On 13 May 2026 the Court of Justice of the European Union delivered its judgment in Stellantis Portugal (C-603/24), holding that a transfer pricing adjustment which exists only to bring a group company to a target profit margin is not, by itself, consideration for a supply of services, and so falls outside the scope of VAT. The judgment is the fourth in a line the Court has built since late 2024, alongside Weatherford Atlas Gip (C-527/23), Högkullen (C-808/23) and Arcomet Towercranes (C-726/23). Read together, the four judgments set the current EU position on when an intra-group payment is a VATable supply, when input VAT on intra-group services is deductible, and what a tax authority may require before allowing that deduction. For any group with management charges, service fees or margin true-ups moving between a holding company and its subsidiaries, the operational consequence is the same: the VAT characterisation of each intra-group flow has to be supported by a contract and by evidence of the service actually rendered, not assumed from the invoice.
Stellantis is a Portuguese reference, decided on the Portuguese tax authority’s treatment of an intra-group adjustment, which makes the line directly material for any group with Portuguese entities. This note sets out what Stellantis decides, how the three earlier judgments frame it, the combined reading for intra-group service arrangements, and the position for Madeira-based group structures.
What the Stellantis judgment decides
Stellantis Portugal, S.A. (formerly General Motors Portugal) bought vehicles from manufacturers within the General Motors group and resold them to independent dealers. Under an internal agreement, the transfer prices the manufacturers charged were adjusted up or down, through credit and debit notes, so that Stellantis Portugal reached a predetermined profit margin once warranty and other operational costs were taken into account. The Portuguese tax authority treated that adjustment as consideration for a service supplied by Stellantis Portugal to the manufacturers, and assessed VAT on it.
The Court disagreed. For a payment to be consideration for a supply of services, there must be a direct link between an identifiable service and the remuneration for it, in the form of a legal relationship of reciprocal commitments. An adjustment whose purpose is to bring a company to a target margin, computed from a range of costs, does not establish that link. The Court added that the uncertain nature of the remuneration itself works against a direct link: whether anything is paid at all, and in which direction, depends on where the margin lands. Absent a reciprocal service obligation, the adjustment is not a separate taxable transaction. It is more properly treated as a modification of the price of the goods originally supplied.
The three earlier judgments
Stellantis sits at one end of a line the Court has been drawing since 2024. The other three judgments address the adjacent questions.
In Weatherford Atlas Gip (12 December 2024), the Court held that the right to deduct input VAT on intra-group services cannot be refused on the grounds that the same services also benefited other companies in the group, or that the tax authority considered them unnecessary, provided the services were used for the recipient’s own taxable transactions. The right to deduct is a fundamental feature of the VAT system and does not yield to a subjective view of what a company needed.
In Högkullen (3 July 2025), a Swedish holding company supplied management and financing services to its nineteen subsidiaries. The tax authority sought to treat the whole as a single, unique supply whose value could not be tested against comparables, and to revalue it by reference to total expenditure. The Court held that parent-to-subsidiary services cannot be categorically bundled into a single supply. They are to be assessed individually, and their open market value can be established by the comparative method.
In Arcomet Towercranes (4 September 2025), a subsidiary paid its parent a fee, calculated by an OECD transfer pricing method, for services including strategic planning, contract negotiation, financial management and operational support. The Court held that where the services are genuine and contractually detailed, the margin-based fee is consideration for a VATable supply. It also held that a tax authority may require a taxable person claiming deduction to produce documents beyond the invoice, to prove the service was actually rendered and used for taxable activity, provided the request is necessary and proportionate.
The combined reading
The four judgments do not pull in different directions. They mark the boundary of a single principle, that VAT follows the substance of the transaction and not its label.
Whether an intra-group payment carries VAT turns on the direct link, not on the transfer pricing characterisation. Arcomet and Stellantis are the two sides of that test. Arcomet‘s fee bought a defined, contracted service and was VATable; Stellantis‘s adjustment bought nothing identifiable and was not. The same instrument, a margin true-up through credit and debit notes, fell inside VAT in one case and outside it in the other, because the underlying substance differed.
Where there is a genuine service, input VAT on it is deductible, and the deduction survives both the fact that group companies share the service and the tax authority’s doubt about its necessity (Weatherford). But the deduction has to be earned with evidence. Arcomet confirms the invoice is not the end of the matter; the taxable person carries the burden of showing the service was real and was used for its taxable activity. And valuation cannot be done by aggregation: Högkullen stops a tax authority bundling diverse services into one unquantifiable supply in order to defeat a market-value comparison.
For a group, the practical consequence is that intra-group service arrangements should be documented as what they are. A management charge or service fee should rest on a contract that names the service, and on records, such as reports, deliverables and time records, that show it was performed. A margin adjustment should be characterised deliberately: if it pays for a service, it is invoiced with VAT; if it is a true-up of the price of goods, it is handled as a price modification referencing the original supply. An adjustment note with no underlying agreement is the exposure these judgments identify.
The position for Madeira group structures
Entities operating in Madeira are subject to the ordinary Portuguese and EU VAT rules. The MIBC regime confers a reduced IRC rate and is not a VAT regime. A Madeira holding company that charges management or service fees to operating subsidiaries, or that receives margin adjustments from elsewhere in a group, is within the scope of these judgments on the same terms as any other Portuguese entity.
For investors structuring or reviewing a Madeira group, the point to map at the design stage is the documentation: the intra-group service agreements, the basis on which fees are calculated, and the evidence that will be available if the characterisation is questioned. A structure that is sound for IRC and substance purposes can still carry a VAT exposure if the intra-group flows are not documented to the standard these judgments now require.
Where MCS can assist
MCS advises on the review of intra-group service arrangements against the position set by these four judgments, including the drafting and review of intra-group service agreements, the characterisation of margin adjustments and true-ups, and the documentation that supports input VAT deduction on intra-group services. We advise on the interaction between a group’s transfer pricing policy and its VAT position, and on the review of existing arrangements for groups with MIBC-licensed entities.
The procedural next step for any group concerned about its exposure is a scoping review of the intra-group flows, the agreements behind them, and the supporting evidence, against the direct-link and documentation standards set out above. Engagements are quoted on the basis of that review.
Contact MCS for a scoping discussion at the addresses on www.mcs.pt.
This article is provided for general information purposes on Intra-group Services VAT only and does not constitute legal, tax, financial, or migration advice. The content reflects the legal and regulatory framework in force at the date of publication; subsequent amendments to the relevant statutes, regulations, administrative orientations, or jurisprudence may render parts of the content inapplicable. At the date of preparation of this article, the descriptions of the four judgments set out above reflect the publicly available accounts of Stellantis Portugal (C-603/24), Weatherford Atlas Gip (C-527/23), Högkullen (C-808/23) and Arcomet Towercranes (C-726/23); the case references, the dates of judgment, the holdings, and the reasoning should be verified against the published text of each judgment on the Court of Justice of the European Union’s database before any decision is taken. No professional or client relationship is created by the reading of this article, and readers should not act, or refrain from acting, in reliance on the content without obtaining advice tailored to the specific facts of their situation. Madeira Corporate Services accepts no liability for any decision taken on the basis of this article in the absence of a formal engagement.
Miguel Pinto-Correia holds a Master Degree in International Economics and European Studies from ISEG – Lisbon School of Economics & Management and a Bachelor Degree in Economics from Nova School of Business and Economics. He is a permanent member of the Order of the Economists (Ordem dos Economistas)… Read more
