Transfer Pricing Adjustments and VAT Implications: Impact of Recent ECJ Decisions

Price adjustments to reflect market value in transactions between affiliated parties can have VAT implications.
For VAT, the taxable base is the actual consideration received or to be received.
Market value imposition for VAT taxable base is regulated only in certain situations where parties do not have full deduction rights.
When parties align transaction prices to market value, the VAT regime follows the regime of the modified transactions.
If adjustments are made for fiscal results without changing prices, VAT implications need case-by-case analysis.
Adjustments to align affiliate profitability with contractual or transfer pricing policy may have different VAT treatments across EU states.
Some states view these as intra-group service remuneration, while others follow VAT Expert Group guidelines, seeing no new transaction or adjustment.
Recent preliminary questions to the Court of Justice of the European Union (ECJ) address VAT treatment for transfer pricing adjustments.
ECJ decisions provide binding interpretations for member states, unlike non-binding VAT Expert Group guidelines.
The recent ECJ decision in the Arcomet Cranetowers case from Romania analyzed VAT implications of transfer pricing.
Arcomet Romania had a contract with parent company Arcomet Belgium defining operational commitments and responsibilities.
The contract specified that Arcomet Belgium handled strategy, negotiations, engineering, and risk management, while Arcomet Romania managed purchasing and leasing cranes.

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.