Credit note or cancellation invoice: What do I need to know?

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Credit note or cancellation invoice – both terms are often used synonymously, but they are not.

Entrepreneurs in particular should know the difference and use both documents correctly.

What is meant by a credit note, what advantages does it have and what differences are there to the
invoice correction, you can find out here.


  • Definition: What is a credit note?

    In simple terms, a credit note is a reverse invoice. Reversed because the person who delivers the service or goods does not issue an invoice. Instead, in this particular case, he receives a corresponding document from his customer in return, often also called a billing document or billing credit note.

    The legal regulations for a credit note can be found in the Value Added Tax Act (Umsatzsteuergesetz, UStG) Section 14 Paragraph 2 Sentence 3, which states that the recipient of a service may issue such a document if this procedure has been agreed in advance between both parties.

  • The difference between an invoice and a credit note is therefore solely who issues the respective document. The tax office recognizes both documents equally. Provided they meet the required mandatory information.

Die Möglichkeiten des Widerrufs bei Lastschriften

The necessary mandatory information

The mandatory information that must be included includes:

  • 1

    The document must be clearly identified as a credit note, conventionally by the heading.

  • 2

    The name and address of both parties to the contract, i.e. service provider and service recipient, must be listed.

  • 3

    Tax number and/or VAT identification number also belong on the document.

  • 4

    Consecutive number of the credit note, so that the document can be clearly assigned.

  • 5

    The date of issue of the credit note should also be included in the document.

  • 6

    An exact description/description of the goods or service must not be missing.

  • 7

    The date of the service and/or delivery must be stated.

  • 8

    Consideration for the delivery or service. Broken down by the different tax rates that were applied.

  • 9

    Tax rate and amount of tax that was charged in each case.

  • The mandatory information must be listed. If they are missing, the recipient of the credit note may not use the input tax deduction. Therefore, you must make sure that this information is not missing.

The advantages of a credit note instead of an invoice


If both parties to the contract have agreed on a credit note procedure, this can even be advantageous for both sides. This is because this procedure usually establishes a longer-term business relationship – which gives both sides a certain degree of planning security.

Both sides save time with this procedure: The recipient of the service does not have to check the invoice, but can issue a credit note himself. While the provider of the service does not have to write an invoice and, in the worst case, even wait a long time for his money. A credit memo procedure also eliminates the need for time-consuming dunning procedures.

Create credit notes: Quite simple with easybill


Curious now? Then simply take a look at the corresponding function in our invoicing software. With our handy templates, you don’t have to think long and hard about what information belongs on a credit note. Instead, you simply create the document with a few clicks. This way, you benefit from the advantages of a credit note without having to think your way through a new process – we’ve already done that for you.

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Invoice correction: the differences with credit note


As already indicated, credit note and invoice correction, also referred to as cancellation invoice, are often confused in everyday language or at least treated as equivalent. In fact, however, there are some differences between the two documents:

  • An invoice correction neutralizes parts of the original invoice.
  • A cancellation invoice must always refer to an existing invoice. The invoice number as well as the date of issue must be indicated on the invoice correction. In addition, the invoice correction must also have its own consecutive invoice number.
  • The invoice correction must also list the amount by which the original invoice is corrected.

An invoice correction is used when the customer returns or complains about a product and you, as the seller, want to grant a price reduction.


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