The European Court of Justice (ECJ) ruled that an amount adjusted according to the OECD transfer pricing guidelines’ margin method between affiliated companies in different member states constitutes remuneration for a service. The case involved Romanian and Belgian companies, where adjustments were made based on the OECD’s transactional net margin method. The ECJ confirmed that such adjustments are subject to VAT and that tax authorities can require documentation beyond invoices to confirm the right to deduct input VAT. The ECJ agreed with the Advocate General’s opinion that the assessment of whether a transfer price falls under the VAT system should be case-specific, and in this instance, the transaction is subject to VAT as a service.
Source: blogs.pwc.de
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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