ECJ C-603/24 (Stellantis Portugal) – AG Opinion – VAT Adjustments in Intra-Group Transfer Pricing Not Separate Supplies

On January 15, 2026, the ECJ released the AG Opinion in the case C-603/24 (Stellantis Portugal).

Context: Reference for a preliminary ruling – Common system of value added tax – Directive 2006/112/EC and Directive 77/388/EEC – Supplies between affiliated undertakings – Adjustment of the intra-group sale price based on the warranty costs and operating costs incurred by the purchaser – Adjustment of the price of a supply as a separate supply of services effected for consideration – Relevance, for the purposes of value added tax law, of adjustments of a transfer price

Summary

Case Background and Questions: Stellantis Portugal, S.A. challenged VAT assessments related to adjustments in the intra-group sale price of vehicles, specifically whether such adjustments constitute a taxable supply of services under VAT law. The Supreme Administrative Court of Portugal referred this question to the Court of Justice of the European Union for clarification.
Legal Framework: The case revolves around Articles 2, 73, and 90 of the VAT Directive, which define taxable transactions and the taxable amount for supplies of goods and services. The Advocate General emphasized the distinction between profit adjustments for income tax purposes and VAT implications, noting that VAT law typically does not recognize adjustments based solely on income tax criteria.
Advocate General’s Analysis: The Advocate General argued that a price adjustment made to reflect warranty and operating costs should not be treated as a separate supply of services under VAT law. Instead, such adjustments should be viewed as modifications to the taxable amount of the original supply, thus not constituting a new taxable transaction.
Justification for Decision: The reasoning centers on the principle that VAT law focuses on actual economic transactions rather than fictional or theoretical adjustments. Since the adjustments pertained to the original sale price and were documented appropriately, they should affect the taxable amount without being classified as separate services.
Conclusion and Recommendations: The Advocate General proposed that the Court should clarify that adjustments in intra-group transfer pricing for VAT purposes should not be deemed separate supplies unless they involve distinct services for consideration. The opinion underscores the need for clear criteria separating income tax implications from VAT assessments, aiming for consistency in application across EU member states.

Article in the EU VAT Directive 2006/112/EC

Article 2 of the Sixth VAT Directive (Article 2 of the EU VAT Directive 2006/112/EC).

Article 2

1. The following transactions shall be subject to VAT:
(a) the supply of goods for consideration within the territory of a Member State by a taxable person acting as such;
(b) the intra-Community acquisition of goods for consideration within the territory of a Member State by:
(i) a taxable person acting as such, or a non-taxable legal person, where the vendor is a taxable person acting as such who is not eligible for the exemption for small enterprises provided for in Articles 282 to 292 and who is not covered by Articles 33 or 36;
(ii) in the case of new means of transport, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1), or any other non-taxable person;
(iii) in the case of products subject to excise duty, where the excise duty on the intra-Community acquisition is chargeable, pursuant to Directive 92/12/EEC, within the territory of the Member State, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1);
(c) the supply of services for consideration within the territory of a Member State by a taxable person acting as such;
(d) the importation of goods.

Facts

Corporate Structure and Operations:
- Stellantis Portugal, S.A., formerly General Motors Portugal, Lda (GMP), operates in the motor vehicle trade.
- GMP is part of an economic group involved in manufacturing and distributing vehicles and parts.
- The group includes Original Equipment Manufacturers (OEMs), National Sales Companies/Organizations (NSCs/NSOs), and contract assemblers.
Business Transactions:
- GMP functions as an NSC/NSO, purchasing vehicles from European manufacturers within the General Motors group.
- These vehicles are resold to independent Portuguese dealers, who then sell them to final customers.
- Dealers handle vehicle repairs for manufacturing defects, warranty issues, and roadside assistance, charging GMP for these services including VAT.
Financial Adjustments:
- GMP informs European manufacturers of costs incurred in distributing vehicles and parts.
- Costs include vehicle repair costs, operating costs (staff, electricity, marketing).
- An adjustment is made to the vehicle sale price based on these costs, documented by credit or debit notes issued by the European manufacturers.
Tax Inspection and Dispute:
- A tax inspection was conducted on GMP for the 2006 financial year.
- The inspection found that GMP initially bears after-sales costs and then passes these costs to OEMs.
- The tax authority argued that these transactions should be subject to VAT within Portugal.
- As a result, supplementary VAT assessments were issued to GMP for a total amount of EUR 1,504,215.49.
Legal Proceedings:
- GMP appealed against the supplementary VAT assessment.
- The Tribunal Central Administrativo Sul upheld the tax authority’s decision.
- GMP further appealed to the Supremo Tribunal Administrativo.

Questions

Must Article 2 of the Sixth VAT Directive (Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment), as worded in the version in force at the time of the facts, be interpreted as meaning that the concept of the supply of services effected for consideration contained in that provision includes an adjustment of the sale price of vehicles which is duly provided for and determined in a contract concluded between the parties, in order to achieve a minimum profit margin, and which is documented by means of a credit or debit note issued to the applicant/appellant by the European manufacturers of the General Motors group?

Summary

The question is whether the concept of “supply of services effected for consideration” includes an adjustment of the sale price of vehicles as provided in a contract to achieve a minimum profit margin, documented by credit or debit notes issued by European manufacturers.

AG Opinion

Articles 2(1)(c), 73 and 90 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that the relevance, for the purposes of VAT law, of an adjustment of profits made for reasons of income tax law depends on what it relates to and how it is made.

Where the adjustment of profits is made by means of separate supplies of services for consideration (creation of input and output) and there are not only fictitious supplies of services, those separate supplies of services for consideration constitute taxable transactions for the purposes of Article 2(1)(c) of Directive 2006/112.

Where the adjustment of profits is made unilaterally and subsequently by the tax authority solely for the purposes of an appropriate allocation of profits between two tax-levying States, that is not, in principle, relevant for the purposes of VAT law.

On the other hand, where, as in the present case, the adjustment of profits is made by means of a sale price which has been provided for precisely for that purpose and agreed to be variable and which relates to a specific supply of goods, that constitutes a reduction in the taxable amount under Article 90 of Directive 2006/112 or a further part of the taxable amount under Article 73 thereof in respect of the supply made. Since the change in the taxable amount of a supply relates solely to the consideration, it cannot itself constitute a ‘supply of services for consideration’ within the meaning of Article 2(1)(c) of Directive 2006/112.

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