Corrective tax document at 8. If you are an avid crossword puzzle lover you know that this is just a credit note. The term credit note used to be used in the past, but nowadays the legislation refers to it as a corrective tax document for an invoice. As the name suggests, it is issued by VAT payers.
What is a credit note?
A credit note, formerly known as a debit note, is now called a corrective tax document. Its requirements are regulated by Section 45 of Act No. 235/2004 Coll., on Value Added Tax, as amended.
It is a document which corrects a regular document, most often an invoice. The credit note is issued only by VAT payers. For non-payers of VAT it is sufficient to issue only a cancellation invoice.
When do we issue a credit note?
We will issue a credit note to the buyer at the moment when, for example:
- a product complaint where the customer returns all or part of the product to you,
- cancellation of a delivered service or goods (e.g. you mistakenly send and invoice for something the customer did not order),
- a price reduction due to a quantity discount on goods or services already purchased (invoiced).
You must issue a credit note within 15 days of discovering the above. You must also make an effort to deliver the credit note to the buyer within that period. It is no longer necessary for the customer to acknowledge receipt of the credit note, it is sufficient if you deliver it to the buyer in the same way as the invoice.
Particulars of a credit note
A credit note has almost the same form as an invoice. Unlike an invoice, however, it contains amounts with a negative minus sign.
The law defines the mandatory elements that a credit note MUST have. These are:
- identification data of the seller and the buyer (the same as on the invoice)
- the registration number of the original tax document (number of the invoice issued)
- the registration number of the corrected tax document
- the reason for the correction
- the difference between the corrected and original tax base
- the difference between the corrected and the original tax
- the difference between the corrected amount and the original amount to be received by the seller
- the date on which the taxable transaction took place (the 'DTAP').
If you issued a simplified tax document, you do not have to include the buyer's identification data, the difference between the corrected and original tax and the difference between the corrected and original tax base in the credit note.
Accounting for the credit note
There are two ways of accounting for a credit note:
1. Post the credit note to the same accounts and pages as the invoice with a negative amount (with a minus).
2. Post the credit note on the opposite side of the invoice with a positive amount (with a plus).
How to issue a credit note - model?
If you use our on-line system, you can issue a corrective tax document conveniently in it. In the Invoice type field, just select Correction tax document. Detailed instructions including a clear template can be found on our website.