- The article explains how transfer pricing adjustments (true-up/true-down) have long been treated separately from VAT, but EU case law has increasingly clarified when they may fall inside or outside VAT.
- In the Stellantis Portugal case, the CJEU emphasized that VAT depends on whether there is a direct link between a service and consideration within a reciprocal legal relationship, not on the economic purpose of the adjustment.
- Stellantis involved intragroup price adjustments to bring a Portuguese distributor’s profitability to a target margin, via debit/credit notes based on actual costs.
- Portuguese tax authorities argued the adjustment was payment for taxable services, but the CJEU indicated that a transfer pricing adjustment is not automatically consideration for a service.
- The key takeaway is that only adjustments tied to an identifiable supply and determinable payment are likely to be subject to VAT.
Source: blog.pwc.ro
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.
