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Germany: VAT treatment of business activities of supervisory board members

Germany: VAT treatment of business activities

A decision of the Federal Tax Court (BFH) concerning the business activities of supervisory board members and the corresponding value added tax (VAT) treatment concludes that a member of a supervisory board who is not subject to risk of payment because of non-variable fixed remuneration, is not active as a trader and is not subject to being invoiced for VAT.


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The case identifying information is: V R 23/19 (V R 62/17) (27 November 2019).


In general, the German tax authorities have, up to now, classified the activities of a supervisory board member as a business activity (with certain exceptions for civil servants and other public service employees) and therefore must be invoiced for VAT—unless the supervisory board member can (and wants to) invoke the status of a small enterprise (§ 19 German VAT Law (UStG)).

In contrast, following a judgment of the Court of Justice of the European Union (CJEU)—C-420/18 (13 June 2019)—the BFH concluded that a member of a supervisory board who does not carry any payment risk due to a non-variable fixed remuneration, is not active as a trader. The BFH explicitly left open the question of whether, in the case that a supervisory board member receives a variable remuneration, the previous treatment in relation to business activities must be followed.

The financial authorities have yet to announce any public reaction to the BFH decision. Guidance, however, could be beneficial if it clarifies and provides legal certainty for companies and their supervisory board members—especially given the multitude of open issues on different remuneration models, such as variable and mixed payments, which case law has not explicitly addressed.

Read a March 2020 report [PDF 273 KB] prepared by the KPMG member firm in Germany

The KPMG report also includes brief discussions of other VAT developments that may affect businesses in Germany:

  • e-Commerce: New provisions in the EU for the exchange of payment data from 2024 (Directive (EU) 2020/284 and Council Regulation (EU) 2020/283 of 18 February 2020, Official Journal of the EU L 62 of 2 March 2020)
  • Small enterprises: New provisions in the EU from 2025 (Council Directive (EU) 2020/285 of 18 February 2020, Official Journal of the EU of 2 March 2020)
  • CJEU submission on the interest applied to electricity tax refund claims according to EU law (BFH, resolution of 19 November 2019, VII R 17/18; CJEU ref. no.: C-100/20)
  • Sale and leaseback: Time at which VAT is incurred (BFH, decision of 27 November 2019, V R 25/18)
  • Zero-rated international transport of goods relating to import and export (BMF, guidance of 6 February 2020 - III C 3 - S 7156/19/10002 :001)

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