VAT impact of transfer pricing adjustments

At a glance

The CJEU’s Advocate General has delivered long-awaited conclusions in the “Stellantis Portugal” case, underscoring the need for businesses to anticipate potential intragroup activities.

A closer look

On 15 January 2026, the Advocate General of the Court of Justice of the European Union (“CJEU” or “the Court”), Ms. Kokott, delivered her opinion in the “Stellantis Portugal” case (C-603/24)¹.

Background

This case concerns the VAT treatment of transfer pricing adjustment in intragroup transactions. The Court previously addressed this issue in the “Arcomet” case². However, the factual background differs significantly. Importantly, both the CJEU in the “Arcomet” case and the European Commission, in several  working papers before³ and after⁴ that judgment, emphasized that there is no “one-size-fits-all” solution and that a case-by-case assessment is required. Against this background, the potential impact of the present case deserves careful consideration.
 

Facts

Stellantis Portugal, S.A. is part of the Stellantis group and acts, in the group’s terminology, as a “national sales company.” It purchases vehicles from the original equipment manufacturers and resells them to independent dealers in Portugal.  

Stellantis Portugal S.A. reimburses those independent dealers for the costs incurred in connection with vehicle warranties granted to customers.  The dealers invoice these costs to Stellantis Portugal S.A. with VAT. The company then passes the costs on to the manufacturers, as documented through by credit or debit notes issued by the latter.

The Portuguese VAT authorities took the position that these payments constituted remuneration for services supplied by manufacturers to Stellantis Portugal S.A. and were therefore subject to Portuguese VAT.  The company disagreed, and the dispute was ultimately brought before the Portuguese Supreme Administrative Court (“Supremo Tribunal Administrativo”). That court referred a preliminary question to the CJEU, asking whether the concept of a “supply of services effected for consideration” includes a contractual adjustment of the vehicle sale price intended to achieve a minimum profit margin.
 

Advocate General conclusions

After extensive analysis, the Advocate General has concluded that the VAT treatment of profit adjustments made for income tax purposes depends on their nature and manner in which they are implemented. With that in mind, the Advocate General distinguished between several scenarios⁵:

• Separate services: “Where the adjustment of profits is made by means of separate supplies of services (…) for consideration (creation of input and output) and there are not only fictitious supplies of services, those separate supplies of services for consideration constitute taxable transactions (…)”,
• Unilateral tax authority adjustments: “Where the adjustment of profits is made unilaterally and subsequently by the tax authority solely for the purposes of an appropriate allocation of profits between two tax-levying States, that is not, in principle, relevant for the purposes of VAT law.”
• Contractual price adjustments: “On the other hand, where, as in the present case, the adjustment of profits is made by means of a sale price which has been provided for precisely for that purpose and agreed to be variable and which relates to a specific supply of goods, that constitutes a reduction in the taxable amount (…) or a further part of the taxable amount (…). Since the change in the taxable amount of a supply relates solely to the consideration, it cannot itself constitute a ‘supply of services for consideration’ (…)”.
   

Comments

Ms. Kokott opinions contain several noteworthy developments, in particular:

• The clear distinction between a transfer pricing adjustment imposed by income tax authorities, which should not have VAT consequences, and a transfer pricing adjustment agreed between the parties that may affect the VAT taxable amount; and,
• The confirmation that a change in the taxable amount of a supply does not, in itself, constitute a separate  supply of services for VAT purposes.

This reasoning directly contradicts the position taken by the Portuguese tax authorities which treated transfer pricing adjustments to the sale price of goods as distinct supplies of services.

The conclusions of the Advocate General are not binding on the Court. A final judgment is therefore still awaited. Based on the Court’s usual timelines—typically up to six months from the delivery of the Opinion—a decision may be expected before the summer. This leaves affected businesses some time to assess the potential implications for their intragroup transactions.

The Deloitte Luxembourg Indirect Tax Team remains at your disposal to discuss the potential impacts on your organization.

¹ Cases - InfoCuria - Court of Justice of the European Union

² SC Arcomet Towercranes STL, C-726/23, 4 September 2025 (see our newsletter : CJEU ruling on the VAT valuation of intragroup services | Deloitte Luxembourg | Input VAT | News).

³ WP 923, 28 February 2017,  Possible implications of transfer pricing

⁴ WP 1114, 10 October 2025,  WP-1114-Commission-Case-law-C-726-23-Arcomet-Towercranes-Transfer-pricing.pdf

⁵ We underline.