The Opinion of the VAT Expert Group is that Transfer Pricing Adjustments should be considered as “Outside scope of VAT” where both parties have a full right to recover VAT, in accordance with the simplification practice that we suggest to be adopted by the Member States. It is only when one of the traders does not have a full right of recovery, that Transfer Pricing Adjustments might require a VAT adjustment if there is a sufficiently direct link between any payments resulting from an adjustment and specific supplies. Transfer Pricing Adjustments resulting from a tax audit should always be treated as outside of the scope of VAT unless the parties agree to change the consideration accordingly.
Source Circabc
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