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EU Commission position on VAT treatment of a participation in supervisory boards

On 29 September 2011 the EU Commission formally requested the Netherlands to amend its rules on the VAT treatment of a participation in supervisory boards. Under the Dutch VAT rules, individuals are not obliged to register for VAT, pay VAT on the compensations received or file VAT returns, if they hold no more than four positions as members of supervisory boards. The EU Commission considers that the activity of serving as a member of even one supervisory (management) board is to be considered as an economic activity subject to VAT in case this activity is carried out on a regular basis and against remuneration.

In so far as Bulgaria is concerned, the practical impacts of this binding position in terms of Bulgaria VAT compliance have to be determined taking also into consideration specific provisions of Art. 3, para 3, it.2 of the VAT Act, which states that  serving as a member of management or supervisory boards by individuals do not represent an economic activity.

In this regard the Bulgarian high level jurisprudence Court must be reconsidered also. In its judgment No.8369 in case No.202/2009 the Supreme Administrative Court ruled that the companies serving as members of management boards do not carry out an economic activity, because those services “have no value” and  “do not provide services for the received remuneration”. Therefore, the court ruled these companies have no right to deduct the input VAT on the received remuneration.

Our lawyer firm at your disposal for any further information in that respect.



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