On 15 January 2026, the Advocate General Juliane Kokott published her opinion in case C‑603/24 Stellantis Portugal v. Portuguese tax authority relating to the VAT relevance of transfer pricing adjustments.

Stellantis Portugal purchased vehicles from affiliated OEMs and then resold them to independent dealers in Portugal. The purchase price was established as a reference price which could be increased or decreased depending on the distributor’s distribution costs and the adopted warranty costs. The transfer price was adjusted at the end of each period to ensure the distributor’s actual operating profit reflected the target defined in the group’s policy.

In the year under dispute the price was reduced and the distributor was reimbursed for its overpayment. The tax authority wanted to treat the reimbursement as consideration for distribution and warranty services which it alleged were provided by the distributor to the manufacturer.

AG argued that:

  • the price adjustment itself is not a supply of services for VAT purposes;
  • profit allocations are as a rule irrelevant for VAT purposes while an adjustment of profits subject to income tax does not fall within VAT regulations and does not constitute consideration for a supply of any services;
  • what is decisive for VAT purposes are the parties’ arrangements as to the amount of consideration, not the tax authority’s subsequent ‘view’ of the correct transfer pricing.

If this opinion is shared by the Court, it may become an important point of reference for all groups using transfer pricing adjustments.

  1. Voluntary TP adjustments between affiliates:
    • If these are part of a contractually agreed variable price mechanism and apply to past supplies, they should be treated as taxable amount adjustments in these supplies (VAT Directive Articles 73 & 90), rather than as separate supplies of services.
    • The mere fact that an adjustment is used to rebalance profits within the group does not create a supply of services for VAT purposes.
  2. Adjustments imposed by tax authorities for income tax purposes:
    • A transfer pricing adjustment unilaterally imposed by the tax authority to revise profits should generally not have VAT consequences as it does not affect the payment agreed between the parties.
  3. Risk of wrong treatment as a service:
    • Authorities may try to treat payments or reimbursements following TP adjustments as consideration for (marketing, distribution, warranty) services. AG’s opinion emphatically criticises such an approach.

The opinion provides a good reason to:

  • review your intercompany contracts for whether and how they describe the variable price and TP adjustment mechanism (this is important for treating such revisions as taxable amount adjustments in VAT);
  • verify whether your VAT records (invoices, notes, corrections) support treating the underlying transactions as price adjustments and not supplies of services;
  • identify adjustments resulting solely from tax authorities’ decisions and check for any incorrect VAT treatment that may have followed.

If you wish to discuss any transfer pricing matters, including 2025 reporting or transfer pricing adjustments, please contact us.

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