The Council of the European Union has declined to answer a parliamentary question on whether Member States may exclude company directors from VAT liability, referring the matter to the European Commission instead. In a reply dated 30 July 2026, the Council stated that it is not its role to provide legal opinions or analysis, and invited the questioner, Benoit Cassart (Renew), to address the Commission as guardian of the Treaties responsible for overseeing Member States' application of EU law.
The question, tabled by Cassart, concerned the interpretation of a declaration attached to the minutes of the Council meeting on Directive 77/388/EEC of 17 May 1977, which states that Member States may consider as not liable to VAT individuals engaged in honorary activities, as well as managers, directors, members of supervisory boards, and company liquidators, to the extent that they form part of the companies. Cassart asked whether, under current EU law, a Member State would be required to consider services provided by natural-person directors as falling within the scope of VAT, and whether such directors would have no administrative VAT obligations in their Member State of residence if that state applies the exclusion, even if they serve as directors in another Member State that does not apply the exclusion in the same way.
The Council's refusal to engage on the substance leaves the legal question unresolved. The reply is procedural, not substantive, and offers no guidance on the scope of the 1977 declaration or its continued relevance. The Commission, which has not yet responded to the question, will now be expected to clarify whether the declaration remains a valid basis for Member States to exempt directors from VAT, and whether divergent application across Member States creates compliance burdens for cross-border directors.
The exchange highlights a tension between the Council's role as a legislative body and the Commission's executive function in ensuring uniform application of EU law. For directors who serve on boards in multiple Member States, the lack of a clear EU-wide position means their VAT obligations may vary depending on where they reside and where the company is established. This could create administrative complexity, particularly for those who are not considered taxable persons in one state but are in another. The Commission's forthcoming answer will be closely watched by tax practitioners and corporate governance professionals for any indication of a harmonised approach.