Global VAT & Indirect Tax News

The article examines how transfer pricing adjustments can trigger VAT when they are considered payment for goods or services, citing the recent Stellantis Portugal Advocate General opinion. It highlights the need for multinationals to conduct structured reviews, document economic rationale, and maintain evidence to mitigate VAT risks, especially in finance and insurance sectors.

Bloomberg Tax’s commentary discusses how transfer pricing adjustments can create VAT exposure, citing recent ECJ cases and a Stellantis Portugal Advocate General opinion. It explains that adjustments tied to specific goods or services may be subject to VAT, while purely profit‑based adjustments may not. The article advises multinationals to conduct structured reviews and maintain documentation to mitigate risks.

The Advocate General opinion in the Stellantis Portugal case highlights uncertainty over whether transfer pricing adjustments constitute separate supplies of services and thus trigger VAT. The article reviews recent ECJ cases, outlines the need for structured VAT reviews, and stresses the importance of documentation for multinationals, especially those in finance and insurance sectors.

Portugal’s government has drafted a bill to cut VAT on construction for own permanent housing to 6%, but the Portuguese Association of Chartered Accountants (OCC) deems the proposal unworkable due to its reliance on post‑construction third‑party checks. The bill would apply only to properties for own use with a sale value not exceeding €648,000, and would require contractors to issue zero‑VAT invoices with developers self‑assessing. OCC warns that the uncertainty could force builders to absorb the difference between 6% and the standard 23% rate.

A non‑binding opinion from an EU Court of Justice adviser clarifies that Stellantis Portugal SA’s practice of adjusting sales prices for dealerships does not constitute a service and therefore is not subject to VAT. The opinion adds to a growing body of guidance on VAT treatment of transfer‑pricing adjustments and highlights the European Commission’s focus on closing the €128 billion VAT gap reported in 2023.

The article discusses the CJEU Advocate General’s opinion in the Stellantis Portugal case, clarifying that transfer pricing adjustments agreed between parties may affect VAT taxable amounts, while unilateral tax authority adjustments do not. It distinguishes between separate services and contractual price adjustments, noting that a change in taxable amount does not constitute a separate supply of services. The final judgment is pending, expected before summer 2026, giving businesses time to assess implications.

The Advocate General’s opinion in the Stellantis Portugal case (C‑603/24) clarifies that transfer pricing adjustments between group companies are to be treated as adjustments to the original prices of earlier sales, not as separate repair services. Consequently, corrective invoices must be issued and the VAT taxable base of those earlier supplies must be adjusted. The final CJEU judgment is expected later in 2026.

The Advocate‑General has clarified that transfer‑pricing (TP) adjustments made for direct tax purposes do not attract VAT, but TP adjustments that are contractually agreed within intra‑group supplies of goods are within the scope of VAT. In the Stellantis Portugal case (C‑603/24), the Portuguese tax authorities imposed VAT assessments on Stellantis Portugal for TP adjustments, and the Advocate‑General advised the European Court that such adjustments should be treated as price adjustments for vehicles. Businesses are urged to review their TP policies and implement VAT considerations in their ERP systems.

Portugal’s government has proposed a 6% VAT rate on construction and rehabilitation works for primary residences, targeting urban development projects initiated between September 2025 and December 2029. The measure applies to sales under €648,022 and rentals under €2,300/month, with specific timing and lease conditions, and includes amended reverse‑charge rules and potential VAT refunds for individuals.

An Advocate General for the European Court of Justice has opined that transfer price adjustments made by Stellantis Portugal to dealership sales are not subject to VAT, as they are considered alien to VAT law. The opinion, issued Thursday, is not binding on the court, and the ECJ decision remains unscheduled. The case centers on Stellantis's retroactive price adjustments to ensure a basic profit margin for local dealerships.

The article outlines how corporate income tax (CIT) and VAT planning, vehicle selection, and structuring choices can materially affect returns on Portuguese real estate investments. It highlights Portugal’s progressive CIT rate reduction, the special tax regime for SICs, and the conditions under which VAT exemptions can be waived to enable VAT recovery while preserving CIT benefits.

Portugal has extended its mandatory B2G e‑invoicing regime to all business sizes, with key deadlines moving into 2026 and 2027. The new rules require QR codes, ATCUD codes, and eventually Qualified Electronic Signatures (QES) for electronic invoices, while the eSPAP platform remains the official submission channel. SAP ECC and S/4HANA users must adopt the eDocument Cockpit and integration flows to remain compliant.

The Portuguese Tax Authority (AT) has clarified the rules for input VAT deduction on electric and plug‑in hybrid vehicles in Oficio Circulado n.º 25088. Key points include VAT liability on private use, non‑deductibility of maintenance expenses, and a 50% deduction for bi‑fuel vehicles. These changes affect how companies account for vehicle-related VAT and may require procedural adjustments.