Every business, online or physical, has faced this situation: Can I cancel an invoice? And if I can, how do I do it?
If the invoice has already been issued, any cancellation or modification must be made under the regulations of Royal Decree 1619/2012. Otherwise, when the time comes to settle the tax credit, problems will arise.
This Royal Decree applies to both ordinary invoices and electronic invoices generated from your ecommerce, as indicated by the Ministry of Finance. The e-invoice is an electronic document, and must comply with the same legal requirements as the traditional paper invoice.
In both cases, an erroneous and already issued invoice can only be legally corrected with:
- A credit note
- A correction invoice
In this article, we will focus on cancelling an invoice and making a credit note.
Table of Contents
When can I cancel an invoice
The reasons why a company can make a cancellation of invoice or e-invoice, can be, among others:
- The product has not been received, even though it has been paid.
- A service has not been performed, even if it has been paid
- Directly when a product has been returned
It is only possible to cancel an invoice if it has just been sent and is not included in a closed accounting quarter. That is to say: they do not have the VAT settled. In this case, we cancel the invoice and issue a credit note.
If the invoice, or the electronic invoice, has an error (data is missing, taxes have been miscalculated) and the accounting/administrative quarter is already closed and settled, a corrective invoice must be issued, which we will discuss in another article.
One of the common questions is: can I cancel an invoice even if the tax period in which it was registered has already passed? The AEAT says yes.
What is a credit note?
The credit note is a legal document in which the refund is recorded, by including all the final amounts in negative of the invoice to be cancelled. In this way, for practical purposes, it is as if the other invoice were cancelled. And the tax authorities are aware that this money is no longer in the company’s cash box.
The credit note is made like a normal invoice, but clearly identified as a credit note. The customer should receive the note along with a copy of the original invoice, and the reversal of the financial amount should be visible.
Returning to the Inland Revenue, you should keep your old invoices, even if they are “cancelled” with a credit note, in case you ever have an inspection by the Inland Revenue. This way you can prove that the credit note was made on the basis of an actual invoice.
How to cancel an invoice.
Taking into account all of the above, to cancel an invoice, it is necessary:
- Making the new invoice, where it is clear that it is a “credit note”.
- Assign it a number that corresponds to the series of invoices that have already been issued. It should not be correlative to the invoice you are cancelling, but if in the current accounting period you have 22 invoice or invoices, the note would be 23.
- Include the reference number of the cancelled invoice.
- And don’t forget to include the amounts that have been cancelled, in negative.
Invoice errors can occur, as humans, for different reasons. And it is important to know how to handle such erroneous invoices, for example to make cancellations.
With our ERP software, which allows a comprehensive management of your business, you can manage all your invoices, both ordinary invoices or invoice, as e-invoices or electronic invoices. You can ask for information, if you wish.