This article examines the intersections between Transfer Pricing (TP) and Value Added Tax (VAT), focusing on whether TP adjustments are relevant for VAT purposes. While TP is governed by the arm’s length principle, VAT is based on the consideration agreed between the parties, creating significant tensions. Through an analysis of the OECD Guidelines, the EU VAT Directive, and relevant legal doctrine, the paper focuses on the recent Arcomet case judged by the Court of Justice of the European Union (CJEU), concluding that a TP adjustment falls within the scope of VAT when it constitutes consideration for a specific supply of goods or services, and when a direct link exists between the adjustment and an identifiable supply
EC Tax Review