Credit Notes: When You Need Them and How to Create Them
Returns, refunds, and order corrections all require credit notes. Here's what they are, when to issue them, and how to stay compliant.
A credit note (creditfactuur) is a document that partially or fully cancels an existing invoice. If you sell on marketplaces, you'll issue them more often than you think — every return that results in a refund should technically have a credit note.
When to issue a credit note
- Full return — Customer returns the entire order for a refund
- Partial return — One item from a multi-item order is returned
- Price correction — You charged the wrong amount
- Discount after the fact — A post-sale goodwill gesture
What goes on a credit note
A credit note must reference the original invoice and include:
- The credit note number (part of your sequential numbering)
- Reference to the original invoice number
- The amount being credited (negative amounts)
- VAT breakdown of the credit
- Reason for the credit
Why credit notes matter for VAT
Without a credit note, you're technically paying VAT on revenue you gave back. During your VAT return, credit notes allow you to deduct the refunded VAT. Skip them and you're overpaying tax — money you'll never get back unless you correct your records.
Automating credit notes
Manual credit notes are tedious, especially during busy return periods (post-holidays, anyone?). Automatic invoicing tools can generate credit notes from returned orders, keeping your books clean without the manual hassle.
