Transfer pricing adjustments (upwards or downwards) might have VAT implications. These implications rise when a transaction for consideration is performed and the adjustment is seen as more or less consideration given in exchange for a taxable supply of goods or services already made. This means that the adjustment has to be linkable to a specific transaction made for consideration. In the case analyzed by the Italian Tax Authority, the adjustment was directly linked to the transaction and it was considered relevant for VAT purposes with the consequent effects in terms of issuance of debit and credit notes. It is worth noting that this requirements have to be assessed on a case-by case basis.
Source: Italian Tax Administration – Letter ruling No. 529 of the 6 August 2021 (in Italian)
Fausto Capello
Gianni & Origoni
