VAT Implications on Transfer Pricing Adjustments: Insights from Acromet Towercranes Case

The Acromet Towercranes case provides some clarity on when a transfer pricing (TP) adjustment is considered a supply for VAT purposes, but it does not offer clear guidance for businesses. The main issues are whether the uncertain nature of TP adjustments breaks the link between payment and supply, and whether TP adjustments are more like profit adjustments rather than payments for a supply. The judgment confirms that if a payment is in return for a service, it falls within the scope of VAT. A TP adjustment is considered a supply if it is governed by a legal relationship with reciprocal obligations and has a direct link to a service received. However, this is difficult to reconcile with previous case law. The decision increases the risk that tax authorities may view TP adjustments as VATable, so businesses should review their agreements and adjustments to mitigate risks.

Source: deloitte.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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