- Increased Scrutiny on Intragroup Transactions: Tax authorities are focusing more on the VAT implications of TP adjustments due to the lack of uniform EU rules. Recent CJEU rulings, including the Arcomet Towercranes case, highlight that payments made under OECD transfer pricing methods can be considered as remuneration for services subject to VAT, necessitating careful compliance by multinational companies.
- CJEU Rulings and Implications: The CJEU’s decision in the Arcomet case established that the VAT treatment of TP adjustments must be assessed individually, and businesses must provide adequate documentation proving that services were rendered to support VAT deductibility. The upcoming Stellantis case further explores whether retrospective TP adjustments constitute taxable supplies or affect the taxable amount of sales.
- Recommended Actions for Businesses: Companies should establish clear intercompany contracts, analyze the VAT implications of intragroup transactions, and maintain robust documentation to substantiate their VAT positions. This includes ensuring compliance with invoicing requirements for TP adjustments and being prepared for potential audits, as inadequate handling may lead to penalties and assessments.
Source Grant Thornton
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