VAT Treatment of Supervisory Board Fees

1. General Information

1.1 Background

For decades, supervisory boards were considered VAT entrepreneurs until a CJEU decision in 2019 changed the legal situation. This article contains important information on the correct billing and structuring of supervisory board fees.

1.2 Change in Jurisprudence

The change in jurisprudence by the BFH and the CJEU in 2019 led to uncertainties among supervisory boards and companies. It was determined that not all supervisory boards are to be treated as VAT entrepreneurs.

1.3 Need for Action

Supervisory boards and companies should urgently examine whether adjustments in the billing of supervisory board fees are necessary. Practical recommendations for action are presented in this article.

2. Corporate Law Framework

Corporations are legally required to establish a supervisory board. The remuneration structures for supervisory boards vary depending on the company and may consist of various components.

3. VAT for Companies Not Fully Entitled to Input Tax Deduction

Industries such as healthcare or financial services are often not fully entitled to input tax deduction. The imposition of VAT on supervisory board fees can represent a final cost burden.

4. VAT Assessment

4.1 BFH Jurisprudence until 2019

Previous jurisprudence treated supervisory boards as VAT entrepreneurs, provided the small business threshold was not exceeded.

4.2 CJEU Decision of 13.06.2019

The CJEU ruled that not all supervisory boards are to be regarded as VAT entrepreneurs, especially if there is no remuneration risk.

4.3 Change in BFH Jurisprudence

The BFH decided that a fixed remuneration without remuneration risk does not constitute a VAT-taxable entrepreneurial activity.

4.4 Change in Administrative Opinion

The BMF adjusted its administrative opinion and established criteria for when a supervisory board is considered a VAT entrepreneur.

5. Recommendations for Action

5.1 Treatment at the Company Level

Remuneration agreements should be reviewed and adjusted if necessary. Changes can lead to VAT relief.

5.2 Treatment at the Individual Supervisory Board Member Level

Supervisory board members should check whether they qualify as VAT small entrepreneurs and whether adjustments to remuneration are necessary.

Legal status: July 2025. This article does not replace individual advice in specific cases.