Court of Justice of the European Union · Chamber · Preliminary reference (Portugal)

Case C-603/24 · Judgment of 13 May 2026

Stellantis Portugal Transfer pricing adjustments and VAT: when a "true-up" becomes a taxable transaction

Parties

Stellantis Portugal S.A.
(formerly Opel Portugal / GM Portugal, "GMP")
v. Autoridade Tributária e Aduaneira

Subject matter

VAT & transfer pricing
Art. 2(1) of the Sixth Directive 77/388/EEC, on the supply of services "for consideration"

Question

Is a transfer pricing adjustment = the consideration for a VAT-taxable supply of services?
Answer: not automatically.

Key takeaway

A transfer pricing adjustment does not automatically constitute the consideration for a supply of services subject to VAT. To be taxable, there must be an identifiable service and a direct link between that service and the sum paid, not merely the fact that the adjustment absorbs certain costs.

The facts

How vehicles and money move within the group and where the "adjustment" comes in.

Group manufacturers

OEMGM plants, Europe

→sell

National sales company

Stellantis / GMPimporter Portugal

→resell

Network

Independent dealersdealerships

→sell

Market

End customersbuyers

The commercial flow

GMP buys vehicles from the group's OEM manufacturers, resells them to independent dealers, who sell them on to end customers.

Warranty repairs

For manufacturing defects and warranty work (recalls, roadside assistance), the dealer repairs the vehicle and invoices the costs to GMP.

Cost reporting

GMP passes these repair costs on to the OEM manufacturers, alongside operating costs (personnel, electricity, marketing).

The 2004 intra-group agreement

An intra-group agreement provides that the vehicles' transfer prices are adjusted retroactively so that GMP achieves a pre-agreed profit margin, taking actual costs into account.

End-of-period true-up

At the end of each period, the adjustment is implemented through credit / debit notes issued by the manufacturers to GMP, either lowering or raising the price of vehicles already sold.

The dispute

Following a tax audit, two opposing characterisations of the same adjustment.

Tax authority (PT)Autoridade Tributária e Aduaneira

By bearing and passing on the repair costs, GMP supplied (repair) services to the OEM manufacturers. The adjustment is the consideration for these services, located in Portugal.

Conclusion: additional VAT due on "services"

Stellantis / GMPthe taxpayer

The adjustment is a profit margin true-up (transfer pricing purpose), which absorbs heterogeneous costs. It is not the payment for an identifiable service supplied to the manufacturers.

Conclusion: outside the scope of VAT on services

The preliminary question

What the Portuguese court asked the CJEU.

Question referred to the CJEU

Does a transfer pricing adjustment (which also absorbs repair costs and is made to secure a pre-agreed profit margin) constitute the consideration for a supply of services for consideration, subject to VAT?

Art. 2(1) of the Sixth Directive 77/388/EEC (today Art. 2 of Directive 2006/112/EC)

The logic: when is it taxable?

The cumulative test of "supply for consideration". Click any test to see what the Court held.

Outside the scope of VAT

Adjustment to the price of goods

Subject to VAT as a supply

Starting pointTransfer pricing adjustment between affiliated companies

Test 1: Legal relationship why it matters

Is there a legal relationship in which reciprocal performances are exchanged?

What the Court held

VAT presupposes a contractual framework in which each party commits to something. A mere movement of money between affiliated companies, without reciprocal obligations, does not fall within the scope of VAT.

If NO

Mere financial true-up, profit adjustment. Outside the scope of VAT.

Test 2: Identifiable supply why it matters

Can a specific good or service be individualised, supplied in exchange for the payment?

What the Court held

There must be a concrete, identifiable benefit for a specific recipient. Here the adjustment covered a basket of heterogeneous costs (repairs, personnel, marketing), not a single, individualisable supply.

If NO

No distinct taxable transaction. No VAT.

Test 3: Direct link why it matters

Is there a direct link between that supply and the sum paid (the payment = its actual consideration)?

What the Court held (the decisive point)

The fact that the adjustment takes certain costs (including repairs) into account does not automatically turn the payment into remuneration for a service. The sum aimed at a global profit margin, not the consideration for an identifiable service, so the direct link is missing.

If NO

Not the remuneration for a separate service. It may, however, be an adjustment to the taxable base of the supply of goods (the vehicles), so VAT on goods may be corrected where applicable.

● This is where Stellantis falls

If YES to all 3 tests

The adjustment becomes the consideration for a supply of services (or goods), so a VAT-TAXABLE transaction, with a corresponding right of deduction.

Conclusion for Stellantis

The adjustment failed at Test 3: the direct link to an identifiable service was missing. It therefore does not represent the consideration for a supply of services subject to VAT. At most, it may be regarded as a subsequent adjustment to the price of the vehicles (goods), a matter for the taxable base of the supply of goods, not for a new "service".

The Court's reasoning, step by step

How the CJEU moved from the rule to the solution.

The basic rule

A supply of services is subject to VAT only if effected "for consideration", which presupposes a direct link between the service and the consideration (settled case law).

What "direct link" means

A legal relationship with reciprocal performances is required, in which the payment is the actual consideration for an individualisable service supplied to the recipient.

Included costs are not decisive

The fact that the adjustment takes certain costs into account (among them repair costs) is not sufficient to qualify it as remuneration for a distinct service.

The real purpose of the adjustment

The adjustment sought to achieve a global profit margin (transfer pricing logic, direct taxation), not the payment for an identifiable service supplied to the manufacturers.

The conclusion

In the absence of the direct link, the adjustment is not a supply of services subject to VAT. It may, however, be an adjustment to the price of the goods supplied — a distinction that the national court must verify in light of the contract, the calculation method and the documentation.

The solution

The operative part of the judgment.

CJEU Judgment, 13 May 2026

Article 2(1) of the Sixth Directive must be interpreted as meaning that a transfer pricing adjustment made to secure for an affiliated company a pre-agreed profit margin (even where it takes costs such as repair costs into account) does not, in itself, constitute the consideration for a supply of services subject to VAT, in the absence of an identifiable service and of a direct link between that service and the sum paid.

Glossary

Click a term for its definition and relevance in this case.

Practical effects

What the judgment means for multinational groups.

Reduced VAT exposure

Transfer pricing adjustments are not automatically VAT-bearing, which reduces the risk of additional "service" assessments for year-end true-ups.

Case-by-case analysis

The VAT qualification depends on the substance of each adjustment, not on its label. "Profitability adjustment" is not a sufficient legal characterisation.

Documentation is decisive

The intra-group contract, the calculation method, the settlement model and the credit / debit notes are what show whether there is (or is not) a direct link to a supply.

Direct vs. indirect

The boundary between direct taxation (corporate income tax, transfer pricing) and VAT holds: an adjustment made for TP reasons is not automatically "contaminated" with VAT.

Possible impact on goods

If the adjustment concerns the price of goods supplied, it may modify the taxable base of those supplies, so VAT corrections on goods are possible (credit / debit notes).

Two possible characterisations

The judgment leaves two characterisations open, depending on the actual structure of the transaction: neutral (outside the scope of VAT) or adjustment to the consideration for goods.

Checklist for the qualification of a TP adjustment

✓Is there a legal relationship with reciprocal performances? Check whether each party commits to something concrete.
✓Can you individualise a good / service? Or does the adjustment cover a heterogeneous basket of costs?
✓Is the payment = the actual consideration? If the sum targets a global margin, the direct link is missing.
✓Does the adjustment concern goods already supplied? Then it is a taxable-base matter, not a new service.
✓Does the documentation support the characterisation? Contract, calculation method, settlement, credit / debit notes.