- ECJ rulings in Arcomet and Högkullen clarify that transfer pricing adjustments under clear contractual mechanisms can be VAT-taxable, even if payments are variable or profit-based.
- Intra-group management services must be treated as separate supplies for VAT, requiring individual valuation (not aggregation) using the comparative method where possible.
- There is a compliance gap between transfer pricing methods (which aggregate profits) and VAT rules (which require direct links to specific supplies), necessitating detailed documentation.
- Multinational businesses face challenges due to varying VAT rules across EU Member States and must tailor documentation and agreements accordingly.
- Companies should enhance collaboration between VAT and transfer pricing teams, reassess historical VAT positions, and maintain granular records to prepare for increased tax authority scrutiny.
Source: alvarezandmarsal.com
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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