ECLI:EU:C:2026:21
C-603/24
OPINION OF ADVOCATE GENERAL
KOKOTT 1 Case C‑603/24
Stellantis Portugal, S.A.
v
Autoridade Tributária e Aduaneira
(Request for a preliminary ruling from the Supremo Tribunal Administrativo (Supreme Administrative Court, Portugal))
(Reference for a preliminary ruling – Common system of value added tax – Directive 2006/112/EC and Directive 77/388/EEC – Supplies between affiliated undertakings – Adjustment of the intra-group sale price based on the warranty costs and operating costs incurred by the purchaser – Adjustment of the price of a supply as a separate supply of services effected for consideration – Relevance, for the purposes of value added tax law, of adjustments of a transfer price)
I. Introduction
1. Income tax law has many different facets. One of them is transfer pricing, which plays an important role between affiliated undertakings in the appropriate allocation of profits, taking into account the arm’s length principle. Unfortunately, determining the correct transfer price is less a matter of law and more a ‘matter of faith’. In that respect, there is no such thing as one correct transfer price, but rather various methods for determining it and thus a whole range of ‘correct’ transfer prices.
2. That is probably the reason why, to date, it has always been attempted to keep VAT law, which generally does not involve such ‘matters of faith’, separate from it. The present request for a preliminary ruling shows that that may no longer be possible in the future. ( 2 )
3. Unlike the case in Arcomet Towercranes , ( 3 ) already decided by the Court, the present case concerns a subsequent adjustment of the price of a supply intended to implement an intra-group allocation of profits. In that regard, the proceedings allow the Court to review the scope of adjustments of transfer pricing made for reasons of income tax law and the consequences of those adjustments under VAT law, a field that has received little attention to date, and, if possible, to give an answer that provides guidance beyond this specific case.
II. Legal framework
A. European Union law
4. The legal framework for 2006, the year at issue in the present case, is constituted by the Sixth VAT Directive, ( 4 ) which did not yet provide for the transfer of the tax liability in the case of supplies of services to a taxable person established abroad. However, the provisions to be interpreted are identical to the corresponding provisions of Directive 2006/112/EC on the common system of value added tax ( 5 ) (‘the VAT Directive’).
5. Article 2(1)(a) and (c) of the VAT Directive (corresponding to point 1 of Article 2 of the Sixth VAT Directive) provides: ‘The following transactions shall be subject to VAT: (a) the supply of goods for consideration within the territory of a Member State by a taxable person acting as such; … (c) the supply of services for consideration within the territory of a Member State by a taxable person acting as such’.
6. Article 73 of the VAT Directive (corresponding to Article 11A(1)(a) of the Sixth VAT Directive) defines the taxable amount, and provides: ‘In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply.’
7. Article 90(1) of the VAT Directive (corresponding to Article 11C(1) of the Sixth VAT Directive) provides: ‘1. In the case of cancellation, refusal or total or partial non-payment, or where the price is reduced after the supply takes place, the taxable amount shall be reduced accordingly under conditions which shall be determined by the Member States.’
B. Portuguese law
8. It is true that the exact wording of the corresponding provisions of Portuguese law has not been communicated to the Court. However, it is to be assumed that the VAT Directive was transposed accordingly in Portugal by the Código do IVA (‘the VAT Code’).
III. The facts of the case
9. Stellantis Portugal, S.A. (‘the applicant’) is a company operating in the motor vehicle trade and, in 2006, the year at issue, was part (more precisely: its legal predecessor was part) of the General Motors Group, which manufactures and distributes vehicles and parts and accessories.
10. That group was made up of original equipment manufacturers (‘OEMs’) which manufacture the products and/or supply them to the national sales companies (‘NSCs’) or national sales organisations (‘NSOs’), which distribute those products in a market that has been predefined in geographical terms.
11. In the production chain, the applicant operated as an NSC/NSO, purchasing vehicles from the European manufacturers (OEMs) of the General Motors Group. The vehicles purchased were resold to independent Portuguese dealers, which, in turn, sold those vehicles to the final customers.
12. In the event of manufacturing defects, the final customer went to the dealer to have them repaired by the dealer in its own facilities. The Portuguese dealers then charged the applicant for the costs they incurred in repairing the vehicles, charging the relevant amount of VAT in respect of that supply of services. Such vehicle repairs could be carried out in the event of anomalies resulting from defects in the manufacturing process for the motor vehicles and the parts and accessories, anomalies related to the vehicles’ warranties and procedures related to roadside assistance.
13. The applicant informed the European manufacturers of the General Motors Group (the respective OEMs) of the costs in distributing the motor vehicles and the parts and accessories manufactured by the group. Those costs included the vehicle repair costs referred to above and the applicant’s operating costs, in particular staff, electricity and marketing costs.
14. Depending on the costs declared, an adjustment was then made in respect of the price of the vehicles sold to the applicant by the European manufacturers of the General Motors Group. That adjustment was made on the basis of a contract concluded between the companies of the General Motors Group to determine the prices of the vehicles transferred.
15. Under that contract, ‘… General Motors Corporation (GM) and its GME subsidiaries are to apply a market-based pricing process to determine the transfer prices [of products] sold by the manufacturing units of GM (the OEMs) to the distribution units. The prices … shall be determined by deducting from the external sales prices the total amount of the relevant distribution costs and the amount of the operating profit aimed to be made …. In accordance with the procedure followed by GME, the initial transfer prices shall be determined in each reference period applying a gross margin discount to the expected external sale prices. At the end of each period, the transfer price shall be adjusted according to the operating profit previously agreed for the distribution unit, such that the actual amount of the operating profit for that unit is the same as the operating profit target amount ….’
16. That contract also provided as follows: ‘… the initial transfer prices shall be adjusted at the end of each reference period in order to ensure that the actual financial results of the distribution unit tally with the agreed operating profit. … That adjustment shall be made … in the relevant period, with the relevant increase or reduction being recorded in the accounts of the selling unit (OEM).’
17. The adjustment of the sale price of the vehicles was documented by means of a credit or debit note issued to the applicant by the European manufacturers of the General Motors Group.
18. The applicant was the subject of an inspection, at its offices, carried out by the Serviços de Inspeção Tributária da Direcção de Finanças de Lisboa (Tax Inspection Services of the Lisbon Finance Directorate, Portugal). The inspection was general in scope and concerned accounting and tax matters relating to the 2006 financial year. The final inspection report was drawn up on 10 December 2009. In it, the tax authority found that the OEMs are responsible for repairs, given that they are the entities responsible for the manufacture and/or assembly of vehicles and parts and accessories. So, initially, the applicant bears all of the after-sales costs and then passes on the amount of those costs to the relevant OEMs.
19. In that regard, the tax authority proceeds on the basis that the applicant supplied OEMs with services, within the national territory, which are subject to VAT under Article 1(1)(a) of the VAT Code. The costs of repairs, warranties and roadside assistance indicated by the applicant in that regard amounted to a total of EUR 6 352 516.47, which gives rise to value added tax in the amount of EUR 1 334 028.47. Thus, on 23 December 2009, the applicant was issued with supplementary VAT assessments for 2006 totalling EUR 1 504 215.49.
20. It is apparent that those assessments were challenged by the applicant, but that they were upheld by the judgment of the Tribunal Central Administrativo Sul (Southern Central Administrative Court, Portugal). The applicant lodged an extraordinary appeal (recurso de revista) against that judgment on 16 November 2023.
IV. The preliminary ruling procedure
21. The Supremo Tribunal Administrativo (Supreme Administrative Court, Portugal) stayed the proceedings and referred the following question to the Court of Justice for a preliminary ruling: ‘Must Article 2 of the Sixth VAT Directive …, as worded in the version in force at the time of the facts, be interpreted as meaning that the concept of the supply of services effected for consideration contained in that provision includes an adjustment of the sale price of vehicles which is duly provided for and determined in a contract concluded between the parties, in order to achieve a minimum profit margin, and which is documented by means of a credit or debit note issued to the applicant/appellant by the European manufacturers of the General Motors Group?’
22. In the proceedings before the Court, Stellantis Portugal, the Portuguese Republic and the European Commission submitted written observations. The Court decided not to hold a hearing in accordance with Article 76(2) of the Rules of Procedure of the Court of Justice.
V. Legal assessment
A. Understanding the question referred for a preliminary ruling
23. The question posed by the referring court is, at first glance, surprising and can be understood, at second glance, only on the basis of the position taken by the Portuguese tax authority in the course of the proceedings.
1. Service at both positive and negative prices?
24. On the basis of the intra-group rules, the price of the products sold to the applicant (cars and parts) aims to ensure that they achieve only or at least a certain result (that is relevant for the purposes of income tax law) and that they are taxed in Portugal. Therefore, the prices of the products sold are adjusted periodically by the seller. According to the request for a preliminary ruling, that adjustment is made in both directions. The consequence is that, in the event of a price increase, the purchaser subsequently still has to pay something to the seller, whereas, in the event of a price reduction, the purchaser has made an overpayment and is therefore reimbursed. For that reason, the seller issues corresponding credit or debit notes.
25. During the year in question, the price was reduced and a reimbursement was made to the purchaser. The tax authority now apparently wishes to treat that reimbursement as consideration for a service supplied to the seller by the purchaser in Portugal. That is why the referring court asks whether the reduction in the purchase price resulting from a supply made by the seller can constitute consideration for a service supplied by the purchaser to the seller.
26. I fail to see what service is supplied by a purchaser who, for whatever reason, subsequently pays a lower or higher purchase price. ( 6 ) Nor does Portugal explain this in any more detail in its observations. Since, in the present case, the purchase price could also have increased (for example, if fewer warranty cases occur or if the purchaser’s/applicant’s own operating costs decrease), the assumption of a separate supply of services by the purchaser becomes even more daring. According to the Portuguese tax authority, the purchaser would have supplied the seller with a service, and what is more, according to the logic of those authorities, the purchaser would even have paid for that service itself.
27. In the light of the foregoing, that would be a supply of services in return for negative consideration, which is not provided for by VAT law and which has no consequences, for the purposes of VAT law, for the ‘supplier of services’. That also makes sense because VAT, as a general tax on consumption, is intended to tax the expense of a consumer good. ( 7 ) However, if the recipient of a service does not have any expense but, on the contrary, receives money, the reason for the VAT burden does not apply. Consequently, in so far as the purchaser of goods, depending on the circumstances provided for in the contract, must subsequently pay more or less for a supply, that quite clearly militates against the existence of a supply of services by the purchaser and, on the contrary, militates in favour of an adjustment of the consideration for the supply already made.
2. Bearing of costs as a service?
28. The Portuguese tax authority appears to consider that the bearing of the warranty costs of ‘defective’ vehicles purchased and resold by the applicant constitutes a service supplied to its seller. Ultimately, the defective cars are repaired by the last seller (the car dealer at the end of the supply chain) at its own expense, but those costs are then charged to the applicant. The latter bears the warranty costs, but those costs are, to a certain extent, already taken into account in its purchase price. It is only when they are higher than expected (and consequently the result provided for under income tax law is no longer achieved) that the purchase price of the goods is reduced.
29. However, it is quite clear from Article 2(1) of the VAT Directive that merely bearing costs cannot constitute a supply of services. VAT law does not tax payments as such. A payment (and thus also a refund of costs incurred) is relevant for the purposes of VAT law only when it is made ‘in return for’ a supply of services. That is why Article 2(1) of the VAT Directive states that a taxable transaction exists only where a supply of services is effected for consideration. It is also apparent from Article 73 of the VAT Directive that only payments obtained by the supplier in return for the supply are relevant.
30. The fact that the applicant initially bears the cost of repairing the products it sells and that those costs (in addition to other costs – as the Commission rightly points out) are taken into account in the pricing of the product purchased does not therefore mean that it thus supplies any service to a third party. Rather, it is fulfilling its own obligations as a seller to its purchaser, which is in turn faced with the warranty claims of its customers (the final customers).
3. The relevance, for the purposes of VAT law, of a distribution of profits?
31. Ultimately, the purchase price adjustment serves here ‘only’ to allocate the profits of one intra-group company to another. That is, in principle, irrelevant for the purposes of VAT law. Profit distributions are not made for an economic activity (supply of goods or services), but only for participation in another’s economic activity. If even a dominant holding company is claimed not to be a taxable person in spite of it receiving millions in dividends, ( 8 ) profit adjustments can also hardly be relevant in the context of a subsequent adjustment of transfer pricing. The adjustment of profits for the purposes of income tax law is in principle alien to VAT law and therefore does not constitute consideration for a supply of services, regardless of who supplies them.
4. Interim summary
32. The adjustment of the consideration for a supply, expressly referred to in the question, can therefore never itself constitute a supply of services.
33. If the question is taken literally, it can therefore be answered very quickly. The mere adjustment (upwards or downwards) of a sale price for a supply in principle never itself constitutes a supply of services within the meaning of Article 2(1) of the VAT Directive.
B. The actual question referred for a preliminary ruling: Consequences of a price adjustment made for reasons of income tax law
34. If the request for a preliminary ruling is examined in more detail, however, it raises the dogmatically interesting question of the consequences, under VAT law, of an adjustment of transfer pricing made for reasons of income tax law. On close inspection, that question has even been referred to the Court in another case (the case in Arcomet Towercranes ( 9 )) although it was not answered exhaustively in that case.
35. In that judgment, the Court reformulated the question, which had been appropriately referred and which was not straightforward to answer, making it rather straightforward to answer. It is doubtful whether that rather straightforward answer was also a useful answer. I will therefore take the opportunity here and reformulate a question that is rather straightforward to answer so that the underlying problem becomes clear and can be resolved by the Court. If the Court does not resolve the problem here, the resolution of the problem would only be delayed. The uncertainties already created in practice by the judgment referred to above would then continue to exist.
36. In essence, the referring court seeks to ascertain how adjustments to a sale price agreed between two intra-group companies (also referred to as the transfer price for the purposes of income tax law) are to be treated for the purposes of VAT law where that price adjustment serves primarily to allocate the profit between the two affiliated undertakings in an appropriate manner (within the meaning of income tax law).
37. As a general rule, the aim of contractually agreed profit allocation is to prevent, for the purposes of income tax law, the tax authority from subsequently adjusting transfer prices because the arm’s length principle may not have been observed, so that one company (usually that of a low-tax jurisdiction) generated, from the perspective of the tax authority (usually that of a high-tax jurisdiction), excessive profits that were actually generated and taxable in the other jurisdiction (in the example, the high-tax jurisdiction).
38. Advocate General Richard de la Tour, who, unlike the Court, addressed the difficult question in the case referred to above, agrees that, for the purposes of VAT law, rules or criteria relating to income tax cannot be decisive. ( 10 ) What matters is whether the conditions of a transaction that is taxable (and liable to tax) (Article 2(1) of the VAT Directive) are satisfied where a transfer price is subsequently adjusted.
39. Unlike Advocate General Richard de la Tour, ( 11 ) however, I consider it to be entirely possible and even necessary to give a principled answer to the question of the consequences under VAT law of an adjustment of transfer pricing made for reasons of income tax law. Despite the complex reality in a systematic area of law such as VAT law, this does not necessarily have to be decided afresh, on a case-by-case basis, each time.
40. Indeed, there are certain situations in which an adjustment of transfer pricing may, in some circumstances, have consequences for the purposes of VAT law, and others in which it does not. Those situations can also be distinguished from each other, without being exhaustive.
C. The reformulated question
41. In that regard, the reformulated question and the one that actually requires an answer is as follows: ‘Must an adjustment of the consideration for an intra-group supply that is made for income tax reasons be regarded as a significant change in the taxable amount for the purposes of VAT law in accordance with Article 90 of the VAT Directive or as the taxable amount for a separate service supplied by the person who benefits from the change in the transfer price, or is it irrelevant for the purposes of VAT law as a mere adjustment of profits between two intra-group undertakings?’
42. A number of situations are relevant in that regard. Accordingly, it is conceivable for the taxable person to make separate services or supplies with a view to generating input and output, which thus influences the profits as desired. The Court appears to have assumed such a situation in the case in Arcomet Towercranes. ( 12 ) However, it would also be possible for the parties to invoice something only on paper in order to steer profits accordingly. These are usually agreements that allow adjustments in both directions, whereby a supply of services, at least in one direction, is difficult to imagine (see, in that regard, section C.1.).
43. It is also conceivable, however, for the tax authority (for example, ten years later in the context of a tax audit) to make an adjustment of transfer pricing with a view to an appropriate allocation of profits, which – usually without any real payment flows – ultimately leads to a (fictitious) attribution of profits on one side (and, in fact, a fictitious increase in expenses and thus a decrease in the profits on the other side) (see section C.2.). However, it is also conceivable for the existing purchase price subsequently to be adjusted on account of certain variables which were still open when the initial purchase price was set (see section C.3.).
1. Separate supply of service for the creation of input and output vs. fictitious invoicing of fictitious supplies intended to correct profits
44. Under Article 2(1)(c) of the VAT Directive, ‘the supply of services for consideration within the territory of a Member State by a taxable person acting as such’ is subject to VAT.
45. According to settled case-law, a supply of services is effected ‘for consideration’ within the meaning of Article 2(1)(c) of the VAT Directive and is therefore subject to VAT only if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, the remuneration received by the provider of the service constituting the actual consideration for the service supplied to the recipient. ( 13 ) That criterion relating to the existence of a legal relationship – as is also rightly apparent from the recent case-law of the Court of Justice – is to be given a broad meaning. ( 14 )
46. Where the service to be supplied and the consideration to be paid for it arise from an underlying contract, such a legal relationship can, in principle, be assumed to exist. Moreover, this appears to have been the correct starting point for the Court ( 15 ) and the Advocate General ( 16 ) in the case in Arcomet Towercranes. If consideration has actually been agreed for a supply of services, provided that a corresponding positive result is achieved or not achieved, there is (at the time when the relevant condition is fulfilled) a supply of services for consideration that is relevant for the purposes of VAT law.
47. In the present case, there is not even a contract under which a service supplied by the purchaser (the applicant) to the seller (OEM) could somehow be justified. First, the applicant purchases only the cars and resells them. That resale also entails bearing the warranty costs. Second, the tax authority’s assumption ‑ that the applicant supplies services in the form of the distribution and management of the warranty in favour of its seller and therefore in return for the consideration resulting from the price adjustment ‑ would make no sense if the applicant’s profit exceeded the prescribed range. In the event of lower distribution costs or lower warranty costs, the applicant would still have to pay the seller something for its own supply of services. That is far from the reality.
48. If something of that nature had been contractually agreed, that would rather militate in favour of a fictitious supply of services, so that such a contract would rightly ( 17 ) be irrelevant to the taxation of the expense of a consumer good under VAT law. However, in the present case, it was not even the subject of a contractual agreement, but a supply of services is merely alleged by the tax authority.
2. Subsequent adjustment of the transfer price by the tax authority for the purposes of profit adjustment
49. However, the situation is different where an adjustment of the transfer price, which has been ordered by the tax authority (and is thus unilateral), is made with a view to an appropriate allocation of profits between companies (usually between different States).
50. So long as that occurs only in connection with the taxation of company X’s income in Member State A, it is a pure fiction. For income tax reasons, the profit is increased accordingly. Whether company Y’s profit is reduced in State B (which would logically be the case) is an entirely different question. Indeed, given that the other State may have other views about the correct transfer price and that, as I explained above, there is no such thing as one correct transfer price, that is not necessarily the case. That can also be described as a dilemma for the purposes of income tax law, for which, inter alia, dispute resolution procedures ( 18 ) have been developed.
51. By contrast, VAT law is based on the principle that an adjustment of the price (consideration) always has the same effect on both sides. Thus, the supplier’s tax liability is reduced or increased (Articles 90 and 73 of the VAT Directive), while the recipient’s input tax deduction increases or decreases proportionally (Article 186 of the VAT Directive). In that regard – this also distinguishes VAT law from income tax law – it is not the objective value of a supply which is decisive, but the value taken as the basis by the parties, as the Court only recently reiterated. ( 19 )
52. For that reason, Working paper No 923 of the VAT Committee also quite rightly states: ‘There is a tension between the transfer pricing rules set out for the purposes of direct taxation[,] which, based on the arm’s length principle[,] seek to arrive at the arm’s length valuation of a transaction (i.e. the open market value), and the VAT rules, generally based on the existence of a supply for consideration, where consideration is seen as a subjective value (i.e. the price actually paid)’. ( 20 )
53. The tax authority’s view of the correct transfer pricing may therefore have consequences under income tax law; it does not, in principle, have any consequences under VAT law. In the present case, the parties’ views as to the amount of the consideration remain decisive.
54. The VAT Expert Group’s entirely accurate statements also refer to this. According to those statements, such transfer pricing adjustments are outside the scope of the VAT Directive. ( 21 ) The VAT Expert Group states, however, that a distinction should be drawn between cases where the adjustment is provided for by contract and that, if there is an adjustment for previous supplies, that must lead to an adjustment of the taxable amount. ( 22 )
55. On the other hand, if, for reasons of income tax law, the tax authority unilaterally (and ultimately fictitiously) increases (or decreases) the profit subsequently, that does not constitute any change in the consideration agreed between the undertakings concerned. Therefore, in principle, that does not alter the services previously supplied in return for the agreed consideration (see Article 73 of the VAT Directive) and thus also does not alter the amount of the VAT due and already paid. However, that does not appear to be the situation in the present case.
3. Subsequent adjustment of an undetermined but determinable (variable) price
56. The present case concerns, rather, the subsequent adjustment of a price for the vehicles supplied, which, at the time of the agreement, was yet to be determined and was therefore designated by a reference price, but which could vary upwards or downwards depending on changes in various parameters. In that regard, it is entirely possible to speak of an undetermined but determinable (variable) price. According to the facts presented by the referring court, the decisive parameters are the costs borne by the purchaser (the applicant) (the applicant’s own distribution costs and the warranty costs borne by it) in connection with the distribution of the vehicles produced by the General Motors Group and purchased by the applicant.
57. At the end of each period, the transfer price was adjusted according to the operating profit previously agreed for the distribution unit (in this case, the applicant), such that the actual amount of the applicant’s operating profit was the same as the target amount of operating profit.
58. That method of calculating the sale price between the OEMs and the applicant ensured that the applicant retained the profit that had been allocated to it within the group, but no more or less. That profit allocated depends on the variables (its own distribution costs and the warranty costs borne by it), which were calculated subsequently for each asset purchased. Depending on the evolution of the variables, the purchase price increased or decreased subsequently.
59. For such situations, there are corresponding provisions in the VAT Directive governing the consequences under VAT law. There is therefore no need to construct fictitious supplies of services beyond the supplies made, particularly where those could lead to a negative price.
60. Article 90 of the VAT Directive expressly states that, where the price is reduced after the supply takes place, the taxable amount is to be reduced accordingly under conditions which are to be determined by the Member States. In this case, that would be the taxable amount of the supply to the applicant. At the same time, Article 73 of the VAT Directive covers subsequent price increases because, under that provision, the taxable amount of the seller’s supply is ultimately all it receives for its supply. That naturally includes subsequent increases of the purchase price.
61. Those two provisions clearly show that adjustments to the actual price of a supply change the taxable amount of that supply. When that is the case, such a change in the taxable amount cannot at the same time constitute a supply of services. A subsequent price adjustment therefore has an impact only on the taxable amount of the underlying transaction.
62. In other situations, the Court has already had to consider the effects of subsequent price changes and has always done so without assuming the existence of a (fictitious) service ‘by adjusting the contract’. Thus, comparable questions arise in customs law when the customs value is adjusted subsequently. While in the case in Hamamatsu ( 23 ) the Court held that a general adjustment of transfer prices without any specific reference to adjustments concerning the individual goods imported constituted an unforeseeable change with no effects under customs law, in the case in Tauritus ( 24 ) it considered the contractually agreed subsequent change of an undetermined but determinable (variable) purchase price of individual goods to be significant under customs law. That corresponds to the distinction proposed here according to the arrangements for adjusting a transfer price.
63. In my view, the Court’s ruling in the case in Arcomet Towercranes ( 25 ) does not preclude that conclusion. First, that case did not concern the adjustment of a transfer price, but the existence of a supply of services for consideration if the profit was too high or too low. Irrespective of whether the result is actually convincing in that specific case or whether fictitious services were in fact invoiced, the Court ultimately held only that there is a supply of services for consideration where the parties have contractually agreed on a supply of services for consideration, presumably on the assumption that the service was actually supplied.
VI. Conclusion 1 ( 2 ) See also, on this topic, Echevarria, G., The interplay between transfer pricing and Value Added tax: Recent Case Law , in EC Tax Review 2025/5, p. 201 (p. 207 et seq.).
64. I therefore propose that the question referred for a preliminary ruling by the Supremo Tribunal Administrativo (Supreme Administrative Court, Portugal) should be answered as follows: Article 2(1)(c) and Articles 73 and 90 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that the relevance, for the purposes of VAT law, of an adjustment of profits made for reasons of income tax law depends on what it relates to and how it is made. Where the adjustment of profits is made by means of separate supplies of services for consideration (creation of input and output) and there are not only fictitious supplies of services, those separate supplies of services for consideration constitute taxable transactions for the purposes of Article 2(1)(c) of Directive 2006/112. Where the adjustment of profits is made unilaterally and subsequently by the tax authority solely for the purposes of an appropriate allocation of profits between two tax-levying States, that is not, in principle, relevant for the purposes of VAT law. On the other hand, where, as in the present case, the adjustment of profits is made by means of a sale price which has been provided for precisely for that purpose and agreed to be variable and which relates to a specific supply of goods, that constitutes a reduction in the taxable amount under Article 90 of Directive 2006/112 or a further part of the taxable amount under Article 73 thereof in respect of the supply made. Since the change in the taxable amount of a supply relates solely to the consideration, it cannot itself constitute a ‘supply of services for consideration’ within the meaning of Article 2(1)(c) of Directive 2006/112.
( 3 ) Judgment of 4 September 2025, Arcomet Towercranes (C‑726/23, EU:C:2025:646).
( 4 ) Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1).
( 5 ) Council Directive of 28 November 2006 (OJ 2006 L 347, p. 1). 6 ( 7 ) See my Opinion in Zlakov (C‑744/23, EU:C:2025:332, point 39 et seq.) for further details.
( 8 ) At least according to the Court of Justice – see fundamental judgment of 20 June 1991, Polysar Investments Netherlands (C‑60/90, EU:C:1991:268, paragraph 13); see also judgments of 8 September 2022, Finanzamt R(Deduction of VAT linked to a shareholder contribution) (C‑98/21, EU:C:2022:645, paragraph 41 et seq.); of 8 November 2018, C&D Foods Acquisition (C‑502/17, EU:C:2018:888, paragraph 30 et seq.); and of 17 October 2018, Ryanair (C‑249/17, EU:C:2018:834, paragraph 16 et seq.). However, that is not entirely convincing and is therefore not without controversy – see my Opinion in Högkullen (C‑808/23, EU:C:2025:149, point 32 et seq.).
( 9 ) Judgment of 4 September 2025, Arcomet Towercranes (C‑726/23, EU:C:2025:646).
( 10 ) Opinion in Arcomet Towercranes (C‑726/23, EU:C:2025:244, point 38).
( 11 ) Opinion in Arcomet Towercranes (C‑726/23, EU:C:2025:244, point 32).
( 12 ) Judgment of 4 September 2025, Arcomet Towercranes (C‑726/23, EU:C:2025:646).
( 13 ) Judgments of 4 July 2024, Credidam (C‑179/23, EU:C:2024:571, paragraph 36); of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA (C‑846/19, EU:C:2021:277, paragraph 36); and of 3 March 1994, Tolsma (C‑16/93, EU:C:1994:80, paragraph 14).
( 14 ) Judgment of 27 April 2023, Fluvius Antwerpen (C‑677/21, EU:C:2023:348, paragraph 31).
( 15 ) Judgment of 4 September 2025, Arcomet Towercranes (C‑726/23, EU:C:2025:646, paragraphs 35 and 36).
( 16 ) Opinion of Advocate General Richard de la Tour in Arcomet Towercranes (C‑726/23, EU:C:2025:244, point 41 et seq.).
( 17 ) A possibly different conclusion is reached in the judgment of 4 September 2025, Arcomet Towercranes (C‑726/23, EU:C:2025:646, paragraph 48), and in the Opinion of Advocate General Richard de la Tour in Arcomet Towercranes (C‑726/23, EU:C:2025:244, point 48), which, however, did not address the argument to the contrary due to the specific facts of the case.
( 18 ) Within the European Union, there is now even Council Directive (EU) 2017/1852 of 10 October 2017 on tax dispute resolution mechanisms in the European Union (OJ 2017 L 265, p. 1) for that purpose. However, that directive covers only disputes arising from the interpretation and application of treaties and conventions which provide for the elimination of double taxation on income and, where appropriate, on capital.
( 19 ) Judgment of 3 July 2025, Högkullen (C‑808/23, EU:C:2025:516, paragraph 21), with reference to judgments of 25 November 2021, Amper Metal (C‑334/20, EU:C:2021:961, paragraph 28), and of 7 November 2013, Tulică and Plavoşin (C‑249/12 and C‑250/12, EU:C:2013:722, paragraph 33). 20 ( 21 ) See Working paper No 071 REV2 of the VAT Expert Group, taxud.c.1(2018)2326098 – EN, p 2. 22 ( 23 ) Judgment of 20 December 2017, Hamamatsu Photonics Deutschland (C‑529/16, EU:C:2017:984, paragraphs 18 and 31 et seq.).
( 24 ) Judgment of 15 May 2025, Tauritus (C‑782/23, EU:C:2025:353, paragraphs 60 and 61).
( 25 ) Judgment of 4 September 2025, Arcomet Towercranes (C‑726/23, EU:C:2025:646).