The CJEU Clarifies When an Intragroup Transfer Pricing Adjustment May Have VAT Implications

On 13 May 2026, the Court of Justice of the European Union (CJEU) delivered a new judgment on the VAT treatment of intragroup transfer pricing adjustments in the case of Stellantis Portugal (C-603/24). This decision follows other recent rulings of the Court, such as Arcomet Towercranes (C-726/23) and Högkullen (C-808/23), which also examined the impact of transfer pricing adjustments in the field of VAT.

The case originated from the activity of Stellantis Portugal, successor to Opel Portugal and formerly part of the General Motors group. The company operated as a distributor in Portugal, purchasing vehicles from manufacturers within the group and subsequently reselling them to independent dealers, who in turn sold them to final consumers.

According to the judgment, where the vehicles presented manufacturing defects, anomalies covered by warranty, or incidents relating to roadside assistance, the dealers carried out the repairs and invoiced those costs to the Portuguese distributor. The company subsequently communicated those costs to the group manufacturers together with other operating costs, such as personnel, electricity, and marketing expenses.

The dispute focused on an intragroup transfer pricing agreement entered into in 2004. Under that agreement, the transfer prices of the vehicles could be adjusted in order to guarantee the distributor a predetermined profit margin. Those adjustments were implemented through credit notes or debit notes issued by the manufacturers.

The Portuguese tax authorities considered that those adjustments constituted remuneration for an autonomous repair service supplied by the distributor to the manufacturers and therefore concluded that a supply of services subject to VAT existed.

The CJEU analysed Article 2(1) of the Sixth VAT Directive and recalled that a supply of services is only carried out for consideration where two elements are present: a legal relationship between the parties involving reciprocal performance and a direct link between the service supplied and the consideration received.

In this case, the Court noted that the only proven legal relationship was the 2004 transfer pricing agreement, whose purpose was to determine intragroup prices and guarantee a specific margin to the distributor. However, the judgment emphasised that no clause of the agreement imposed on the Portuguese company any obligation to provide repair services to the manufacturers in exchange for remuneration.

The CJEU also highlighted that the adjustments were not calculated solely on the basis of repair costs, but also took into account other operating costs of the distributor. In addition, those adjustments could result in either credit notes or debit notes. For the Court, those elements made it difficult to establish the existence of a direct link between a possible supply of services and the remuneration received.

The judgment concludes that a transfer pricing adjustment such as the one at issue does not, in itself, constitute consideration for a supply of services subject to VAT, unless there is a legal relationship characterised by reciprocal commitments aimed at the provision of identifiable services and the payment of remuneration directly linked to those services.

The Court added a further relevant element. Where the adjustments do not constitute remuneration for an autonomous supply of services, they could, depending on the specific circumstances, be regarded as a subsequent adjustment to the acquisition price of the vehicles.

The judgment states that, in such a case, it would be for the national authorities to assess the possible impact of those adjustments on the determination of the taxable amount of the original supply of goods transaction, in accordance with Article 11 of the Sixth VAT Directive.

The decision is particularly relevant for multinational groups operating with intragroup transfer pricing policies, especially in sectors where subsequent adjustments linked to profitability margins or costs associated with previous transactions may arise.

The CJEU insists that the mere fact that an economic adjustment takes certain costs into account, including repair or warranty costs, does not automatically mean that there is an independent supply of services subject to VAT. The decisive element remains the existence of a legal relationship involving reciprocal performance and a direct link between an identifiable service and the consideration received.

The judgment also qualifies the interpretation that could have been derived from previous decisions such as Arcomet Towercranes, by recalling that the mere existence of an intragroup agreement is not, in itself, sufficient to classify any economic adjustment as an autonomous supply of services for VAT purposes.

This approach reinforces the importance of correctly analysing the function and nature of intragroup adjustments, as well as their potential impact on VAT and on the determination of the taxable amount of previous transactions. At ILIA ETL GLOBAL, we advise companies and international groups on transactions involving international taxation and transfer pricing matters, from a coordinated perspective combining tax advisory services and tax risk analysis.