In the judgment of 4 September 2025 in Arcomet Towercranes, case C-726/23, the Court of Justice of the European Union has ruled on VAT taxation of transfer price adjustment between related entities.
The case concerned the Romanian company Arcomet (a subsidiary company), engaged in the trade and rental of cranes, which received support services from its Belgian parent company. Pursuant to the arrangements between the parties, where the profit margin exceeded the expected level, a corrective invoice was issued by the Belgian company, whereas in the event of a lower margin, such invoice was issued by the Romanian company. In the years 2011–2013, Arcomet Romania received invoices related to the transfer pricing adjustment, intended to maintain the margin at market level. The Romanian tax authorities disputed the right to deduct VAT, arguing that these services were not related to its taxable activities.
The Romanian company appealed against the decision of the authorities to the district court in Bucharest. The Romanian court referred questions to the CJEU, which held that:
Remuneration for the intra-group services provided by the parent company to the subsidiary, determined in accordance with OECD guidelines and linked to the operating margin of the subsidiary, constitutes a taxable supply of services subject to VAT.
Consequently, the transfer pricing adjustment made in this respect should also be treated as a taxable supply of services subject to VAT.
The tax authority may request additional evidence from the taxpayer, apart from the invoice, to confirm the existence of services and their use for taxable transactions, if this is necessary and proportionate.
However, it is not required that the services provided be necessary or useful for these transactions. This means that tax authorities may request evidence confirming the performance and use of services for VAT deduction purposes but may not assess their economic usefulness to the taxpayer.
Despite the conclusions resulting from the judgment in question, it should be remembered that each situation requires a separate and individual assessment of its legal consequences for the taxpayer.
The full text of the judgement can be found at this link.
The information contained in the alert is general and does not represent the tax opinion and does not cover all changes resulting from the proposed regulation. Before making any decision or action, as well as in case of any questions or concerns, please contact our tax advisers, tel.+48 22 250 31 00.
