Comments on ECJ C-726/23 (Arcomet): VAT for Intra-Group Services and Evidence Requirements for Deductions

The Court of Justice ruled that compensation for specified group services provided by a parent company to its subsidiary falls under VAT if calculated according to OECD guidelines and exceeds a certain profit margin.
There must be a legal relationship with mutual obligations, and the compensation must be the actual consideration for identifiable services providing a concrete benefit.
A direct link between the service provided and the compensation received is required, considering economic and commercial reality.
The variable nature of compensation does not affect the direct link if the calculation method is predetermined and precise.
Regarding VAT deduction, tax authorities can require additional documents beyond the invoice to prove services were performed and used for taxable activities.
The presence of an invoice is necessary for formal purposes, but deduction cannot be denied solely due to formal invoice deficiencies if all necessary data is available.
Material conditions include the actual performance of services and their use for taxable activities.
Tax authorities can request evidence but cannot require proof of necessity or economic viability of services for deduction.
The burden of proof lies with the taxpayer, and required evidence must be necessary and proportionate.

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.