Recent case law has confirmed that intragroup transfer pricing adjustments can have VAT consequences, where an adjustment represents the consideration for a clearly identified supply of goods or services. The key principle is now well established. A transfer pricing adjustment is not automatically neutral for VAT, but neither is it automatically taxable. Everything depends on whether there is a direct and identifiable link between the payment and a specific taxable transaction.
A new development has brought this issue back into focus.
On 16 January 2026, Advocate General Juliane Kokott delivered her Opinion in the Stellantis case (C-709/23), addressing whether an intragroup top-up payment made as part of a year-end arm’s length adjustment should be subject to VAT. Her position is clear and pragmatic. A transfer pricing adjustment, taken on its own, cannot justify a VAT adjustment. For VAT to apply, the additional payment must be directly linked to a specific supply of goods or services.
In practice, where the adjustment is a global year-end true-up intended solely to rebalance profitability within the group, without being attributable to identifiable transactions, it does not constitute consideration for a taxable supply. In such cases, the financial flow falls outside the scope of VAT.
For businesses, this is a reassuring signal. It confirms that transfer pricing adjustments do not automatically increase VAT exposure, provided they are structured as genuine profitability adjustments and not as hidden remuneration for specific supplies.
That said, these conclusions come from the Advocate General. The final ruling of the Court of Justice of the European Union is still pending.
One to watch closely.
