Pro forma invoice: it looks like an invoice, but it is not one
It does not appear in the invoicing regulations for a simple reason: it is not a tax document. It is a quote that looks like an invoice.
An informative document that looks like an invoice but has no tax effect: it does not trigger the chargeable event, it is not entered in the books and it does not allow a deduction.
The pro forma is not governed by RD 1619/2012 because it performs no function the regulations recognise. It does not trigger VAT, it does not go into the record book of invoices issued, it gives whoever receives it no right to deduct and it evidences no income.
What it is really for
- Letting the client process the payment. Many companies and every public authority need a document with amounts on it before they can open the spending file.
- Asking for an advance before the service has been provided.
- Declaring a customs value on a shipment outside the European Union.
- Evidencing a purchase to a third party: a bank, a grant scheme, a business partner.
Two practical precautions: the word «proforma» has to be clearly visible, and the document must not carry a number from your official series. If it does, that number is compromised and you will have to explain why there is no invoice behind it.
The moment it stops being enough
As soon as money comes in, the pro forma falls short. Article 75.Two of the VAT Act is categorical: on advance payments the tax becomes chargeable when the money is received, for the amounts actually received.
With numbers: a pro forma for €3,000 plus €630 of VAT so that the client can process the payment. The day the €1,815 of the 50% comes in, you have to issue a real invoice for €1,500 of base and €315 of VAT, which goes into the current quarter even if the work has not started.
The mistake that comes up most
Working all year with pro formas and invoicing “when the client pays”. VAT becomes chargeable with the transaction or with the advance payment, not with the invoice, so that delay does not delay the tax: it just leaves the transaction undocumented and the quarter wrongly filed.
Where this carries on in Cairos: Quotes that turn into invoices.
Terms that go with this one
Almost no tax concept makes sense on its own. These three are the ones that most often turn up beside it.
Delivery note
The document evidencing the delivery of goods and its date; it is not an invoice and has no tax effect on its own.
InvoicingAdvance on account
Money the client hands over in advance, which triggers VAT if it is on account of your work and does not if it is to pay costs in their name.
VATDevengo (the chargeable event)
The moment a transaction is treated as having taken place and the tax obligation arises, regardless of when it is paid for.
This, handled without thinking about it
Cairos keeps the invoices, the record books and Hacienda's forms from the same data, so the theory on this page turns into boxes that are already filled in.
No card and no minimum term.