Intercompany rebilling is a key tool for managing finances within many groups, subsidiaries, and business networks in France. Rebilling is when a company invoices another company for the cost of services or purchases. While intercompany rebilling offers many operational advantages, it also presents significant tax implications and can expose companies to serious legal risks if the process isn’t properly managed.

This article covers intercompany rebilling, its advantages for French companies, how to implement it, and the tax regulations to follow when rebilling.

What’s in this article?

• What is intercompany rebilling?
  
• What are the advantages of intercompany rebilling?
  
• What costs can be rebilled?
  
• What tax regulations apply to rebilling?
  
• How does intercompany rebilling work?
  
• How Stripe Invoicing can help
  

What is intercompany rebilling?

Intercompany rebilling, also known as intercompany invoicing, is when a company invoices another entity within the same group (e.g., parent company, subsidiary, sister company) for costs incurred as a result of a service rendered, a purchase, or the sharing of assets within the framework of a joint project.

The purpose of rebilling is to capture the actual expenses and revenue for each entity within a group by making the entity directly benefitting from a good or service responsible for those costs. This aligns economic reality with tax and accounting practices, ensuring that expenses and profits are fairly distributed among the companies involved. In addition, rebilling makes it possible to justify to the French government the financial flows between companies within the same group.

What is the difference between rebilling and disbursements?

Rebilling refers to expenses incurred by a company on its own behalf in connection with a project or service. Disbursements are expenses incurred on behalf of a third party (e.g., a customer or other entity within the same group). In the case of disbursements, the invoice is issued in the name of the final entity and not in that of the company that advanced the funds.

In addition, disbursements are always exempt from value-added tax (VAT), but generally, intercompany rebilling must include VAT.

What are the advantages of intercompany rebilling?

For companies within the same group, rebilling’s main purposes are to achieve economies of scale, optimize resource management, and ensure financial transparency, which facilitates tax and accounting management as well as decision-making. The advantages of intercompany rebilling include the following:

Economies of scale

Intercompany rebilling centralizes purchasing and support functions for multiple companies within a single group, and redistributes the costs between the receiving companies. The centralized nature of this process increases purchase volumes and strengthens the group’s negotiating power (e.g., better rates, better terms, faster delivery).

In addition, rebilling avoids duplicate contracts, software applications, or service providers, allowing the group to reduce costs and improve efficiency. Each receiving company pays its actual share.

Resource optimization

Centralizing expertise, tools, and support functions within the group avoids duplication in each receiving company. A single team, software application, or infrastructure can serve multiple entities, depending on the needs of each project. This reduces waste and redundancy.

Intercompany rebilling encourages more efficient use of resources and better allocation of means.

Financial transparency

Rebilling makes each company’s actual costs visible and trackable. Each expense is assigned to the company that is benefitting from the services or resources. This avoids implied transfers or flows that are not justified. With rebilling, accounts reflect the economic realities of business activities (costs and revenues). For company leadership, intercompany rebilling provides a reliable view of costs, margins, and performance for each company, enabling them to make better strategic decisions.

In addition, in the event of an inspection or audit, rebilling provides clear justification for financial flows between companies within the same group. Each flow is supported by an invoice, an agreement, and a consistent calculation method.

What costs can be rebilled?

All expenses incurred by a company for services or goods provided to another company within the same group are rebillable. In general, expenses related to the following are rebillable:

• Acquisition of goods (such as computer hardware)
  
• Human resources management (e.g., travel expenses, staff service expenses, lodging costs)
  
• Recruiting
  
• Marketing and communications
  
• IT systems
  
• Use of a common headquarters
  

What tax regulations apply to rebilling?

In general, intercompany rebilling is subject to the normal VAT rate of 20%. The company incurring the expense must, therefore, invoice the receiving company for VAT. The latter is able to recover it. However, there are cases where VAT is not due or where the rebilled company cannot recover it, including the following:

• When incurred expenses are rebilled at a price lower than the cost price (i.e., the sum of costs incurred for production and distribution of a good or service), no VAT is due because rebilling is considered to be a disbursement. However, these expenses must meet specific requirements.
  
• When incurred expenses do not qualify for deductible VAT (e.g., lodging costs, travel expenses), VAT must be included, but the rebilled company will not be able to recover it.
  
• When costs are rebilled to a foreign company and not subject to VAT, VAT must be included, but the rebilled company will not be able to recover it.
  

How does intercompany rebilling work?

To rebill expenses, a company must follow specific steps to ensure that financial flows are legally compliant. The steps for intercompany rebilling are as follows:

• Identify the expenses to rebill
  Expenses incurred by one company for the benefit of another within the same group must be clearly identified, itemized, well-documented, and trackable.

• Define objective distribution criteria
  Define objective criteria that accurately reflect the use or benefit of the expenses incurred, such as time spent for human resource expenses, number of users for a software application, occupied surface for shared office space, volume processed for marketing expenses, etc.

• Define a standard transfer price
  For companies within the same group but located in different countries, the company that is rebilling must define a standard transfer price that corresponds to the price at which a company transfers tangible goods or provides services to associated companies (i.e., the actual cost of the resources plus an appropriate profit margin). This transfer price is considered standard when the transactions are invoiced at the same prices and under the same terms as if they had been concluded between independent companies.

A business must bill another entity the same amount that it would bill an independent company.

• Draft a rebilling agreement
  A rebilling agreement, also known as a service agreement, defines the type of expenses incurred, the duration of the agreement, the division of responsibilities between each entity, and the billing and payment terms. The rebilling agreement also strengthens intragroup relationships and justifies the group’s legitimacy and relevance to the tax authorities.

• Issue a compliant invoice
  The invoice issued to the receiving company must contain all mandatory information required by law: issue date, company details (e.g., name and address, SIRET number, commercial register, VAT number), detailed accounting of the good or services invoiced, unit price pretax, total amount pretax, VAT amount, grand total with all taxes included, etc.

• Track financial flows
  The company that advances funds and the company that reimburses funds must correctly record invoices in their accounting systems.

• Preserve supporting documents
  The companies involved in rebilling must preserve all documents substantiating financial flows to ensure full transparency and, in the case of an audit, demonstrate the rebilling’s legality. These documents include supplier invoices, service agreements, allocation keys.

How Stripe Invoicing can help

Stripe Invoicing simplifies your accounts receivable (AR) process—from invoice creation to payment collection. Whether you’re managing one-time or recurring billing, Stripe helps businesses get paid faster and streamline operations:

• Automate accounts receivable: Easily create, customize, and send professional invoices—no coding required. Stripe automatically tracks invoice status, sends payment reminders, and processes refunds, helping you stay on top of your cash flow.

• Accelerate cash flow: Reduce days sales outstanding (DSO) and get paid faster with integrated global payments, automatic reminders, and AI-powered dunning tools that help you recover more revenue.

• Enhance the customer experience: Deliver a modern payment experience with support for 25+ languages, 135+ currencies, and 100+ payment methods. Invoices are easy to access and pay through a self-serve customer portal.

• Reduce back-office workload: Generate invoices in minutes and reduce time spent on collections through automatic reminders and a Stripe-hosted invoice payment page.

• Integrate with your existing systems: Stripe Invoicing integrates with popular accounting and enterprise resource planning (ERP) software, helping you keep systems in sync and reduce manual data entry.

Learn more about how Stripe can simplify your accounts receivable process, or get started today.