Transfer Pricing Adjustments Separate From VAT, ECJ Adviser Says

Stellantis Portugal SA’s practice of adjusting transfer prices in sales to dealerships shouldn’t be considered a service subject to value-added tax, according to an adviser for the European Court of Justice.

The adjustment of profits is “in principle alien to VAT law,” and isn’t considered a supply of services that Portugal can tax, Advocate General Juliane Kokott wrote in an opinion Thursday.

The opinion isn’t binding on the court, whose decision has yet to be scheduled.

The case concerns Stellantis’s policy of retroactively adjusting the prices of the vehicles it would sell to local dealerships to ensure a basic profit ...