EU VAT law and central procurement: advantages and challenges

Multinational companies often have a central procurement function to negotiate with suppliers and streamline processes.
However, there are concerns over whether EU VAT law allows for a compliant and tax-neutral central invoicing process.
The key question is whether the central procurement can be broken down into two taxable supplies, from the supplier to the central procurement entity and from the procurement entity to the using entity.
If the central procurement entity is not considered the recipient of the supply, then a central invoicing process cannot be organized.
The CJEU case law suggests that a central procurement entity may not be able to dispose of goods as if it were the owner, making it doubtful whether the transaction between a supplier and a central procurement entity can be considered a taxable supply.
However, the commission agent’s principle, which creates a legal fiction of two identical supplies provided consecutively, may be relevant in central procurement structures.