Court of Justice of the European Union (CJEU) Ruling of 4 September 2025 – Arcomet Towercranes (C-726/23)
On 4 September 2025, the CJEU issued a landmark and long-awaited ruling concerning the VAT treatment of intragroup transfer pricing adjustments invoiced following the application of OECD-recognised transfer pricing methods.
In this case, a Belgian parent company provided services to its Romanian subsidiary. The contract included an annual transfer pricing adjustment: if the subsidiary exceeded a certain profit threshold, it had to repay the excess to the parent company. The Romanian Tax Authorities refused the subsidiary’s right to deduct VAT on these payments, arguing that no underlying service was demonstrated.
The Court ruled that the adjustment constituted consideration for taxable services, since there was a direct link between the services provided and the payment, even if the latter was variable or conditional.
As a result, the subsidiary could claim VAT deduction, provided that it could demonstrate that the services had been rendered and used for its taxable activities. The invoice was considered the main piece of evidence, although other supporting documentation could also be required, provided the request remained proportionate.
This judgement is significant: it confirms that intragroup transfer pricing adjustments may have VAT implications. Solid contractual and economic documentation is therefore essential to secure both the VAT charge and the right to deduct.
In short, this ruling requires businesses to systematically review and document transfer pricing adjustments from a VAT perspective. Groups must align their intragroup policies with VAT requirements to mitigate the risk of assessment. The decision marks a turning point in the treatment of intragroup flows, offering a clearer legal framework.
