The CJEU ruled that intra-group transfer pricing adjustments intended to guarantee a subsidiary’s profit margin are not subject to VAT as a "supply of services."
The Court of Justice of the European Union (CJEU) delivered its judgment on 13 May 2026 in Stellantis Portugal, S.A. v Autoridade Tributária e Aduaneira (Case C-603/24) concerning whether intra-group transfer pricing adjustments are subject to VAT.
The case involved Stellantis Portugal, S.A., as the legal successor of Opel Portugal, Lda., formerly General Motors Portugal (GMP). GMP operated as a national sales company/national sales organisation (NSC/NSO) within the General Motors group and purchased motor vehicles from original equipment manufacturers (OEMs) established in the European Union for resale in Portugal.
Under a 2004 agreement governing transfer prices within the group, the prices of vehicles, parts and accessories sold by the OEMs to NSCs/NSOs could be adjusted to guarantee a previously determined profit margin. At the end of each reference period, the OEMs issued credit notes or debit notes to reflect transfer pricing adjustments.
The dispute arose after the Portuguese Tax and Customs Authority concluded that GMP had provided repair services for motor vehicles to the OEMs concerned.
The authority argued that the costs of repairs relating to Recall Campaigns, Policy and Warranty matters, and Road Side Assistance procedures were initially borne by GMP and subsequently passed on to the OEMs through transfer pricing adjustments. On that basis, the authority assessed VAT and compensatory interest amounting to EUR 1,504,215.49 for the 2006 financial year.
The CJEU examined whether those transfer pricing adjustments constituted consideration for a “supply of services effected for consideration” under point 1 of Article 2 of Sixth Council Directive 77/388/EEC.
The court reiterated that a supply of services is subject to VAT only where there is a direct link between the supply of services and the consideration actually received, together with a legal relationship involving reciprocal performance between the parties.
According to the judgment, the 2004 agreement primarily regulated the fixing of transfer prices and the achievement of a previously determined profit margin for GMP. The court found that none of the clauses referred to in the order for reference established a legal relationship under which GMP was obliged to provide repair services to the OEMs in return for remuneration.
The CJEU also noted that the transfer pricing adjustments were calculated using several factors, including repair costs and GMP’s operating costs such as staff, electricity and marketing expenses. As a result, the court considered that any link between repair services and the adjustments was, at most, indirect.
The court ruled that an adjustment of a transfer price of motor vehicles does not constitute consideration for a “supply of services effected for consideration” unless there is a legal relationship characterised by reciprocal commitments relating to the supply of services and the payment of remuneration establishing a direct link between those services and the adjustment.
