Proforma invoice vs tax invoice: when to use each in Cyprus
A proforma asks for payment; a tax invoice records the sale. Here is when to use each, and why the difference matters for your VAT.
Many Cyprus businesses ask for payment before they deliver: a deposit for a custom order, full payment before goods leave the warehouse, an advance before a project starts. The document for that request is a proforma invoice. It looks like an invoice, but it is not one, and mixing the two up causes problems with VAT.
What a proforma is
A proforma invoice is a request for payment, sent before the sale is final. It shows the customer exactly what they are paying for: items, quantities, prices and VAT. It is often what their bank or their own accounts department needs before they can pay.
What it is not:
- It is not a tax invoice, so it does not go into your sales or your VAT return.
- It does not give your customer the right to reclaim VAT.
- It does not create an amount owed in your books until the sale actually happens.
Tip: Put "Proforma invoice" clearly at the top, give proformas their own number series, and add a line such as "This is a proforma invoice and not a tax invoice." That removes any doubt for your customer and for anyone who checks your records.
When to use each
| Situation | Document |
|---|---|
| Asking for payment in advance, before delivery | Proforma invoice |
| A quote the customer still has to accept | Estimate or quotation |
| The goods or services are delivered, or payment is received | Tax invoice |
| Correcting a tax invoice already sent | Credit note |
The moment the customer pays, or you deliver, the sale has happened, and that is when you issue the tax invoice. It gets a number from your normal invoice series and goes into your VAT return for that period.
Turning a paid proforma into a tax invoice
The practical routine:
- Send the proforma with its own number, for example PRO-00012.
- When the payment arrives, issue the tax invoice for the same items.
- Record the payment against the tax invoice.
- Keep a note on the tax invoice of the proforma it came from, so the paper trail runs both ways.
Doing this by hand means retyping every line and keeping two number series straight. In ToLogistiko a proforma turns into the tax invoice with one click, keeps the link to the proforma, and takes you straight to recording the payment. Proformas never reach your sales or VAT reports until they are converted. Read the proforma guide.
In short
Use a proforma to ask for money, a tax invoice to record the sale. Keep proformas in their own series, never put them on your VAT return, and issue the tax invoice as soon as you are paid or deliver.
