EU Court Builds Body of Law on Transfer Pricing Adjustments, VAT

A European Court of Justice adviser’s opinion involving the automaker Stellantis adds to a growing body of legal guidance on how value-added tax applies to pricing adjustments between related companies.

Stellantis Portugal SA’s practice of adjusting the sales price to ensure stable profit margins for dealerships doesn’t constitute provision of a service, and thus shouldn’t be subject to VAT, the nonbinding opinion says.

It comes at a time when the European Commission has explicitly focused on closing the VAT gap—the difference between the tax owed and the tax collected—which was over €128 billion ($150 million) in 2023.

The opinion ...