Opinion of the Advocate General on TP adjustments in Case C-603/24 “Stellantis Portugal S.A.”

On 15 January 2026, the Advocate General (AG) of the European Court of Justice issued her opinion in Case C-603/24, Stellantis Portugal S.A. The case concerns the VAT treatment of transfer pricing adjustments between related companies within an automotive group.

Stellantis Portugal S.A. (hereinafter “Stellantis”) is part of the multinational automotive group General Motors (hereinafter “GM”), engaged in the manufacturing and distribution of vehicles, vehicle parts and accessories. Stellantis acts as a national distributor, purchasing vehicles from European group manufacturers and reselling them to independent Portuguese dealers which, in turn, sold those vehicles to the final customers. In the event of manufacturing defects, the final customer contacted the dealer to have these defects repaired by the dealer in its own facilities. The Portuguese dealers then charged the repair costs (with VAT) to Stellantis. Stellantis, in turn, informed the European manufacturers of the GM group of the costs for distributing the vehicles manufactured by the group. Those costs did not only include the aforementioned vehicle repair costs but also the operating costs of Stellantis such as staff, electricity, and marketing expenses.

Under an intra-group agreement, the transfer prices for these vehicles were initially set based on expected sales. However, at the end of each reference period, retrospective adjustments were made to ensure that the distributor achieved a pre-agreed profit margin, taking into account the actual costs incurred. These adjustments to the sales price of the vehicles were documented via credit or debit notes issued to Stellantis by the European manufacturers.

Following a tax audit, the Portuguese tax authorities stated that additional VAT should have been charged by Stellantis, on the basis that the company supplied the European group manufacturers with (repair) services subject to VAT. 

The main question before the Court of Justice is whether a retrospective adjustment to the sales price of vehicles - agreed in advance in a contract between related companies to ensure a minimum profit margin, and documented by a credit or debit note - should be treated as a supply of services for consideration and therefore fall within the scope of VAT under Article 2 of the Sixth VAT Directive (77/388/EEC).

In the year at issue in the present case, the sales price of the vehicles was reduced and a reimbursement was made by the manufacturers to Stellantis. The tax authorities wanted to treat that reimbursement as a consideration for a (repair) service supplied by Stellantis to the manufacturers.

In this respect, the AG first establishes that the existence of a separate supply of services by Stellantis is highly unlikely. Indeed, the transfer pricing adjustments can be made in both directions and this means that the sales price of the vehicles could also have increased. In this scenario of a price increase the manufacturers would receive extra money from Stellantis and this conflicts with the argument that Stellantis would have supplied the manufacturers with a service (i.e. in case of a repair service rendered by Stellantis to the manufacturers, the latter would have to pay for this repair service instead of receiving money from Stellantis). Instead, the AG argues in favour of adjustments of the price for the supplies of vehicles already made. This is also supported by the fact that there is not even a contract under which a service supplied by Stellantis to the manufacturer could be justified.

The AG adds that when transfer pricing adjustments are made unilaterally and retroactively by the tax authorities in order to reallocate profits between two related companies, this is not to be seen as an adjustment of the remuneration agreed between parties. Consequently, such transfer pricing adjustments fall outside the scope of VAT and they do not alter the amount of VAT due and already paid.

In the present case, however, the potential price adjustments are contractually agreed. The effective adjustment of the price for the vehicles supplied, was yet to be determined at the time of the contract. The cars were sold for a reference price, which could then afterwards be adapted upwards or downwards depending on changes in various parameters. According to the fact pattern presented by the referring court, these parameters are the costs borne by Stellantis in connection with the distribution of the vehicles produced by the General Motors Group. These kind of price adjustments (only) have an impact on the taxable amount of the earlier supplies of vehicles but they do not constitute a separate supply of services. 

For final clarity on the practical VAT implications of this case, we have to await the judgment of the European Court of Justice. However, the opinion of the AG already provides a useful framework. If transfer pricing adjustments are agreed between parties and they specifically relate to earlier supplies of goods, then this has an impact on the taxable base of these earlier supplies of goods (which has VAT consequences since the invoicing must be corrected). These price adjustments as such do however not constitute a separate supply of services.

Just as in the Arcomet case (CJEU on VAT treatment of transfer pricing adjustments - KPMG Belgium), the AG’s opinion again confirms that the potential VAT consequences of transfer pricing adjustments should always be analyzed based on a case-by-case assessment, with no “one-fits-all” solution.

If you have any further questions or if you would like to know more on the potential VAT consequences of transfer pricing adjustments for your company, then please do not hesitate to contact us!