- Transfer pricing agreements are used by international groups to allocate profits and costs among subsidiaries.
- Transfer pricing corrections can impact VAT.
- On April 3, 2025, the Advocate General concluded that under the Transactional Net Margin Method, compensation from transfer pricing corrections is subject to VAT.
- The case involves the Arcomet group, which rents cranes globally.
- Arcomet Romania buys or rents cranes and sells or rents them to customers.
- Arcomet Belgium negotiates supplier contracts for its subsidiaries.
- An agreement between Arcomet Belgium and Arcomet Romania sets profit margins from -0.71 percent to 2.74 percent.
- In case of excess profit or loss, invoices are exchanged between the two entities.
- The Advocate General believes VAT treatment of transfer pricing should be case-specific.
- The Advocate General concludes that compensation from transfer pricing corrections is a taxable service.
- Different transfer pricing methods can have varying VAT implications.
- Each case must be assessed to determine if compensation is VAT-taxable.
- The final decision from the EU Court of Justice is awaited.
Source: vanoers.nl
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.
