Comments on ECJ C-726/23 (Arcomet): Transfer Pricing Payments Subject to VAT in Arcomet Case

• The European Court of Justice ruled on a case involving SC Arcomet Towercranes SRL regarding VAT on payments based on transfer pricing policy.
• The case involved payments made by Arcomet RO’s parent company using the Transactional Net Margin Method from OECD guidelines.
• Arcomet Towercranes is an international company with its headquarters in Belgium and subsidiaries in the EU, including Romania.
• An agreement was made between Arcomet BE and Arcomet RO for mutual services, with Arcomet BE handling most commercial activities and economic risks.
• Payments were calculated using the TNMM, with invoices issued based on profit or loss thresholds.
• Arcomet RO paid and deducted VAT on invoices from Arcomet BE, but the Romanian tax authority denied the VAT deduction.
• The court ruled that payments based on transfer pricing can fall under VAT if they are considered service fees, regardless of their purpose for profit determination.

Source: meijburg.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.

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