- Transfer pricing adjustments in international business are common but VAT implications remain unclear.
- The EU Court of Justice’s Advocate General issued an opinion on a specific case involving a Belgian parent company and a Romanian subsidiary.
- The case involved services provided by the parent company, with adjustments treated as VAT-taxable remuneration.
- The opinion suggests each transfer pricing adjustment case should be analyzed individually.
- The case involved Arcomet Towercranes, a group dealing with crane rentals, with financial adjustments between the Romanian subsidiary and Belgian parent.
- 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 trigger VAT obligations.
- Each financial flow must be assessed to determine if it constitutes a VAT-taxable transaction based on specific criteria.
Source: mddp.pl
See also
- ECJ C-726/23 (Arcomet Towercranes) – AG Opinion – Transfer Pricing Adjustment for intra-group services subject to VAT; documentation required
- Briefing Document: Advocate General’s Opinion in Case C-726/23 (SC Arcomet): VAT, Transfer Pricing and Intra-Group Services
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- The Advocate General’s opinion in case C-726/23 may significantly alter the perception of transfer pricing (TP) adjustments in relation to VAT, potentially leading to VAT arrears for taxpayers, as it suggests that certain financial flows previously deemed outside VAT may now be subject to taxation.
- The case involves SC Arcomet Towercranes SRL and Arcomet Service NV, where transfer pricing rules led to invoices being issued for excess profits and losses. The Advocate General argued that adjustments should be assessed individually, highlighting that services provided by one entity to another within a group could be subject to VAT if they are based on transfer pricing methods.
- If the CJEU confirms this opinion, taxpayers may need to document and prove that services from related entities are used for taxable transactions to maintain their right to deduct VAT, prompting a reevaluation of how related-party transactions are managed and documented.
Source PwC
CJEU and VAT on transfer pricing adjustments
- In April 2025, Advocate General JR de la Tour issued an opinion on Case C-726/23, addressing the VAT implications of transfer pricing adjustments between related entities, specifically involving a Romanian and a Belgian company in the crane rental business.
- The Advocate General emphasized that each case must be analyzed individually, referencing the VAT Committee’s guidance that corrections tied to contractual agreements or adjustments related to marketing and administrative expenses should be subject to VAT or lead to a tax base correction.
- The opinion suggests that the transactional net margin method used by the companies to determine remuneration indicates that such payments should be treated as taxable services under VAT, potentially resulting in unfavorable changes for taxpayers if the CJEU adopts this position in its ruling.
Source Prawo.pl
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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.
