On 15 January 2026, Advocate General Kokott issued her opinion in Stellantis Portugal (C 603/24). The case concerns a topic that has received increasing attention in recent years: whether and when transfer pricing adjustments have consequences for VAT. Her conclusion provides valuable guidance in an area where many organizations encounter practical difficulties.

Background and facts

Stellantis Portugal operates as the national sales company within the group. It purchases vehicles from European group manufacturers and resells them to independent dealers in Portugal. Within the group, it has been agreed that the sales company should achieve a fixed profit margin. As a result, the purchase prices paid by Stellantis Portugal throughout the year are provisional and based on expectations of costs and revenue. At the end of each period, the actual financials are compared to the target margin, and transfer pricing adjustments are made to restore the agreed margin.

A key aspect of the case relates to warranty and repair costs. Dealers perform warranty and repair work and charge these costs, including Portuguese VAT, to Stellantis Portugal. These costs are reflected in internal reports provided to the manufacturers and indirectly affect the final transfer pricing adjustment.

The Portuguese tax authorities argued that part of those adjustments constituted remuneration for a service provided by Stellantis Portugal to the manufacturers, as Stellantis Portugal bore certain after sales costs. In their view, this meant that Portuguese VAT was due. The national court referred this question to the Court of Justice.

AG Kokott’s analysis

Advocate General Kokott disagrees with the Portuguese tax authorities. She highlights that transfer pricing adjustments can be both positive and negative. According to her, this does not align with the nature of remuneration for a service, where the service provider is paid for something supplied. Moreover, there is no contractual basis for Stellantis Portugal to provide repair or after sales services to the manufacturers.

Instead, the AG considers the adjustments to be corrections to the original sales prices of the vehicles. The initial prices were estimates, and the adjustments serve to determine the final price of the earlier transactions. Consequently, the VAT base of those previous supplies must be adjusted. A downward correction reduces the taxable amount, while an upward correction increases it.

More broadly, the AG notes that transfer pricing adjustments fall into three categories. Some adjustments result solely from profit corrections made by tax authorities and therefore have no VAT effect. Others function as remuneration for agreed intra group services, making them subject to VAT. A third category consists of adjustments, such as those in this case, used to determine the final price of earlier supplies; these modify provisional prices and require a corresponding adjustment of the taxable amount.

Conclusion

AG Kokott concludes that the transfer pricing adjustments in this case do not constitute payment for a separate service but form a price adjustment to earlier supplies of vehicles. Therefore, any VAT consequences relate to those original transactions between the manufacturers and Stellantis Portugal. It is now up to the Court of Justice to decide whether to follow this opinion.

Practical relevance

The AG’s conclusion emphasizes that the VAT treatment of transfer pricing adjustments depends heavily on the underlying agreements between group companies and how these are implemented in practice. Organizations should therefore carefully assess their transfer pricing models, contractual arrangements and invoicing processes. With more countries transitioning to e invoicing and real time reporting, it is increasingly important to process price adjustments accurately, promptly and at the transactional level.

Follow up

If you have questions about the potential implications for your organization or would like to discuss how to structure your transfer pricing and VAT processes, the specialists at RSM are happy to assist. Feel free to contact your regular RSM advisor or one of our VAT experts.