- The CJEU in Stellantis Portugal clarified that transfer pricing adjustments are VATable only if they are directly linked to a separate supply within a reciprocal contractual relationship.
- If TP adjustments are just profit allocations without a clear service obligation, they are not consideration for a separate taxable service.
- In Stellantis Portugal, the court found no direct link between the adjustments and vehicle repair services, so the adjustments were not subject to VAT as separate supplies.
- However, if the arrangement uses a variable price mechanism for an existing supply, TP adjustments may instead change the consideration for that original supply and affect its VAT treatment.
- The ruling follows the earlier Arcomet approach and emphasizes that the contract terms are key in determining VAT consequences.
Source: taxjournal.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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