CJEU judgment in Case C-603/24 “Stellantis Portugal S.A.”

On 13 May 2026, the European Court of Justice issued its judgment 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.

In our earlier newsflash on the Opinion of Advocate General Kokott, we discussed whether a retrospective adjustment to the sales price of vehicles should be treated as a separate supply of services for consideration and therefore fall within the scope of VAT.

The Court of Justice has now confirmed that TP adjustments do not automatically constitute the remuneration for a separate supply of services. The key question is not whether there is a payment, credit note or debit note between related parties, but the decisive element is what that TP adjustment actually represents.

Stellantis Portugal S.A. (hereinafter “Stellantis”) is part of the multinational automotive group General Motors (hereinafter “GM”). Stellantis acted as a national distributor, purchasing vehicles from European group manufacturers and reselling them to independent Portuguese dealers, which in turn sold those vehicles to final customers.

In the event of manufacturing defects, warranty claims or roadside assistance cases, the final customer contacted the Portuguese dealer, which carried out the repair and charged the repair costs (inc. VAT), to Stellantis. Stellantis then informed the European manufacturers of the costs for distributing the vehicles manufactured by the group. These costs did not only include the vehicle repair costs, but also operating costs such as staff, electricity and marketing expenses.

Following an intra-group agreement, the transfer prices for the vehicles were initially set based on expected sales. At the end of each reference period, however, retrospective adjustments were made to ensure that Stellantis 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 Court of Justice did not follow the Portuguese tax authorities’ approach. It recalled its settled case law that a supply of services is subject to VAT only where there is a direct link between the service supplied and the consideration received. Such a direct link requires a legal relationship between the service provider and the recipient, pursuant to which reciprocal performances are exchanged, with the remuneration constituting the actual consideration for an identifiable service.

Applying that test, the Court of Justice found that the intra-group agreement referred to by the Portuguese court primarily governed the pricing of the vehicles and the mechanism to ensure a predetermined profit margin for the distributor, i.e. Stellantis. Based on the information before the Court, it did not establish an obligation for the distributor to provide repair services to the manufacturers in return for a remuneration.

The Court also considered the calculation method relevant, as the TP adjustment was determined by reference to all distribution costs and not only the repair costs. Repair costs were therefore only one of several parameters in the pricing formula. Moreover, depending on the overall cost and margin position, the adjustment could result in either a credit note or a debit note. As a result, any link between the alleged repair services and the TP adjustment was, at most, indirect.

The judgment is broadly in line with the AG’s Opinion. As discussed in our earlier newsflash, the AG considered the existence of a separate supply of services by Stellantis to be highly unlikely. A key element in that reasoning was that the TP adjustments could be made in both directions. If the sales price of the vehicles had increased, the manufacturers would have received additional amounts from the distributor. This is difficult to reconcile with the view that the distributor supplied repair services to the manufacturers (i.e. in the latter scenario the manufacturers would have to pay for these repair services instead of receiving additional amounts of money from the distributor).

The Court follows the AG in rejecting an automatic qualification of the TP adjustment as a remuneration for a separate supply of services. However, the Court is slightly more cautious on what is then the actual qualification of the TP adjustment. It does not definitively decide that the adjustment must be treated as an adjustment of the taxable base of the earlier supplies of vehicles. Instead, it leaves that assessment to the referring court and the competent national authorities.

This judgment again confirms that no “one-size-fits-all” approach can be applied when it comes to the VAT qualification of TP adjustments.

The Court of Justice clarifies that a TP adjustment should not automatically be characterised as consideration for a separate supply of services solely because it is documented by means of a credit note or debit note, or because certain service-related costs are taken into account as a parameter in the calculation of the TP adjustment.

At the same time, the judgment should not be read as implying that TP adjustments are automatically outside the scope of VAT. Where an adjustment is sufficiently linked to earlier supplies, it may affect the taxable base of those supplies and could require corrective invoicing and reporting.

This judgment should be read in conjunction with the Court of Justice’s recent case law on TP adjustments, including the Arcomet case. Taken together, these cases confirm that the VAT treatment of TP adjustments remains highly fact-dependent. The decisive question is whether the adjustment can be linked, on the basis of the contractual framework and economic reality, to an identifiable separate supply for VAT purposes, or whether it should instead be regarded as a price adjustment of earlier supplies or as a broader profitability correction.

In conclusion, businesses applying TP adjustments, periodic true-ups or target margin mechanisms should review whether their intercompany agreements, TP policies, price formulas, credit notes, debit notes and the VAT reporting are aligned.

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