Credit Note in Fiscalisation

How to account for VAT in the circumstance when you offer a discount on condition that something happens later (for example, on condition that the customer buys more from you) or a customer fails to pay full amount based on the installment that previously agreed upon?

Firstly you issue invoice with tax value based on the full amount contained on the invoice. If customer later earns the discount, or the tax value is reduced based on the failure to pay, it is common practice to issue a credit note.

When you allow a credit or contingent discount to a customer who can reclaim all the tax on your supply as input tax, you do not have to adjust the original VAT charge provided both you and your customer agree not to do so. Otherwise, you should both adjust the original VAT charge. You should issue a credit note to your customer.

If both parties agree, the customer may issue a tax debit note instead of the supplier issuing a credit note. A valid debit note places the same legal obligations on both parties as a valid credit note and must fulfill the same conditions.

When jurisdiction decides to introduce fiscalisation, it’s important to know that many models won’t support credit note as a settlement method. For a legislator it is important to evaluate what impact will introduction of a fiscalisation model that lacks to support discounts, refunds and credit notes have on taxpayer’s business. Many will argue that credit note is a tool for tax avoidance, but does it really have to pose such risk? Learn how SDC system can handle this issue, contact us.