In recent months, the impact of transfer pricing adjustments on VAT settlements has once again become the focus of attention. Although this issue has been present in practice for years, it still raises numerous doubts, and the upcoming judgement of the Court of Justice of the European Union may be of significant importance for the further development of the practice of taxpayers and tax authorities.

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Important opinion of the Advocate General

An important voice in the discussion on VAT taxation of transfer pricing adjustments is the opinion of the Advocate General of the CJEU of 3 April 2025 in case C-726/23 (Arcomet).

The Advocate General pointed out that in the case in question, where the TP adjustment was directly related to services provided by the parent company, there was a link between the service and the remuneration, which should result in an obligation to account for VAT.

Although the opinion concerned a specific factual situation, it sparked a wide-ranging discussion. It reiterated that each TP adjustment should be analysed individually, taking into account the nature of the services, the documentation and the intentions of the parties.

Another important judgement on transfer pricing adjustments is case C-603/24 (Stellantis Portugal), although we are still awaiting the opinion of the Advocate General in this case.

Practical consequences for taxpayers

In light of both planned judgements, taxpayers should exercise particular caution when documenting and accounting for TP adjustments. The key issue may be whether the adjustment relates to a specific past transaction.

In the case of classic profitability adjustments, the lack of a link to a specific supply or service argues against their inclusion in the VAT regime. However, in situations where the adjustment results in a change in the level of remuneration for historical supplies or constitutes remuneration for a ‘separate’ service, there may be an obligation to account for VAT.

Summary

Currently, there is no clear answer to the question of whether transfer pricing adjustments are subject to VAT, and each situation requires individual analysis. The upcoming judgements in the Stellantis and Arcomet cases may significantly affect the daily practice of taxpayers operating within international capital groups.

We encourage you to monitor the judgements in the above cases and, if you have any questions or need assistance with VAT settlements and transfer pricing adjustments, please contact our team of experts.