What’s a credit note?
You have probably heard of it; the credit invoice. A credit invoice is a negative invoice, with which you (partially) correct a previously sent invoice. A credit invoice must meet the same requirements as a normal invoice, such as a date, description, unique invoice number and amounts. The big difference, however, is that the amounts are negative.
When do you send a credit invoice?
There are several times when it may be necessary to send a credit invoice.
You made a mistake in the original invoice, because you forgot to process the agreed discount. Normally, the fee for your work is € 1,000 excluding VAT. You invoice your client for this amount. However, you have agreed with your client a discount of € 100 excluding VAT. In order to pass on this discount, you send a credit invoice of € 100 excluding VAT. So, on balance, you have invoiced € 900 excluding VAT.
You cannot, for whatever reason, deliver your product or service, but the payment has already been made by your customer. Your customer has ordered a print of € 150 excluding VAT. You are unable to deliver this print and you have agreed with the customer to refund the purchase amount. You create a credit invoice for € 150 excluding VAT and have therefore not invoiced anything on balance. After this, you transfer the overpaid amount back to your customer.
A more annoying example is if a client is unable or unwilling to pay for your services. The invoice is already in your accounts and you will have to pay tax over it. If it is clear that your invoice will not be paid, you can decide to credit this invoice fully. When you choose to do this, you also add in the original claim you had on your customer. They don’t have to pay this anymore.
In the administration
You process a credit invoice in your income. This means that there are always two invoices in your accounting that cancel each other out. It is therefore not the intention that the original invoice is deleted! Each credit invoice has its own, unique invoice number. If you order your invoices like this: 2022001, 2022002 etc. then you give the credit invoice number 2022003. You can optionally add a C (for credit) before the invoice number to make clear that it is a credit invoice. In addition, state on the credit invoice, for example in the subject field, the invoice number of the original invoice. This way it is clear against which invoice this will be cancelled.
As with a normal invoice, the invoice date is leading for the VAT return. If the original invoice was sent in a different period than the credit invoice, you will therefore first have to pay the VAT according to the original invoice. In the period of the credit invoice you can reclaim the credited VAT in the VAT return.