Comments on ECJ Stellantis Portugal (C‑603/24): AG Confirms TP Adjustments Are Not Separate VAT Supplies

✔ No separate VAT-able service

AG Kokott clearly views contractual TP adjustments as not constituting separate supplies unless a specific service can be identified and linked to consideration.

✔ But VAT taxable amount can change

If the TP adjustment reflects:

• a variable purchase price,
• agreed contractually, and
• linked to original supply,

then the adjustment may increase or reduce the VAT taxable amount.

✔ VAT treatment depends heavily on contract + economic reality

• the contractual mechanism,
• presence/absence of a direct link between payment and service,
• whether the TP adjustment is purely profit allocation or part of purchase price structuring.

• AG Kokott confirms that contractual TP adjustments are not automatically a separate supply for VAT.
• They affect only the taxable amount when linked to a variable purchase price agreed upfront, aligning with Articles 73 and 90 VAT Directive.
• A separate VAT supply arises only if an identifiable service for consideration exists.
• The Portuguese tax authority had argued the adjustment amounted to a service by the purchaser.

Source: VATfaq’s summary & analysis [vatfaqs.com]

A‑G advises: no separate transfer pricing supply of services without a contract

• Baker Tilly confirms AG Kokott’s view: price adjustments are not a supply of services if no contract exists linking consideration to a specific service.
• Adjustments may still modify the taxable amount of the original supply, but they do not trigger VAT as a stand‑alone service.
• They outline three possible CJEU outcomes (taxable, non‑taxable, hybrid) and conclude AG Kokott favors “not taxable”.

Source: Baker Tilly insight article [bakertilly.nl]