VAT liability of legal persons operating
as director or liquidator
of a company

As from 1 January 2015, corporate entities operating as board member, director or liquidator will be submitted to VAT.

Until now, companies operating as member of the board of directors, director or liquidator were not obliged to subject themselves to VAT for the services they rendered. They had the option to register for VAT purposes for their activity as board member, director or liquidator.

The VAT administration has published recently a new decision concerning VAT liability of corporate entities operating as board member, director or liquidator of companies. (VAT Decision n° E.T. 125.189 of 20 November 2014).

1. VAT-liability as from 1 January 2015

As from 1 January 2015, the optional regime will be abolished. Companies operating as member of the board of directors, director or liquidator of companies will be submitted to VAT and VAT registration will become mandatory.

The companies, who are not yet registered for VAT purposes, will have the obligation to submit a form 604A in order to become a VAT registered taxable person.

Accordingly, they have to charge VAT on the services they supply as from 1 January 2015.

Bonuses or "tantièmes" granted as from 1 January 2015, will also be subject to VAT, even if they relate to previous fiscal years.

Attention! This decision is applicable for corporate entities. Individuals who operate as board member, director or liquidator of companies remain exempt from VAT obligations. 

2. Consequences of this new decision

In the past, a lot of corporate entities, serving as board member or director, have opted not to subject themselves to VAT, especially when the companies to which they rendered services were not entitled to a full deduction of VAT (e.g. insurance companies, financial institutions, hospitals, investment companies, etc.).

These companies will now see that the cost of these services will increase by the non-deductable VAT. Therefore this new rule might be an incentive to appoint individuals rather than corporate entities in their board. This is another rule to discourage the use of the management company.

Leo Peeters - leo.peeters@peeters-law.be