Comments on ECJ case C-726/23 (Arcomet): Transfer Pricing Adjustments May Be Subject to VAT if Direct Link Exists

• The ECJ ruled that transfer pricing adjustments can fall within the scope of VAT if there is a direct link between services provided and compensation received.
• The case involved a Belgian parent company and its Romanian subsidiary, with disputes over whether certain intra-group invoices should be subject to VAT.
• The court held that remuneration for intra-group services, even if calculated using transfer pricing methods, constitutes consideration for a supply of services and is subject to VAT.
• The chosen transfer pricing method is irrelevant to VAT; what matters is the existence of a service and payment.
• The decision increases the risk that tax authorities may treat transfer pricing adjustments as VAT-able, so businesses should review their intra-group agreements and transfer pricing practices.

Source: dlapiper.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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