Do you know what to include on an invoice? When to add ‘retention’? What if you find a mistake in an invoice that you already gave away? When to issue a simplified invoice? Find answers to these and other questions in this post.
What is an invoice?
It is a document that records the delivery of a good or service. It legally has to be logged in an ‘invoice book’ and the documents have to be kept for 5 years.
Invoices and tickets.
There are different types of invoices. The simplified invoice, or traditional ticket, only contains the information of the issuer but not the receiver.
To be able to offset an expense, one of the requisites is that the transaction is backed up with a valid invoice. A simplified invoice or ticket doesn’t to contain enough information.
Let’s get started with the simplest case.
What to include on an invoice?
Much depends on the type of business that you run and who you issue it to. You might need to add ‘retention’, as explained below.
The actual design of the document is not relevant as long as its content is correct.
Generally speaking an invoice should include a number of basic information listed below.
- The word ‘Factura’ must be clearly visible.
Factura is the only document valid for tax proposes. Others such as ‘Pro-Forma’, ‘Albaran’, ‘Presupuesto’ or tickets are not valid.
- Your Tax ID (full name, CIF and address)
Here we have to be clear that we mean the registered tax name of the business, i.e. for autonomos it is their personal name and NIE number. This is not the commercial name by which your business may be known, such as ‘Quick Repares’ or ‘The English Handy-man”, for instance.
- The Tax ID of your Client.
The same principles explained in the previous paragraph apply
- Date and Invoice Number.
There must be consistency between date and number. I.e. Invoice number 2 can not be issued prior to invoice number 1. Besides that, there can not be gaps in the series of numbers.
- Price(s) of services/items provided (taxable amount), applicable IVA (generally 21%) and total.
If you sell items with different types of IVA, then you have to state separately the different tax amounts along with their tax rate applicable.
Example: General Invoice
(For simplicity the identification of company and client are not added. See points 2 and 3 above)
Company Tax ID Client Tax ID
01/02/2015 num: 12
All the field mentioned above are predetermined with Quipu. We the auto-fill feature you will save a lot of time.
Related: Add invoice with Quipu
Let consider now some other cases:
When retention has to be added.
In some instances the payer (your client) is obliged by law to with-hold part of the money due and pay this to the tax man in your behalf. This is the case, among others, when an autonomo invoices a limited company.
The retention rates are:
• 7%. In invoices issued by autonomos with less than two years of registration.
• 15% In the general case.
• 19%. Only for rental invoices. This applies to the rental of business premises as well as business spaces. (For example: you sublet a desk in your premises to other autonomo.) (see latest updates)
These percentages are calculated over the taxable base (price without IVA) and not over the total.
Example: An autonomo invoices a SL company for some professional services provided.
In this case the invoice should look like this:
Company Tax ID Client Tax ID
01/02/2012 num: 13
In Quipu there is a field to include the retention:
It is a good habit when you have clients to whom you issue invoices with retentions to ask them a ‘ certificado de retenciones’ at the end of the year. This certifies that your client acknowledge having withheld money from you. You may need to show this when applying for tax rebate.
When an autonomo invoices someone other than a limited company there is no obligation to include retentions.
Related: Deposits from clients given to pay others ( It discusses how to include them in the invoice)
Facturas Rectificativas (Corrective Invoices)
You are not supposed to modify or destroy an issued invoice. This might not be simple anyway. Overall if you have already delivered a copy to your client and he has included it in his tax return. The tools you have for this are:
When you detect a mistake in the price, items, etc… of an invoice then you have to produce a corrective invoice (factura rectificativa).
This type of invoice has to refer to the invoice that it corrects (stating number and date).
It also should list the item to cancel, indicated with a minus in the price, and adding the correct item or figure.
Factura de Abono ( Credit Invoice )
From time to time you may have to cancel an invoice or even refund the money. To this end you issue a Credit Invoice. Simply list out the services/items with their price preceded by a minus.
In this case it also should refer to the original invoice.
Factura Simplificada (Simplified invoices)
Sometimes, in cases of shop-type business, it is valid to issue an invoice to ‘an unnamed client’. These are ‘factura simplificada’ type. Restaurants and shops give these invoices. These are not cash jobs. They are properly declared as income. This invoices include essentially all the above information except the details of our client and the break-down of IVA.
This invoices are not valid for our client to offset the expense.
You can make your invoices very simply and intuitively with Quipu, our Invoicing and Cash-flow platform.
Related: What expenses can you offset?