Update: Further amendment of the regulations affecting supervisory board remuneration - BMF circular letter dated 29 March 2022

After both the ECJ and Germany’s Federal Financial Court (BFH) treated the activity of a supervisory board member as not independent and therefore not VAT-taxable, contrary to the practice of the German tax authorities, the BMF adjusted the VAT application decree in a letter dated 8 July 2021. At the suggestion of practitioners, the BMF announced the new changes in a letter dated 29 March 2022.

New regulations

Details with respect to the old BMF letter can be found here. With regard to mixed remuneration with variable and fixed components, the BMF had stipulated that if at least 10% of the remuneration were variable, the supervisory board member was independent. Under the new rules, the reference period is no longer the calendar year, but rather the company's fiscal year. Only supplies performed by the supervisory board member in the fiscal year in question are taken into account. The date of performance for general activities is the end of the fiscal year. Reimbursement of expenses and the attendance fees for actual participation in meetings are taxable on the day of the meeting. When examining the 10% limit, the attendance fees for all scheduled meetings within the company’s fiscal year are to be included as variable compensation components, irrespective of the supervisory board member’s actual attendance. The relevant date for the examination of the 10% limit is the beginning of the company's fiscal year, and subsequent changes are not taken into account.


The transitional rules have also been adjusted, and it is now not objectionable if the previous rule of general non-taxability is still applied to services performed in a fiscal year of the company that began before January 1, 2022. The transitional rule for civil servants will also be extended accordingly.

(Dated: 13 April 2022)