ARTICLE · 10 APRIL 2025

The VAT Consequences Of Transfer Pricing Adjustments

Grant Thornton Malta

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For years, multinational enterprises have navigated uncertainty at the intersection of VAT and transfer pricing (TP) regulations. The central question remains unresolved: Are TP adjustments simply outside VAT's scope...

MaltaTax

Grant Thornton Malta

For years, multinational enterprises have navigated uncertainty at the intersection of VAT and transfer pricing (TP) regulations. The central question remains unresolved: Are TP adjustments simply outside VAT's scope, or do they represent modified consideration for goods or services that should attract VAT?

As organizations fine-tune their intra-group pricing to meet arm's length requirements, the tax implications extend beyond direct taxation. This pivotal issue has now reached the European Court of Justice, with far-reaching consequences for tax compliance across the EU.

On 3 April, 2025, the Advocate General issued an opinion in the significant ECJ Case C-726/23 (Arcomet Towercranes), which addresses the complex intersection between transfer pricing and VAT in EU tax law.

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