Invoices and documents · 4 min read

Credit notes and corrective documents — how to correct an issued invoice

What a credit note is (a corrective tax document under §45 of the VAT Act), when you must issue one, how to link it to the original invoice in Taxorio, and how it affects the VAT return.

What a credit note is

A credit note (a corrective tax document) is a document that corrects an invoice you've already issued. Under Czech law, correcting the tax base is governed by §42 of Act No. 235/2004 Sb., on VAT, and the required particulars of a corrective tax document by §45 of the same Act. A credit note reduces the tax base and the VAT amount of the original invoice — or cancels it entirely (a full void).

A credit note is formally called a corrective tax document and must contain a reference to the number of the original invoice it relates to.

When you must issue a credit note

The law requires a corrective tax document in these situations:

Goods returned or the supply refused — the client returned goods or refused to accept a service.
A discount granted — after issuing the invoice you granted the client an additional discount.
A full void — the job never happened and the invoice must be cancelled in full.

⚠️ An error on the original invoice isn't § 42. A credit note under § 42 handles a change that happened after the invoice was issued (the deal itself changed). If the invoice was wrong from the start — a wrong price, a wrong tax base, a wrong VAT rate — that's a correction of an error under § 43. That isn't reported in the current period, but through a supplementary return for the original period and a follow-up VAT control statement. Taxorio has no dedicated path for § 43 — discuss a correction like that with your accountant.

⚠️ Careful: Under §42 ZDPH a VAT payer is required to issue a corrective tax document within 15 days of learning of the fact that gives rise to the duty to make the correction. Missing this can be sanctioned.

How to issue a credit note in Taxorio

Go to the Invoices section and open the invoice you want to issue a credit note for.
Click More actions → Correct document in the invoice detail.
Pick a scenario: Full cancellation (the whole invoice), Partial return (the client returned goods) or Price correction / discount (a complaint, an agreed discount).
Taxorio automatically pre-fills the details from the original invoice with a negative value.
Add the reason for the correction to the note — for a partial return and a price correction Taxorio pre-fills a half-written sentence ending in "Reason: ", which you finish off briefly (optional, but recommended for your tax records). For a full cancellation, the note only carries a reference to the original invoice.
Save and send it to the client.
Once you've actually refunded the client's money, click Payment refunded on the credit note's detail and enter the date — only then does the correction show up in your income tax.

Deadline for corrections

Supplies from January 1, 2025: 7 years from the end of the calendar year in which the duty to declare the tax arose (amendment No. 461/2024 Sb.).
Supplies up to December 31, 2024: the original 3 years.
Tax document for a received payment: always 3 years — the extension to 7 years doesn't apply to received advances.

Past the deadline, Taxorio won't issue the corrective document and will tell you which deadline applied.

How much can be corrected

The sum of corrective documents against one invoice can't exceed the original document (a CZK 1 rounding tolerance applies). You see the remaining limit in the form as a gauge next to the totals; an invoice that's already fully credited no longer offers the Correct document action. You can also correct in stages — several credit notes until the limit is used up.

For a final invoice, the cap is the whole supply, not the "amount due". After deducting the advance, only the balance is due, but § 45 odst. 4 lets you correct even the part of the tax that went through the advance in one corrective document — you don't have to unwind the deal back into the advance and the balance.

Effect of a credit note on the VAT return

When you're reducing the tax base (a typical credit note), the correction belongs in the tax period in which you did what could reasonably be expected of you for the corrective document to reach the recipient — usually the period in which you sent it. You don't have to wait until the recipient collects it, let alone confirms it. When you're increasing the tax base, the day the facts relevant to the correction arose decides instead. Specifically:

The negative VAT from a credit note reduces your tax liability for the period.
A credit note is stated on the VAT return lines with a negative value for the tax base and the tax.
The recipient (the client, a VAT payer) is required to record the credit note and reduce their VAT deduction.

Taxorio automatically includes the credit note in the VAT export for the relevant period. The negative lines from credit notes are visible under Taxes & insurance → VAT for the relevant period.

💡 Tip: A credit note doesn't necessarily mean refunding money. It can also be a set-off — the client pays less on their next invoice. Agree the settlement method with the client separately.

A credit note against a document in foreign currency

If you're correcting a document in EUR, USD, GBP, CHF or PLN, the correction isn't calculated with the rate on the day you issue the credit note, but with the rate and rate of the original supply. Taxorio therefore carries over the rate from the corrected document onto the credit note and offers its VAT rates too — a credit note against a 2023 invoice legitimately carries 15%. For a credit note against a tax document for a received payment, the rate and rate that governs is the one from the day that payment was received. Thanks to this, the CZK value of the correction matches what you declared in the original period, and the correction doesn't create a tax difference just from the rate moving.

Correcting within the advance chain — what to correct when

The chain looks like this: proforma invoice → tax document for the received payment → final invoice. Which document you correct depends on how far along the chain has got.

No final invoice yet — correct the tax document for the advance

Open the detail of the tax document for the advance (not the proforma invoice).
More actions → Correct document — a credit note against the advance is created.
Once the credit note is issued, you can also cancel the original proforma invoice.

ℹ️ This only applies to an actual refund of money. When the payment never arrived at all, or was recorded by mistake, that's not a case for a credit note — use Clear payment on the proforma invoice instead.

A final invoice already exists — correct the final invoice

Once the advance has been settled by a final invoice, the Correct document action on the tax document for the advance is locked, and Taxorio shows you the number of the final invoice that used the advance. Otherwise the chain would end up with two documents that contradict each other.

The supply happened and only the price / a refund is changing → a credit note against the final invoice, for the full value of the supply (§ 42, § 45 odst. 4).
The supply never happened → first cancel the final invoice (that frees up the tax document for the advance), then correct the advance.

A credit note against the tax document for the advance also reduces the deduction on the final invoice: the final invoice then only deducts the part of the advance that stayed with you. An advance that's fully credited isn't deducted at all.