By Charles Savva

On 13 July 2023, the Court of Justice of the EU (“CJEU”) case C-288/22, specifically Advocate General Kokott, ruled that a natural person acting as a director of a company should not be considered as carrying out an independent economic activity for VAT purposes.  As a result of this determination, it follows that the remuneration received by a director is not subject to VAT within the EU.

This case has particularly important implications for the professional services industry in Cyprus, where the provision of director services is a common service requested from lawyers, accountants, and corporate services professionals.

The case involved a Luxembourg lawyer, who acted as a board of directors’ member for numerous Luxembourg companies, namely public corporations.  Despite the Luxembourg VAT authorities’ position that such director fees are subject to Luxembourg VAT, the lawyer in question did not charge VAT.  The Luxembourg VAT authorities successfully challenged the VAT treatment applied by the lawyer, after which time the case was eventually referred to the CJEU.

While Advocate General Kokott opinion is not legally binding, the CJEU may decide to follow the treatment that directors’ fees are not considered an independent economic activity, and therefore a director is not a VAT taxable person.  As stated above, such alignment by the CJEU would have an important impact in several Member States, including Cyprus.

At present, the Cyprus VAT authorities take a similar approach to the Luxembourg authorities, whereby directors fees are subject to VAT, with very limited exceptions that fall outside the scope of Cyprus VAT.

Savva & Associates commentary:

For more information or a no obligations call, please feel free to contact our Head of Tax, Charles Savva, at or

Charles Savva

Managing Director

Head of Tax Planning

+357 22 516 671 

Christos Tsaousis

Tax and VAT Compliance

Senior Manager

+357 22 516 671

Mina Pieri

Tax and VAT Compliance

Senior Manager

+357 22 516 671

C.Savva & Associates Ltd

15 Vyzantiou Street, Strovolos

2064 Nicosia, Cyprus

+357 22 516 671


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