Pro-forma invoice - What is a pro-forma invoice?

 

As we have seen in previous articles in our blog there are different documents that can appear in a commercial relationship, documents such as budgets, delivery notes, invoices ... today we will talk about the Pro-forma Invoice which is a document that is sent to a buyer in certain circumstances - usually before all of the invoice details are known.

The first thing we must realize is that this specific kind of invoice called Pro-forma cannot be accounted, since it's not a true invoice – it is simply a document that declares the seller’s commitment to provide the goods or services specified to the buyer at certain prices. The pro-forma invoice is a mirror of a real bill and would be similar to a budget which includes in all the fields that have the actual invoice when issued.

Then this would be a kind of draft bill, but not a full vat invoice, the only difference may be the express mention that we have a pro-forma invoice, which is required to note in a conspicuous place so as not to cause confusion with a proper invoice.The pro-forma invoices should include the following content:

• Identification of the sender and receiver name, address, VAT registration number, registration number and identification of economic operators (EORI)• date of issue
• accurate description billed items: quantity, price, total amount, number of packages, gross weight, net weight and volume.
• Currency of the invoice.
• Terms of delivery.• Payment.• Taxes.• Incoterm.• References to order.
• Transport costs.• Other expenses.

The most widespread use of pro-forma invoice is in international trade, the exporter issuing the pro-forma so that the buyer can have all the required information on the goods he will receive.If the pro-forma invoice is accepted by the buyer the document may serve to corroborate the data exporter sale. It can also serve to open a letter of credit in the importer's bank and as a means to declare the value of the goods at customs.
For this signed the pro-forma invoice sender and recipient, a compromise between both parties is established and acquires the character of contract of sale, whichever establish a legal framework in which it is detail that legislation resolve any conflicts that may arise between the derived parts of any breach.

But it is important to know that the pro-forma invoice is not a final or definitive document so cannot be used to deduce the expenditure made in the business accounts. You can’t reclaim VAT using a pro-forma invoice as you cannot do it using an invalid invoice, statement or delivery note. According to the tax authorities, pro-forma invoices are not VAT invoices, and therefore should be marked with the words 'This is not a VAT invoice'.

If the recipient accepts the goods or services offered in the pro-forma invoice and you in turn supply them, then you must issue a proper VAT invoice within the appropriate time limit.

For further details do not hesitate in contact VP Advisers..