- The VAT treatment of transfer pricing adjustments is inconsistent across the EU and lacks clear guidance in Germany.
- The ECJ ruled on whether compensation payments for adjusting profit margins to the arm’s length principle are taxable.
- A contract between Arcomet Belgium and Arcomet Romania governed their crane distribution business functions and risks.
- Remuneration was based on the Transactional Net Margin Method in line with OECD Guidelines.
- Arcomet Romania’s profit margin was guaranteed within a specific range, with compensation for deviations.
- Arcomet Belgium invoiced Arcomet Romania for compensation payments when profits exceeded the threshold.
- The Romanian tax authority denied input VAT deduction due to insufficient evidence of service supply.
- The ECJ decided that compensation payments are remuneration for taxable services.
- The Court stated that the payments were directly linked to services provided by Arcomet Belgium.
- The ECJ found that tax authorities can require additional evidence for input VAT deduction verification.
Source: kmlz.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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