VAT chargeable on Directors’ Fees

Value Added Tax is a field which is continually evolving, especially following decisions taken by the European Courts of Justice (CJEU). As a result of the decision taken by the CJEU in the case C-94/19 (San Domenico Vetraria SpA vs Agenzia delle Entrate), the local practice to  consider the fees paid to companies who refer Directors to their clients, fall outside the scope of VAT in Malta, is no longer tenable.  Previously the practice was to consider such fees, even if charged by a company service provider, to be exempt from VAT on the basis that such fees are deemed to constitute a remuneration for holding an office and hence out of scope for VAT. However, taxpayers are now advised to look into this practice deeply, analyse the situation properly and take corrective action where necessary so as to ensure that their practices do not run foul of such developments in the field.

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