These two agreement templates are typically used in combination in a situation whereby a group utilizes a group company for re-invoicing services (operating as a sort of ‘cash collection agent’). Such a situation may occur, e.g.,  in case customers would prefer or require receiving an invoice from a group company in a particular country, whereas the actual activities are conducted by a group company in another country.

In this context, one could think of a post Brexit situation whereby European customers would prefer to receive an invoice from a European group company, whilst the actual activities (e.g. services or procurement and sales of products) are conducted by a UK group company. Instead of a direct invoice from the UK group company to the customers, the UK group company invoices the reinvoicing company, which in turn invoices the European customers. As such payments made by the European customers for the products or services will initially be made to the reinvoicing group company. On the basis of transfer pricing rules, the UK group company would be entitled to these payments (except for a service fee for the reinvoicing services rendered).

The reinvoicing agreement would arrange that the payment of the European customers is received by the reinvoicing group company, under the obligation to on pay the same amount to the UK group company. The administrative support agreement provides that the reinvoicing group company receives an appropriate remuneration for these reinvoicing (or cash collection) services.

This agreement template is used to state the rights and responsibilities of the parties to the agreements and to substantiate the at arm’s length character of the intercompany transaction on the basis of costs with an appropriate profit mark-up. Common terms in this agreement template inter alia cover the duties of parties, service fee, record and reporting requirements, limitations of liability and termination.