VAT Implications of Transfer Pricing Adjustments: Advocate General’s Opinion Offers Limited Clarity

• Transfer pricing adjustments in international business are common but their VAT implications are unclear.
• The Advocate General of the European Court of Justice issued an opinion on a specific case involving a Belgian company and its Romanian subsidiary.
• The case involved margin adjustments being treated as remuneration subject to VAT.
• The opinion emphasized that each transfer pricing adjustment case should be analyzed individually.
• The case involved a crane rental group where the Romanian company received services from the Belgian parent company.
• The Romanian tax authorities denied VAT deductions due to lack of evidence of service provision.
• The Advocate General stated that financial flows between related entities do not automatically determine VAT obligations.
• It is important to assess if services have a real character, are provided to a specific beneficiary, and have a clear link to remuneration.

Source: mddp.pl

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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