- The Court is examining if a payment from a subsidiary to its parent company due to a transfer pricing adjustment is a consideration for a supply.
- Transfer pricing adjustments occur annually and can significantly affect VAT positions.
- Arcomet Romania, part of the Arcomet group, rents cranes in Romania, while Arcomet Belgium negotiates supplier terms.
- A study found Arcomet Romania’s profit margin exceeded the arm’s length range, leading to payments to Arcomet Belgium.
- Initially, payments were linked to crane sales, later corrected to service consideration or outside VAT scope.
- Tax authorities assessed VAT on these payments, claiming they were not for taxable supplies.
- The CJEU considers the case complex and has sought an Advocate General’s opinion.
- The AG views the payments as consideration for services, not transfer pricing adjustments, based on VAT rules.
- The AG’s opinion is not binding on the Court, which may choose to follow or disregard it.
Source: essentiaglobalservices.com
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.
