What is a pro forma invoice?
A pro forma invoice is a commercial document that serves as a sales offer and informs the buyer about the conditions of a future transaction, but it is not an accounting document or a payment obligation. It is issued before the delivery or service is provided and is used to determine the price, quantity, payment and delivery conditions. A pro forma invoice is often used in international trade, where it serves as the basis for customs formalities, obtaining a letter of credit or confirming the terms of the order before the actual VAT invoice is issued.
Frequently asked questions (FAQ)
1. What information does a pro forma invoice contain?
The pro forma invoice should have the heading “Pro forma invoice” to distinguish it from a VAT invoice. It should also include the details of the seller and buyer, including the company name, address and VAT number or other tax identifiers. This document must have a number and date of issue for reference purposes. Another important element is the description of the goods or services, including the name, quantity, unit price and total value. It should also specify the payment terms, such as the method and date of payment, as well as the delivery terms – e.g. according to Incoterms (FOB, CIF, EXW). For international transactions, it is also necessary to indicate the currency of the transaction.
2. What is the difference between a pro forma invoice and a VAT invoice?
A pro forma invoice differs from a VAT invoice in several ways. While a pro forma invoice serves as a commercial offer, a VAT invoice is an accounting document. A pro forma invoice does not oblige you to pay, whereas a VAT invoice is the basis for payment. Furthermore, a pro forma invoice is not subject to accounting and does not include VAT, whereas a VAT invoice must include the tax due and is the basis for the delivery of goods or the provision of services.
3. When is a pro forma invoice used?
A pro forma invoice is used in various situations. It can be used as a quote for the customer before finalizing the transaction, allowing them to accept the terms of purchase. It is also used as a basis for customs clearance in import and export. In some cases, banks require a pro forma invoice to release financing or set up a letter of credit. In addition, this invoice is used in tenders and business negotiations as a document presenting the terms of cooperation.
4. Does a pro forma invoice oblige me to pay?
A pro forma invoice is not a document that obligates you to pay and does not create a tax liability. Only a VAT invoice or another accounting document is the basis for payment. This means that a pro forma invoice has no legal validity as a payment document and cannot be used as a basis for enforcing payment.
5. What are the advantages of a pro forma invoice?
A pro forma invoice is a secure tool for communicating sales conditions because it does not impose any accounting or tax obligations on the parties. It is particularly useful in customs and financial processes, facilitating formalities related to international trade. In addition, its flexibility allows for changes and modifications before the actual VAT invoice is issued.
A pro forma invoice is a non-binding offer document that presents the details of a transaction before it is carried out, but has no accounting or legal value as a payment document. It is commonly used in domestic and international trade as a basis for finalizing an order and customs clearance.
