Comments on ECJ case 726/23: Transfer Pricing Adjustments May Be Consideration for Taxable Supply of Services Under VAT

The ECJ ruled that transfer pricing adjustments can constitute consideration for a taxable supply of services if there is a reciprocal legal relationship and identifiable benefits.
In the Arcomet case, payments made under an intra-group agreement were found to be actual consideration for commercial services provided, thus subject to VAT.
The Court clarified that the variable or conditional nature of payments does not break the direct link required for VAT if the terms are contractually agreed and quantifiable.
Tax authorities may require necessary and proportionate evidence beyond invoices to assess the right to deduct input VAT.
Not all transfer pricing adjustments are automatically subject to VAT; it depends on the specific arrangement and whether reciprocal obligations and benefits exist.

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.