In a five-page document, the ILA--3,000 members, 183 certified directors and 93 members certified in corporate secretariat and governance practices--calls on the future government to take into account three priorities.
Directors’ remuneration is treated differently from the point of view of direct and indirect taxation: it is considered a service for VAT purposes, but is not deductible for the company charged. “The heavy tax burden on companies paying these fees could prove to be a deterrent and harm Luxembourg's attractiveness in a European context of business centres,” writes the ILA.
A European fight
According to the ILA, the new version of the ATAD (anti-tax avoidance) directive considers the use of non-executive directors as “outsourcing” to avoid paying taxes. “This seriously endangers the Luxembourg governance model which, on the contrary, in order to promote best practice in this area, favours the use of the expertise and objectivity of such directors,” says the ILA.
Recognition of CGOs
If recognised as such, the corporate governance officer would--in addition to being the company secretary--be responsible for verifying the completeness and consistency of the company's governance, monitoring the proper implementation of internal procedures, alerting the board of directors to any malfunctions, updating the company's obligations and keeping governance up to date. According to the institute, the establishment of this role should first be recommended by the financial community in particular, before being extended.
This article was first published in French on Paperjam and translated for Delano.