ILA meets the Minister of Finance
Summary of the meeting that took place on 8 September
On 8 September 2023 an ILA delegation led by its Chair, Virginie Lagrange, met the Finance Minister, Yuriko Backes, and representatives of the Ministry of Finance.

It was a welcome opportunity to explain ILA’s mission of supporting directors and governance professionals. Furthermore, ILA representatives laid out the decisive role our Institute plays in determining and promoting conscious, high-quality, and sustainable corporate governance and what it offers in terms of training, networking, and how it practices thought leadership by regularly publishing recommendations and opinions on corporate governance issues, as well as regular meetings with Regulators and other associations.

Topics of current importance to Directors were also discussed at the meeting, in particular, but not exclusively tax issues. Among others the current situation ILA judges to be a disproportioned tax impact for the debtor of the director’s fees and for the director himself including income qualification, income taxation, reporting, and withholding obligations.

Given the recent conclusion of the Advocate General of the European Court of Justice proposing that the EUCJ should not consider a director to be a VAT-taxable person an exchange unfolded on the different scenarios envisaged by ILA depending on the final judgment by the European Court of Justice. ILA's position is that depending on the outcome of this «VAT» case, different actions could be envisaged to (re)define a better and consistent tax treatment of the Directors fees in Luxembourg. ILA has proposed to intensify the exchange with the tax authorities to find timely solutions that allow predictability for the directors.

ILA delegates have also raised the issue of the current proposal for a Council Directive laying down rules to prevent the misuse of shell entities for tax purposes and amending Directive 2011/16/EU (ATAD 3). ILA has addressed its concern, especially regarding the gateway criteria (Article 6.1.c: “the undertaking outsourced the administration of day-to-day operations and the decision-making on significant functions”) and the substance indicators (Article 7.1.c.i (4): “One or more directors of the undertaking are not employees of an enterprise that is not an associated enterprise and do not perform the function of director or equivalent of other enterprises that are not associated enterprises;”). Concerning the first part, the ILA delegates advocate for more precise definitions and more clarity. With regard to the substance indicators, the ILA representatives would like to see the consideration of the business models of the different sectors taken into account in Luxembourg and the recognition of the added value of a non-executive director for a company to be clearly underlined in the negotiations at EU level.

We thank the Minister of Finance and the representatives of the Ministry of Finance for this exchange and look forward to continuing it in the future.

Valuation governance on the agenda of AIFM’s boardroom discussions
By Elena Moisei - Business Valuation Board member of IVSC* and Senior Manager of Transactions and Corporate Finance at EY