The Court of Justice of the European Union (CJEU) has been analysing the connection between the transfer pricing (TP) regime and VAT, recognising that certain intra-group adjustments — traditionally treated only for income tax purposes — may also constitute transactions subject to VAT.

Recent case law has indicated that, whenever there is a legal relationship with an identifiable consideration, even in the context of TP policies, a taxable supply of services for VAT purposes may exist.
This development requires a reassessment of intra-group flows and their corresponding tax documentation.

Arcomet Towercranes SRL Case (C-726/23)

Among the most recent cases, Case C-726/23 – Arcomet Towercranes SRL, decided on 4 September 2025, stands out.
In this case, the Belgian parent company provided management and support services to its subsidiaries, including Arcomet Romania, applying the transactional net margin method (TNMM) to ensure profit margins within the market range.

When profitability exceeded the upper limit, invoices were issued by the parent company. The Romanian tax authority denied the VAT deduction, arguing that the services were not properly evidenced nor directly linked to the subsidiary’s taxable operations.

The CJEU held that transfer pricing adjustments may indeed constitute supplies of services subject to VAT, provided there is a legal relationship between the parties and an identifiable consideration. The mere fact that the amount results from a TP policy does not exclude VAT liability.

In practical terms, this ruling reinforces the importance of clear contractual arrangements and TP documentation that demonstrates the actual provision of services and their use in taxable operations.

Stellantis Portugal Case (C-603/24)

A second relevant case, Case C-603/24 – Stellantis Portugal, currently pending before the CJEU, may have a significant impact on sectors with adjustable margin policies, such as the automotive, pharmaceutical, or distribution industries.

In this case, Stellantis Portugal adjusted the sale price of vehicles to dealers through credit and debit notes, ensuring contractual minimum margins. The Portuguese Tax Authority considered such adjustments to be subject to VAT and issued additional assessments.

The Portuguese Supreme Administrative Court referred to the CJEU the question of whether these contractual price adjustments constitute a separate supply of services subject to VAT or merely a revision of the initial consideration. The forthcoming judgment will be decisive in clarifying the VAT treatment of price adjustment mechanisms between related parties or within groups.

Conclusions: convergence between Transfer Pricing and VAT

Taken together, these cases demonstrate a clear convergence between the principles applicable to transfer pricing and VAT. Companies should therefore ensure that their intra-group policy and tax documentation are consistent and comprehensive, evidencing the economic substance of transactions and their corresponding tax treatment.