Margin alignment or taxable consideration? CJEU revisits VAT treatment of transfer pricing adjustments

The CJEU’s judgment in Stellantis (C-603/24), delivered on 13 May 2026, clarifies when intragroup transfer pricing adjustments are not remuneration for a taxable supply of services but deliberately leaves some flexibility.

Background

Stellantis Portugal (SP) was a domestic distributor within an automotive group, purchasing vehicles from group manufacturers (OEMs) and reselling them to independent Portuguese dealers.

Under the group’s transfer pricing (TP) policy, SP was guaranteed a minimum operating margin on a resale-minus basis, factoring in external sales prices and a range of operating costs (including warranty repairs, recall-related work, roadside assistance and other distribution expenses). At the end of each period, the OEMs issued debit or credit notes without VAT to align the actual margin with the agreed target.

The Portuguese tax authorities argued that the credit notes constituted consideration for repair services provided by SP to the OEMs and assessed additional VAT accordingly.

SP challenged the assessment. The Portuguese Supreme Administrative Court referred the matter to the Court of Justice of the EU (CJEU).

CJEU: no VAT unless specific legal relationship involving reciprocal obligations

The CJEU applied its established direct-link test: VAT applies only where there is a specific legal relationship involving reciprocal obligations, i.e. identifiable services provided in exchange for identifiable remuneration.

Here, the intragroup agreement governed the supply of goods and the determination of transfer prices (but not any separate obligation to provide repair services). The adjustments were calculated across multiple cost variables, could flow in either direction and did not guarantee full reimbursement of repair costs. According to the CJEU, any link to repair services was, at most, indirect.

The CJEU therefore held that:

• a margin-adjustment mechanism does not, in itself, create a taxable service relationship;
• the mere inclusion of repair costs among several pricing parameters does not convert cost reporting into a taxable supply;
• the burden is on the tax authorities to establish a genuine supply of services with identifiable remuneration, which they did not do here.

What the CJEU left open

The CJEU acknowledged that, had the parties concluded a service agreement, the same payment could have constituted consideration for a taxable service.
It also left the national Court to decide whether the adjustments constitute a retrospective amendment to the taxable amount of the original vehicle supplies.

This decision means that, for TP adjustments involving goods, all three outcomes remain possible:

• Outside the scope of VAT — no direct link to any supply
• Retrospective adjustment to the taxable amount of a previous supply of goods or services
• Consideration for a separate taxable supply — where the contractual arrangements support this

Read alongside Arcomet Towercranes (C-726/23), the message is clear: VAT treatment of TP adjustments is determined by the underlying contractual arrangements, not by the economic substance or accounting labels alone.