With similar formats and characteristics, proforma and commercial invoices could easily be confused. Yet, each applies to different situations. In international trade, all shipments must carry an invoice.
The proforma invoice
A proforma invoice is a provisional document specifying the price of an article and the general terms and conditions. This informational document has no accounting or legal value and is closer to a quote than an invoice. A proforma invoice is required to export goods outside the European Union, which are not intended for sale – for instance when sending gifts and samples, or returning goods to the supplier.
It will form the basis of calculations for customs duties and taxes, and enable customs to issue purchase or sale authority documents.
The commercial invoice
A commercial invoice attests the sale of goods between importer and exporter. Correctly completed, this customs document also ensures a smooth clearance procedure by considerably reducing the likelihood of blockages at the borders. Like the proforma invoice, the commercial invoice enables authorities to calculate customs duties and any tax that may apply in the destination country.
A commercial invoice must contain the following information:
- Invoice date
- Invoice number
- Sale date
- Seller identity
- Purchaser identity
- Purchase order number
- VAT registration number
- Breakdown and description of goods
- List price
- VAT-exclusive unit price for each article sold
- Legally applicable VAT rate
- Total amount payable before and after VAT application
The proforma invoice bears the same information, but with a clear ‘Proforma’ heading and no invoice number as it is not an accounting document.
Please note that you must enclose either a proforma or commercial invoice to your shipment, but not both.
In conclusion, use proforma invoices for goods not intended for sale (gifts, samples) and commercial invoices for sales (of goods with a commercial value). A commercial invoice remains payable until settled by the recipient.
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