Credit Note

A credit note is effectively a negative invoice. It reduces the buyer's balance by a specified amount and cites the original invoice it relates to. Common reasons:

— Returned or rejected goods — Damaged or defective goods — Post-sale price adjustments or discounts — Correction of an overbilled invoice — Volume or loyalty rebates

For accounting and tax purposes, a credit note reverses the VAT charged on the original invoice. The seller reduces their output VAT liability; the buyer reduces their input VAT deduction. Most jurisdictions require the credit note to reference the original invoice number and date.

In most countries the credit note is simply emailed or posted to the buyer. In countries with e-invoicing (Italy via SDI, Mexico via CFDI, Spain via VeriFactu/SII), credit notes must go through the same official channel as the original invoice.