Intercompany Invoice Template

What This Template Includes

• Legal names and registration numbers of both companies
• Intercompany agreement reference and date
• Transaction type: goods, services, cost recharge, royalty or interest
• Period covered
• Cost base and allocation key (for example headcount share)
• Pricing method or markup under the group's transfer pricing policy
• Currency, and exchange rate and date if converted
• Receiving company's matching purchase reference
• Settlement: cash payment or intercompany netting

How to Create Your Intercompany Invoice

Recommended Payment Terms

Use the terms written in the intercompany agreement and apply them consistently. Intercompany balances that are never settled, or settled years late, can raise questions of their own, because unrelated companies would normally expect to be paid on agreed terms. Many groups settle monthly or quarterly, either by actual payment or through a netting process that offsets what each company owes the others; whichever you use, put it on the invoice ('Settlement via group netting, November 2026 cycle') so both finance teams close the balance the same way.

Need help writing payment terms? Read our guide to invoice payment terms for best practices and templates.

Tax Information

Two different taxes are involved. For corporate income tax, prices between associated companies are expected to follow the arm's length principle: the OECD Transfer Pricing Guidelines describe it as the international consensus for valuing cross-border transactions between associated enterprises, and in the US the IRS says section 482 lets it adjust the income of commonly controlled taxpayers, with regulations requiring results consistent with what uncontrolled taxpayers would have realised in the same transaction under the same circumstances. For VAT or GST, an intercompany invoice is usually treated like any other supply between separate businesses: in the UK, HMRC's VAT Notice 741A says business-to-business services are generally supplied where the customer belongs, so no UK VAT is charged to an overseas group company, while HMRC's VAT Notice 700/2 says supplies between members of the same UK VAT group are in most cases disregarded and need no VAT invoice. Documentation duties, penalties and methods differ by country and are outside what an invoice can show. This is general information, not tax advice; take advice from a transfer pricing specialist. Last reviewed October 2026.

Industry context (2026)

Intercompany invoices sit where two sets of rules meet. On pricing, the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (January 2022 edition) give guidance on applying the arm's length principle, described by the OECD as the international consensus on valuing cross-border transactions between associated enterprises. In the US, the IRS says section 482 authorises it to adjust the income, deductions, credits or allowances of commonly controlled taxpayers, and its regulations look for results consistent with what uncontrolled taxpayers would have realised in the same transaction under the same circumstances. On accounting, IFRS 10 (paragraph B86(c)) requires a group to eliminate in full intragroup assets, liabilities, income, expenses and cash flows, which is why mismatched intercompany invoices are a routine month-end problem. On indirect tax, the invoice is treated like any other business supply, subject to place-of-supply rules and, in the UK, the VAT group regime. Each of these is specialist territory; this page explains what an invoice should show, not how to set or defend a price.

Worked example

Common mistakes to avoid

Invoicing Tips

• 1Issue intercompany invoices under a signed intercompany agreement and quote it on every invoice. The agreement, not the invoice, sets the pricing method.
• 2Show how the amount was built: cost pool, allocation key, share, markup. A single 'management fee' line is the hardest kind of intercompany charge to support.
• 3Give each company its own invoice number series. Two legal entities should never share a counter or a prefix.
• 4Agree the amount with the receiving company before month-end and put their purchase reference on the invoice, so both ledgers match and eliminate cleanly.
• 5If you convert currency, state the rate, its source and date on the invoice, and use the same rate in both companies' books.
• 6Keep cost recharges at cost separate from services sold with a markup. Mixing them makes it impossible to see which pricing method applied.

Related Resources

• All invoice and business document templates
• Invoice number best practices: why separate companies need separate sequences
• Reverse charge: glossary definition
• Reconciliation
• Accounts receivable

Frequently Asked Questions