9 February 2026
Advocate General Kokott Clarifies the Distinction Between Price Adjustments and Supplies of Services
The Advocate General’s opinion in Stellantis Portugal (C‑603/24) addresses whether an adjustment of a transfer price agreed between affiliated undertakings may constitute consideration for a supply of services subject to VAT. Stellantis acted as a national sales company within the General Motors Group, purchasing vehicles from OEMs and reselling them to Portuguese dealers. Under the group’s transfer pricing agreement, the initial vehicle prices were set using a margin‑based methodology, and subsequently adjusted by credit or debit notes to ensure that Stellantis achieved a predetermined operating profit.
Following a tax inspection, the Portuguese tax authority argued that such adjustments as they were reflecting costs borne by Stellantis, including warranty repairs and operating expenses, constituted remuneration for services on charged by Stellantis to the OEMs and should therefore be treated as taxable supplies.
The Advocate General rejected this view and emphasised that considering costs in a pre-determined pricing methodology does not necessarily amount to on-charging those costs. Price adjustments linked to variables such as actual distribution and warranty costs reflect an “undetermined but determinable” purchase price. The pricing methodology governs subsequent increases or decreases to the taxable amount of the underlying supply, without creating a separate taxable service. Profit allocation mechanisms aimed at direct tax compliance therefore remain, in principle, irrelevant for VAT unless genuine services are contractually agreed.
Key takeaway / recommendation
Transfer pricing adjustments that form part of a contractually agreed variable sale price do not, in themselves, constitute separate supplies of services for VAT purposes; they simply adjust the taxable amount of the original supply and VAT adjustments may need to be made. Only where related parties explicitly agree to provide services for consideration does VAT on a separate supply arise. Careful drafting of contractual mechanisms governing intra‑group pricing remains essential to avoiding unwarranted VAT exposures. Customs duties, and adjustments, also need to be considered.
