Three documents, one chain
When you pay a supplier an advance up front, three documents usually show up over time on both sides of the deal. Taxorio understands them in the expense records and calls them exactly what the law calls them:
- A proforma invoice (also called a "payment request") — the supplier asks you to pay the advance. On its own it's not a tax document, so it doesn't create an expense or a VAT deduction.
- The tax document for the received payment — for a domestic VAT payer this is the tax document your supplier must issue within 15 days of receiving the money; for a foreign supplier it's often a "prepayment invoice" or a receipt for prepaid credit. This document is an expense, as of the day you paid.
- The settlement — the final invoice for the whole supply, from which the supplier deducts the advance and you pay only the remainder.
This article covers the expense side — advances that you pay as the recipient. Advances that you issue to your own clients are covered in Proforma invoices and final invoices.
When a proforma invoice becomes an advance
A proforma invoice can only be recorded in the inbox as an advance when there's nothing to deduct from it — in other words, when a deduction from the real tax document for the payment wouldn't add anything anyway. Specifically:
| Proforma invoice from… | Non-VAT payer | Identified person | VAT payer |
|---|---|---|---|
| a domestic supplier without VAT (a non-VAT payer) | ✅ becomes an advance once you add the payment date | ✅ becomes an advance once you add the payment date | ✅ becomes an advance once you add the payment date |
| a domestic supplier with VAT | ✅ becomes an advance (VAT means nothing to you anyway) | ❌ you wait for the tax document for the received payment | ❌ you wait for the tax document for the received payment |
| a foreign service (EU, § 24, or a third country, § 108) | ✅ becomes an advance | ✅ becomes an advance, VAT is self-assessed as of the payment date | ✅ becomes an advance, VAT is self-assessed as of the payment date and deducted right away |
| goods from the EU (§ 25 ZDPH) | ❌ never recorded — only the final invoice, for the full amount | ❌ never recorded — only the final invoice, for the full amount | ❌ never recorded — only the final invoice, for the full amount |
| the domestic reverse charge (§ 92a) | (doesn't apply — reverse charge only exists between VAT payers) | (doesn't apply — § 92a only exists between VAT payers) | ❌ never recorded — only the final invoice, for the full amount |
Wherever recording is possible, fill in the Paid on field on the document's detail — that's what actually saves the proforma invoice as an advance. Without a payment date it stays in the Needs review group with the message "Payment request with no payment date." Wherever recording isn't possible (a VAT payer or an identified person with a domestic, VAT-bearing proforma invoice), Taxorio doesn't even expose the payment-date field on it, and the document stays locked with an explanation that you're waiting for the real tax document for the received payment.
The tax document for a paid advance
The inbox's AI recognises this document on its own — typically because its date of taxable supply (DUZP) matches the payment date. In the inbox queue it carries the Tax document for a received payment (advance) badge, and you confirm it exactly like any other document — Taxorio just also fills in the payment date = DUZP and leaves the due date blank (a paid advance no longer has one).
If you already recorded the same advance by hand from a paid proforma invoice, and the real tax document only arrives afterwards, Taxorio recognises the duplicate and refuses the second confirmation with the message "This advance payment is already recorded." Delete that inbox document instead — the expense from the proforma invoice is already in your records.
The settlement — matching and the remaining balance
On the final invoice that deducts the advance, the supplier usually writes a line like "advance deducted… balance due X." The AI extracts the amount due and the number of the deducted advance from a document like that, and the inbox tries to find the matching advance — first by document number, and if there isn't one on the invoice or it doesn't match, by the fact that it's the only advance from the same supplier with a sufficient remaining balance. Depending on the outcome, the panel spells out exactly what will happen:
- The advance was found and it has enough left: "Advance X deducted (document Y, Z remaining) — we will record the remaining balance D." Only the remainder D is recorded, and it's linked to the advance.
- The advance was found, but doesn't have enough left: "The document deducts an advance of X, but advance Y only has a balance of Z remaining — the full amount will be recorded." Taxorio records the whole document rather than just the remainder here, because a partial deduction wouldn't add up for tax purposes — check the advance or the amount due on the document.
- We couldn't find the advance: "We could not find the advance this document deducts in your records — the full amount will be recorded." Taxorio never records just the remainder without actually finding the advance — if you recorded it under a different number, add that number by hand in the Advance/request number field.
- The deducted advance is still waiting in the inbox: "The advance is still in the inbox — confirm it first." The settlement will match up once the advance itself has been recorded.
Both the advance number and the amount due after the deduction can be corrected by hand in the document's detail before you confirm it. A single advance can be drawn down by several settlements over time (typically for prepaid credit — see the FAQ below) — you can see the unused balance on the advance's own detail as "Not yet settled: X of Y." When a settlement covers the advance in full, it's recorded at CZK 0 and linked to the advance — that's the correct outcome, since the document still stands as proof the supply took place, even though nothing more is owed.
The full form and a direct scan
The same logic applies outside the inbox, too — in the full expense form and in a direct scan (New expense → Analyze), the preview tells you whether Taxorio already has a matching advance, using the same wording as the inbox panel. Editing an existing expense, on the other hand, never triggers matching — so touching up a document after it's already been created won't change its link to an advance.
Foreign currency
An advance in EUR, USD or another currency is converted at the CNB rate as of the payment date; a settlement, as of the date of supply. Because the rate can move between the advance's payment and the settlement, the cap on how much of the advance can still be drawn is tracked in the document's own currency, not in converted crowns — so a small shift in the exchange rate won't, on its own, make the matching logic decide the advance doesn't have enough left.
ISDOC
An electronic ISDOC invoice (from iDoklad, Fakturoid, Pohoda, or Taxorio itself) is recognised by the inbox without AI, straight from the XML — including the document type: a proforma invoice (type 4), a tax document for the received payment (type 5), and a settlement that deducts an advance. The migration wizard (importing history from another system) treats these differently, though: a document that deducts an advance is always set aside for manual review rather than skipped silently or imported with a possibly wrong link — matching an advance to a settlement from imported history simply can't be verified as reliably as for a document dropped straight into the inbox. More on ISDOC in general in Importing electronic invoices (ISDOC).
Editing and deleting
- A tax document for a paid advance must have a payment date — Taxorio won't save it without one (the same rule applies one step earlier, to the proforma invoice).
- An advance with a linked settlement can't be deleted — Taxorio refuses, explaining that the settlement would be left with only the remainder while the advance amount would disappear from your records. Unlink or delete the settlement first.
- If you change a document's type back from a settlement to a regular expense or to an advance-payment document, its link to the advance is cleared (the deducted amount and the advance's remaining balance are restored).
Impact on taxes
An advance enters both VAT and income tax as of the payment date; a settlement, only for the remainder, as of the date it's paid. A zero-amount settlement doesn't enter either one.
- A domestic advance for a VAT payer: the deduction is taken from the tax document for the received payment, and the settlement only carries the difference (§ 37a ZDPH).
- A foreign service (EU or a third country): VAT is self-assessed as of the payment date (§ 24(3) ZDPH) — on the DP3 return it lands on line 5/6 (EU with a valid VAT ID) or 12/13 (a third country, or the EU without a VAT ID), and in the VAT control statement it goes into section A.2, where DPPD (the date the tax obligation arises) equals the payment date. A VAT payer deducts the very same tax at the same time (line 43/44); an identified person declares the tax with no right to a deduction — for them it's a real cost. More on self-assessment in Reverse charge in expenses.
- Income tax: in the tax records, a paid advance is an expense as of the day it's paid, and the remainder as of the day the settlement is paid (§ 7b ZDP). VAT that an identified person or a non-VAT payer can't deduct under reverse charge is itself a tax-deductible expense.
- Export for your accountant (Pohoda/Money): both the tax document for a paid advance and the settlement export normally, as ordinary expenses — just with an extra note on what they relate to: "Tax document for a paid advance" for the advance, and a reference to the deducted advance's number and the amount deducted for the settlement. More detail in Export for accounting — Pohoda and Money S3.
The AI assistant and MCP
Through chat and through MCP (external AI tools) alike, you can confirm an advance or a settlement just as you would in the inbox — the preview before confirming shows whether anything is being matched, and exactly what will be created. Recording a new advance (with a payment date) works through chat and MCP alike without uploading it to the inbox first — the same way you'd record any other expense. Deleting an advance with a linked settlement is refused by the assistant, just as it is in the app. See What the AI assistant can do in Taxorio and MCP — controlling Taxorio from Claude and ChatGPT for details.
Frequently asked questions
I prepaid credit with AWS or Google Cloud — when does that get taxed?
Taxorio records the advance and, for a foreign service, declares the tax as of the payment date — the same as for any other advance. For prepaid credit toward one specific service, though, the law (§ 20a(3) ZDPH) also allows for a different reading: if, at the moment you pay, it isn't yet "sufficiently certain" how much you'll use and when, the tax obligation may only arise as the credit is drawn down, not when you pay. Declaring it earlier isn't a mistake and doesn't trigger a penalty — any difference can be assessed later without a sanction (§ 104 ZDPH). For larger amounts we'd recommend talking the right moment through with a tax advisor; Taxorio itself sticks to one consistent rule — "as of the payment date" — for every advance.
Google Ads draws down my prepaid credit every month — how do I record that?
Record the credit top-up as an advance (usually a foreign service under § 24 ZDPH). Every monthly invoice Google issues for the credit it drew down is a settlement — Taxorio matches it to the advance by supplier and deducts the amount drawn, until the advance's remaining balance reaches zero. Then you record a new advance for the next top-up. The same uncertainty about the moment of taxation as in the question above applies here too.
I'm a VAT payer and got a domestic proforma invoice with VAT on it — why can't I just record it?
Because you'd be claiming a VAT deduction without an actual tax document, which the law doesn't allow (§ 72–73 ZDPH). Your supplier is required to issue you the tax document for the received payment within 15 days of getting your money — and it's that document, usually automatically, that Taxorio records as the advance. If it's slow to arrive, the simplest fix is to ask the supplier for it directly; the proforma invoice itself can't stand in for it.