided by the company itself.

14On 28 July 2020, the Administration de l’Enregistrement, des Domaines et de la TVA (Registration Duties, VAT and Estates Authority, Luxembourg; ‘the tax authority’) subjected the directors’ fees received by TP in 2019 to VAT. By decision of 23 December 2020, the taxation was confirmed on the ground that a member of the board of directors of a company carries out an economic activity independently since it is permanent and gives rise to remuneration in return for the activity carried out.

15According to the tax authority, the permanent nature of the activity results from the fact that members of the board of directors are appointed for a term of up to six years. TP receives remuneration decided upon by the general meeting of shareholders on a proposal of the board of directors. The remuneration, some of which was probably also paid in the form of percentage fees, means that the members of the board of directors, even if they are not shareholders, have an interest in the success of the activities of the company. The judgment of 13 June 2019, IO (VAT – Activities of a member of a supervisory board) (C‑420/18, EU:C:2019:490), which is relied on by TP, is limited to the activity of a member of a supervisory board of a foundation established under Dutch law in the context described by the court which made the reference in that case, and is not transposable to the present case.

16On 26 January 2021, TP brought an action against the tax notice requesting that it be annulled. The competent court (District Court, Luxembourg) states that, in the absence of any detail as to the companies and the remuneration paid, it proceeds on the basis that TP’s percentage fees were paid out of the profits realised by the public limited companies incorporated under Luxembourg law of which he is a member of the board of directors and that those percentage fees were awarded to him by resolution of the general meeting of shareholders. It stayed the proceedings and referred the following two questions to the Court of Justice for a preliminary ruling under Article 267 TFEU:

Is a natural person who is a member of the board of directors of a public limited company incorporated under Luxembourg law carrying out an “economic” activity within the meaning of Article 9 of the VAT Directive and more specifically, are percentage fees received by that person to be regarded as remuneration paid in return for services provided to that company?

Is a natural person who is a member of the board of directors of a public limited company incorporated under Luxembourg law carrying out his or her activity “independently”, within the meaning of Articles 9 and 10 of the VAT Directive?’

17In the procedure before the Court, TP, the Grand Duchy of Luxembourg, the Czech Republic and the European Commission submitted written observations and, with the exception of the Czech Republic, also took part in the hearing held on 17 May 2023.

IV. Legal assessment

A. The questions referred and the course of the investigation

18The two questions referred for a preliminary ruling, which it is appropriate to examine together, raise the question whether the remuneration of a board of directors for its activity as part of a body of a legal person constitutes remuneration for an independent economic activity in accordance with Article 9 of the VAT Directive.

19Thus, the question again arises ⁷ as to when a paid activity of a body of a legal person is to be considered an economic activity and when that activity is carried out independently. Both have the consequence that the person acting in that capacity must be regarded as a taxable person who must collect and pay VAT (see Section B).

20When examining this question, account must be taken of the fact that legal persons can act only through their bodies. Should acting as a body be sufficient for a legal person to assume an independent economic activity, then legal persons not entitled to deduct input tax are subject to additional VAT which they have to bear only because of that legal form. This concerns, in particular, undertakings that carry out exempt output transactions (such as hospitals, housing rental companies, banks and insurance companies).

21An undertaking with a legal form which is not required to have such a body is not required to bear that VAT or to pass it on to end customers. Thus, the answer to the question raised above also concerns the principle of neutrality of legal form in VAT law (see Section C).

B. Member of a board of directors as a taxable person

1. Typological approach to determine the taxable person

22A member of a board of directors may be regarded as a taxable person within the meaning of Article 9 of the VAT Directive only if, by that activity, in the context of his membership, he or she ‘carries out in any place any economic activity, whatever the purpose or results of that activity’, in accordance with the first subparagraph of Article 9(1). The second subparagraph of Article 9(1) of the VAT Directive specifies when an activity is to be regarded as an ‘economic activity’. If the requirements of Article 9(1) of the VAT Directive are met, the person concerned is a taxable person.

23In that respect, Article 10 of the VAT Directive merely clarifies that employed persons are not to be regarded simultaneously as taxable persons. That declaratory effect – the Commission uses the term ‘clarification’ in its written observations – follows from the wording, according to which the fact that the economic activity within the meaning of Article 9(1) of the VAT Directive is carried out independently excludes such persons from the tax. Consequently, the question of law to be resolved is limited to whether the requirements of Article 9(1) are met. The relationship of employer and employee referred to in Article 10 of the VAT Directive is therefore only one criterion which must be examined when assessing whether an independent economic activity in accordance with Article 9(1) of the VAT Directive exists.

24Under the second subparagraph of Article 9(1) of the VAT Directive, the concept of ‘economic activities’, which must be carried out independently, includes any activity of producers, traders or persons supplying services including mining and agricultural activities and activities of the professions. It is apparent from the Court’s case-law that that definition shows that the scope of the concept of ‘economic activity’ is very wide and that the term is objective in character, in the sense that the activity is considered per se and without regard to its purpose or results. ⁸

25Furthermore, it follows from the Court’s case-law that, in order to determine whether a service is supplied in return for remuneration, such that the activity in question is to be classified as an economic activity, all the circumstances in which it is supplied have to be examined. ⁹ This is confirmed by the wording of Article 9(1) of the VAT Directive. It delineates the economic activity that leads to a person being considered as a taxable person, listing various specific jobs and ‘the professions’ whose activities are regarded as an economic activity.

26Given the difficulty of precisely defining an independent economic activity of a taxable person, the description of the necessary economic activity with typical occupational images (‘producers, traders or persons supplying services’ or ‘mining and agricultural activities and activities of the professions’) outlines the concept of a taxable person and the economic activity necessary to qualify as such. In contrast to an abstract definition, a typological description is more open. ¹⁰ Whether a particular thing belongs to the type does not have to be determined by logical/abstract subsumption, but can be determined according to the degree of similarity to the prototype (pattern). That assignment demands a view of the overall picture in each individual case, taking into account the generally accepted standards.

27In the meantime, the Court has expressly confirmed that typological approach in its most recent case-law. In that case-law it states in connection with Article 9(1) of the VAT Directive that all the circumstances in which the activity is supplied have to be examined. In that regard, an assessment must be made on a case-by-case basis, referring to the typical conduct of an active entrepreneur in the field concerned. ¹¹

28The Court had already adopted a comparable typological approach in its judgment in Gemeente Borsele ¹² and before that to some extent in the judgment in Enkler. ¹³ Thus, according to previous case-law, the status of taxable person had to depend on whether the remuneration is determined on the basis of criteria which ensure that it is sufficient to cover the operating costs of the provider of the service. ¹⁴ This also applies to the amount of earnings and other factors, such as the number of customers. ¹⁵ It was also significant if the contributions paid by the recipients of the services concerned were intended to cover only a small part of the total operating costs incurred by the provider of the service. ¹⁶

29Even though, to date, the Court has focused mainly on the existence of an economic activity, there is no reason not to also extend that approach to the criterion of independence. Finally, the first subparagraph of Article 9(1) of the VAT Directive mentions an economic activity that is carried out independently and then refers (second subparagraph) to professions which are typically conducted independently (for example, the liberal professions). Lastly, Article 10 of the VAT Directive gives examples (employed and other persons in a relationship of employer and employee) where this is not the case.

30On closer examination, such a typological approach also underpinned the abovementioned decision of the Court regarding the independent economic activity of a member of a supervisory board of an incorporated company who received remuneration for his work. In conclusion, the Court compared that activity with that of a typical taxable person and, due to the particular features of the case (remuneration which was not dependent on participation in meetings or workload, no economic risk, small and fixed lump sum), stated that it could not be considered to be economic activity. ¹⁷

31If that approach is applied, the typical activity of an independent taxable person is characterised by the fact that, as the Court has already made clear, ¹⁸ he or she assumes his or her own economic risk. A typical taxable person – on whom Article 9(1) of the VAT Directive is based – bears a risk of loss and profit personally in that respect. Typically, it is he or she, and not another person, who decides on the scope of his or her activity. He or she is responsible for his or her success or failure and to that extent he or she uses his or her own economic initiative. He or she decides which risks he or she wants to take and how much time he or she wants to invest in one project or another. That expenditure of time and the quality of the activity are, as a general rule, also reflected in the amount of his remuneration. This is not the case, for example, with an employee since only the employer bears the economic risk and takes the economic initiative.

32In the present case, it therefore appears doubtful – as the Czech Republic also points out in its written observations – that it must be assumed that TP carries out an independent economic activity as a member of a body of a legal person. However, this is ultimately a matter for the referring court to determine in the context of the overall assessment which must be made.

33First, TP receives his remuneration not for his own activities (for example as a mandated lawyer who then also assumes corresponding liability if his advice was incorrect), but as part of a collective body. Consequently, it is not he who is personally liable, but initially only the body to which he belongs. ¹⁹ It is also in that sense that the principle set out in Article 441-8 of the Law on commercial companies should be understood. According to that provision, no personal obligation arises on the part of members of the board of directors in relation to the commitments of the company. An independent assumption of risk therefore appears to be excluded.

34Liability in tort, which also covers a member of a body, cannot be decisive in that regard, for that liability can, in principle, affect any person. The fact that an employee is also liable in tort towards his employer therefore provides no indication as to the existence of an independent economic activity. Nor does the fact that a body may be liable for the company’s tax debts change this, contrary to what Luxembourg maintained in its observations and at the hearing. As TP also stated at the hearing, such liability relates to the body and applies in the same way to boards of directors and employed directors. ²⁰ That liability on the part of a body consequently provides no indication as to whether it or its members are engaged in an independent economic activity.

35Secondly, the activities as part of a body cannot be carried out on the free market to other third parties, depending on the decision by TP. On the contrary, they can only benefit the company for which he was appointed as part of the body. I cannot see that TP has acted on his own economic initiative in that regard. His activity is limited by company law which confers on the collegiate body or its members certain rights and obligations in relation to the company. It appears that the level of remuneration was also not dictated by the workload involved.

36Nor was the remuneration determined by negotiation with the recipient of the service, as would be the case for a typical undertaking. Rather – and this is at least the basis of the reference for a preliminary ruling – it was determined unilaterally by the general meeting, that is to say another body of the company. However, as the Court has already pointed out, the fact that a natural person is dependent on the company to determine his or her remuneration is an indicator that he or she does not carry out an independent economic activity. ²¹ Even if TP does not receive a fixed remuneration, but a variable one, or if the remuneration is based on the company’s performance, this does not change the above finding. As a result, he ultimately participates only in the same way as a shareholder in the success of the company, that is to say in its economic risk.

37Participation in another’s (profit) risk, however, cannot be equated with bearing one’s own (profit and loss) risk. Even an employee who, in addition to his or her fixed salary, receives variable remuneration based on the employer’s performance does not, by virtue of that fact alone, carry out an independent economic activity. His or her employer continues to bear the economic risk, in which the employee participates in the event of success, but which he or she does not bear it him or herself.

38The same seems to be true for TP, in so far as he should receive performance-related remuneration. At the hearing, only a flat-rate remuneration was confirmed. First, the success of the company depends on many other components. TP is only part of a collegiate body, which as a rule is also not the only body of a company, but exists alongside other bodies of the taxable person. Secondly, in the worst case, his remuneration as a member of the board of directors is reduced to zero (or a fixed amount which may have been promised). However, he does not have to fear losses or other risks, unlike a typical business/taxable person. It would be more relevant to ascertain whether TP also receives his remuneration if, for example, he is temporarily unable to carry on his activities due to illness, as then he also does not bear the economic risk entailed in his activity. ²² Ultimately, this is for the referring court to verify.

39Admittedly, the case of TP certainly does not involve the classic employee-employer relationship in accordance with Article 10 of the VAT Directive, as the Grand Duchy of Luxembourg rightly points out. However, that is also not necessary. What matters is not whether Article 10 of the VAT Directive is applicable, but whether the conditions of Article 9(1) of the VAT Directive are met.

40In the necessary typological assessment, TP, as a member of a collegiate body of another taxable person – even if variable remuneration existed – probably cannot be compared to a taxable person who typically carries out an economic activity independently in accordance with Article 9(1) of the VAT Directive. Ultimately, however, this is a matter for the referring court.

2. Does the existing status of a taxable person due to the activity as a lawyer affect the assessment of the board of directors’ activity?

41It is questionable, however, whether the outcome is different because, in the present case, TP is already carrying out an independent economic activity as a lawyer. To that extent, TP already carries out the activity of a taxable person. This case concerns the classification of other activities which are not part of the actual main activity of a taxable person.

42The Court has already ruled on the classification for the purposes of VAT of such ‘ancillary activities’. In the case of a self-employed bailiff, Article 9(1) of the VAT Directive must be interpreted as meaning that a natural person who is already a taxable person for value added tax purposes in respect of his activities as a self-employed bailiff must be regarded as a ‘taxable person’ in respect of any other economic activity carried out occasionally, provided that that activity constitutes an activity within the meaning of Article 9(1). ²³

43In that case, the bailiff had made use of his business opportunities under a contract of agency for consideration and had bought certain plots of land at auction for a third party. Consequently, such ancillary economic activities which are still clearly linked to the main (economic) activity share the same treatment.

44The Court has also emphasised that approach in its more recent decision in Fluvius Antwerpen. The supply of electricity by an electricity distribution network operator as a result of electricity theft, when it constitutes a typical commercial risk of that other economic activity, also constitutes an independent economic activity. ²⁴ In this respect, a typical business risk arises at the time of that supply. It therefore shares the VAT treatment of the main economic activity.

45In the present case, however, there are two separate activities, since one is an independent economic activity and the other is not an independent economic activity. One activity falls within the scope of VAT, the other does not. If the EU legislature had in fact intended that one activity would be ‘infected’ by the other, it would have expressed this in the wording of the VAT Directive. As it did not do so, ancillary activities which are separate from the independent economic activity do not become an independent economic activity simply because the necessary – in the present case, legal – knowledge for the independent activity is also helpful for the activity which is not carried out independently.

46However, this does not preclude the company or possibly the body of the company also instructing TP as a lawyer. Remuneration for the exercise of that mandate would then constitute remuneration for an independent economic activity as a lawyer. However, more precise information would be needed in that regard, which is a matter for the referring court to determine. The mere fact that a lawyer has been appointed as a member of several bodies of companies is not sufficient in that regard.

C. Taxation of the activities of a body of a taxable person (principle of neutrality of legal form)

47The principle of neutrality of legal form in VAT law – which the Court regularly emphasises ²⁵ – also militates against taxing the activity of a body of a taxable person where that body is a legal requirement for the taxable person. That might be the case here, which is ultimately a matter for the referring court to determine.

48According to that principle – which may also be based on Article 20 of the Charter – the legal form by means of which the manufacturer or the provider of the service exercise their activities is irrelevant to the question of whether goods or services are comparable. ²⁶ The principle of fiscal neutrality precludes economic operators who effect the same transactions being treated differently in respect of the levying of VAT.

49The assumption that the activity of a member of a body of another taxable person is itself an activity of a taxable person would have the consequence that that member of the body must pay VAT on remuneration received. Since, from a substantive point of view, the aim of VAT as a general tax on consumption is to tax not the taxable person supplying the service but the recipient of the supply, if and because the latter uses money to procure a consumable benefit, ²⁷ according to the scheme of the legislation, each company is liable for VAT as the recipient of the supply.

50If the company is a taxable person with a full right of deduction, this is not a problem. That taxable person is supported by the principle of neutrality. That principle is a fundamental principle ²⁸ of VAT and provides, inter alia, that the trader, as tax collector on behalf of the State, is to be relieved of the final VAT burden, ²⁹ inasmuch as the purpose of the economic activity itself is to achieve sales revenue that is subject to tax. ³⁰ This is achieved through the deduction of VAT under Article 168 of the VAT Directive.

51However, if the company is a taxable person who is not entitled to deduct VAT or to do so only in part, the tax liability of the activities of the body which is required by law results in a definitive cost burden. That cost burden extends to all legal forms which, by operation of law, are dependent on the actions of bodies. The latter is usually the case for artificial legal forms (for example legal persons) since these must necessarily act through bodies provided for by law. Whether that is also true in the present case is for the referring court to determine. If so, then, since there are also taxable persons for whom such a body is not necessary (for example a traditional sole trader), that situation would result in a disadvantage of specific legal forms, which are in competition with the other forms if and because they provide identical services.

52However, VAT must be neutral for competitors. Therefore, the principle of neutrality also precludes economic operators who effect the same transactions being treated differently in respect of the levying of VAT. ³¹ Consequently – as the Court has expressly held – that principle would be frustrated if the taxation was dependent on the legal form in which the taxable person carried on his activity. ³²

53Here, however, a taxable person with the same (exempt) output transactions would receive unfavourable treatment if it paid remuneration to the members of its bodies acting on its behalf. This is because the taxable person who, for example as a sole trader, pays himself that ‘remuneration’ as a ‘salary’ (or takes it out of the business assets by way of withdrawal) would not have to bear that VAT burden.

54Interestingly, there is a statement in the minutes of a Council meeting on Article 4 of the Sixth Directive 77/388/EEC (the predecessor of the VAT Directive) which states that the Member States may ‘consider … as not liable to value added tax … the managing-directors, auditors, [members of the supervisory board] of companies in their relations with the companies to the extent that they form a part of such companies’. ³³ Admittedly, the legal status of that statement ³⁴ is doubtful since such an option does not appear to follow from the VAT Directive. However, it highlights the concerns that already existed at that time in the European Union with regard to taxing the activities of bodies of companies. Rightly, the principle of neutrality of legal form requires non-taxation in any case where the activity of the mandatory bodies of a company is concerned. This is the only way to ensure the neutrality of VAT from the point of view of competition for competing undertakings in different legal forms.

55The principle of neutrality of legal form therefore also supports the view that the remuneration paid by a taxable person for the activities of the body of a company which is required by law is not in turn subject to VAT and thus distorts competition between taxable persons.

V. Conclusion

Conclusion

56I therefore propose that the Court answer the questions referred by the tribunal d’arrondissement de Luxembourg (District Court, Luxembourg, Luxembourg) as follows:

Article 9(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in conjunction with Article 10 thereof,

must be interpreted as meaning that the existence of an independent economic activity must be determined by means of a typological comparison. The decisive factor in that regard is whether, in the context of the necessary overall assessment, the person concerned, as a typical taxable person does, bears an economic risk personally and acts on his or her own economic initiative, which it is for the referring court to ascertain.

In that regard, it follows from the principle of neutrality of legal form that a natural person who is a member of a body of a company which is required by law and who receives remuneration for that activity as a member of that body cannot in this respect be regarded as carrying out an independent economic activity.

¹ Original language: German.

² Many States make the income (remuneration) of a body of a company subject to income tax only and therefore do not assume that any independent economic activity has taken place. Of the 13 Member States which also have legislation or case-law on the VAT assessment of such remuneration of a body of another taxable person, 6 Member States generally do not assume that it constitutes an economic activity covered by VAT, while 6 assume that an independent economic activity is carried out under certain circumstances. Only Luxembourg usually always assumes that the activity of those bodies or members of those bodies constitutes an independent economic activity.

³ See Valérie Bidoul, Réflexions sur le traitement TVA des dirigeants d’entreprise, ACE Comptabilité, fiscalité, audit, droit des affaires au Luxembourg 2016/5, p. 3 et seq.

⁴ The Court has already dealt with the question of the status of a supervisory board as a taxable person in its judgment of 13 June 2019, IO (VAT – Activities of a member of a supervisory board) (C‑420/18, EU:C:2019:490). The judgment of 18 October 2007, van der Steen (C‑355/06, EU:C:2007:615) concerned an employed director who was also the sole shareholder.

⁵ Council Directive of 28 November 2006 (OJ 2006 L 347, p. 1) in the version applicable to the year at issue (2019); in that respect as last amended by Council Directive (EU) 2018/2057 of 20 December 2018 amending Directive 2006/112/EC on the common system of value added tax as regards the temporary application of a generalised reverse charge mechanism in relation to supplies of goods and services above a certain threshold (OJ 2018 L 329, p. 3).

⁶ More specifically, a bank established in Luxembourg, a holding company belonging to a logistics group listed on the Frankfurt stock exchange, and two holding companies belonging to a pharmaceuticals group listed on the Paris stock exchange.

⁷ The Court has already dealt with the question of the status of a supervisory board as a taxable person in its judgment of 13 June 2019, IO (VAT – Activities of a member of a supervisory board) (C‑420/18, EU:C:2019:490). The judgment of 18 October 2007, van der Steen (C‑355/06, EU:C:2007:615) concerned an employed director who was also the sole shareholder.

⁸ Judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA (C‑846/19, EU:C:2021:277, paragraph 47); similarly judgment of 25 February 2021, Gmina Wrocław (Transformation of the right of usufruct) (C‑604/19, EU:C:2021:132, paragraph 69); along similar lines, see also judgment of 16 September 2020, Valstybinė mokesčių inspekcija (Joint activity agreement) (C‑312/19, EU:C:2020:711, paragraph 39).

⁹ Judgments of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA (C‑846/19, EU:C:2021:277, paragraph 48), and of 12 May 2016, Gemeente Borsele and Staatssecretaris van Financiën (C‑520/14, EU:C:2016:334, paragraph 29). See, to that effect, judgments of 19 July 2012, Rēdlihs (C‑263/11, EU:C:2012:497, paragraph 34), and of 26 September 1996, Enkler (C‑230/94, EU:C:1996:352, paragraph 27).

¹⁰ For greater detail, see my Opinion in Posnania Investment (C‑36/16, EU:C:2017:134, point 25).

¹¹ Judgments of 30 March 2023, Gmina L. (C‑616/21, EU:C:2023:280, paragraph 43), and of 30 March 2023, Gmina O. (C‑612/21, EU:C:2023:279, paragraph 35).

¹² Judgment of 12 May 2016, Gemeente Borsele and Staatssecretaris van Financiën (C‑520/14, EU:C:2016:334, paragraph 29 et seq.). The background to that case was the lack of typical market participation by the municipality – see my Opinion in that case (C‑520/14, EU:C:2015:855, point 62 et seq.).

¹³ Judgment of 26 September 1996, Enkler (C‑230/94, EU:C:1996:352, paragraph 28 – ‘comparing the circumstances’), and, building on that, judgment of 19 July 2012, Rēdlihs (C‑263/11, EU:C:2012:497, paragraphs 35 and 36).

¹⁴ Judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA (C‑846/19, EU:C:2021:277, paragraph 49). See, to that effect, judgment of 22 February 2018, Nagyszénás Településszolgáltatási Nonprofit Kft. (C‑182/17, EU:C:2018:91, paragraph 38 and the case-law cited).

¹⁵ Judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA (C‑846/19, EU:C:2021:277, paragraph 49). See, to that effect, judgments of 12 May 2016, Gemeente Borsele and Staatssecretaris van Financiën (C‑520/14, EU:C:2016:334, paragraph 31); of 19 July 2012, Rēdlihs (C‑263/11, EU:C:2012:497, paragraph 38); and of 26 September 1996, Enkler (C‑230/94, EU:C:1996:352, paragraph 29).

¹⁶ Judgments of 12 May 2016, Gemeente Borsele and Staatssecretaris van Financiën (C‑520/14, EU:C:2016:334, paragraph 33), and of 29 October 2009, Commission v Finland (C‑246/08, EU:C:2009:671, paragraph 50). This is also emphasised in the judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA (C‑846/19, EU:C:2021:277, paragraph 52).

¹⁷ Judgment of 13 June 2019, IO (VAT – Activities of a member of a supervisory board) (C‑420/18, EU:C:2019:490, paragraph 44).

¹⁸ Judgment of 13 June 2019, IO (VAT – Activities of a member of a supervisory board) (C‑420/18, EU:C:2019:490, paragraph 41 (own behalf) and paragraph 42 (economic risk)).

¹⁹ See also, in that regard, judgment of 29 September 2015, Gmina Wrocław (C‑276/14, EU:C:2015:635, paragraphs 34 and 37).

²⁰ In that regard, the Court has already declined an independent economic activity: judgment of 18 October 2007, van der Steen (C‑355/06, EU:C:2007:615, operative part).

²¹ Judgment of 18 October 2007, van der Steen (C‑355/06, EU:C:2007:615, paragraph 22) – that was the finding of the Court even in respect of a director who was also the only shareholder of the company. The latter can be ruled out in the present case.

²² See also, to that effect, judgment of 18 October 2007, van der Steen (C‑355/06, EU:C:2007:615, paragraph 24). Also, the judgment of 25 July 1991, Ayuntamiento de Sevilla (C‑202/90, EU:C:1991:332, paragraph 13) highlights the link between profit and own expenses.

²³ Judgment of 13 June 2013, Kostov (C‑62/12, EU:C:2013:391, paragraph 31 and operative part).

²⁴ Judgment of 27 April 2023, Fluvius Antwerpen (C‑677/21, EU:C:2023:348, paragraph 47).

²⁵ See only in the field of tax exemptions: judgments of 28 June 2007, JP Morgan Fleming Claverhouse Investment Trust and The Association of Investment Trust Companies (C‑363/05, EU:C:2007:391, paragraph 26); of 4 May 2006, Abbey National (C‑169/04, EU:C:2006:289, paragraph 53); of 3 April 2003, Hoffmann (C‑144/00, EU:C:2003:192, paragraph 24); of 10 September 2002, Kügler (C‑141/00, EU:C:2002:473, paragraph 30); and of 7 September 1999, Gregg (C‑216/97, EU:C:1999:390, paragraph 20).

²⁶ Judgment of 15 April 2021, Finanzamt für Körperschaften Berlin (C‑868/19, EU:C:2021:285, paragraph 65). See, to that effect, judgments of 17 February 2005, Linneweber and Akritidis (C‑453/02 and C‑462/02, EU:C:2005:92, paragraph 25), and of 16 October 2008, Canterbury Hockey Club and Canterbury Ladies Hockey Club (C‑253/07, EU:C:2008:571, paragraph 31).

²⁷ See, to that effect: judgments of 3 March 2020, Vodafone Magyarország (C‑75/18, EU:C:2020:139, paragraph 62); of 3 May 2012, Lebara (C‑520/10, EU:C:2012:264, paragraphs 23 and 24); of 11 October 2007, KÖGÁZ and Others (C‑283/06 and C‑312/06, EU:C:2007:598, paragraph 37); and of 18 December 1997, Landboden-Agrardienste (C‑384/95, EU:C:1997:627, paragraphs 20 and 23).

²⁸ The Court refers in its judgment of 13 March 2014, Malburg (C‑204/13, EU:C:2014:147, paragraph 43) to the principle of interpretation.

²⁹ Judgments of 13 March 2008, Securenta (C‑437/06, EU:C:2008:166, paragraph 25), and of 1 April 2004, Bockemühl (C‑90/02, EU:C:2004:206, paragraph 39).

³⁰ Judgments of 13 March 2014, Malburg (C‑204/13, EU:C:2014:147, paragraph 41); of 15 December 2005, Centralan Property (C‑63/04, EU:C:2005:773, paragraph 51); of 21 April 2005, HE (C‑25/03, EU:C:2005:241, paragraph 57); and my Opinion in Centralan Property (C‑63/04, EU:C:2005:185, point 25).

³¹ Judgments of 16 October 2008, Canterbury Hockey Club and Canterbury Ladies Hockey Club (C‑253/07, EU:C:2008:571, paragraph 30), and of 11 June 1998, Fischer (C‑283/95, EU:C:1998:276, paragraph 22).

³² See to that effect judgment of 7 September 1999, Gregg (C‑216/97, EU:C:1999:390, paragraph 20).

³³ According to the Commission’s pleadings, the Council document dates from 23 March 1997 and has the reference number R/716/77 (FIN 151). The German translation of that statement to be written into the minutes of the Council meeting of 17 May 1977 on the Sixth VAT Directive is reproduced in the commentary on turnover tax ‘Rau/Dürrwächter, UStG’ in Vol. VIII, texts, ‘EG-Richtlinien’, concerning Article 4 of the Sixth VAT Directive (Update 112 – November 2002).

³⁴ On the limited legal significance, see judgments of 17 December 2020, WEG Tevesstraße (C‑449/19, EU:C:2020:1038, paragraph 44); of 22 October 2009, Swiss Re Germany Holding (C‑242/08, EU:C:2009:647, paragraph 62); and of 8 June 2000, Epson Europe (C‑375/98, EU:C:2000:302, paragraph 26).