Credit Note in Greece: Rules and Requirements

Credit Note in Greece: Rules and Requirements

A credit note in Greece is issued under the VAT system of the Hellenic Republic and is regulated by the Independent Authority for Public Revenue (AADE). A credit note is a legal document that will reduce the value of a previously issued VAT invoice when goods are returned, services are cancelled or errors are identified. It applies to businesses registered for VAT and ensures that the VAT reported matches the correct value of the transaction. Every VAT-registered business must issue a credit note promptly after identifying an error or change and keep records for the statutory retention period. This blog explains when a credit note is used, what details must be included, and compliance rules for businesses in Greece.

What is a Credit Note in Greece

A credit note in Greece is a legal document issued by a supplier to adjust the value of a VAT invoice that has already been issued. It will be prepared when the amount on the invoice is higher than it should be or when goods or services are returned or cancelled. The main role of a credit note is to correct the value of a transaction without creating an entirely new invoice.

 The use of a credit note will reduce the VAT amount and the total of the earlier invoice. It does not impose new tax but adjusts the existing tax that was overstated. This ensures that the VAT declared in the return is accurate and not overstated.

For example, if a business issued an invoice of €10,000 excluding VAT (or with VAT at 24%) and later goods worth €2,000 excluding VAT were returned, a credit note of €2,000 (net) with the corresponding VAT adjustment will be created. Both supplier and customer must record the change so that accounts and VAT returns remain accurate.

Issuance Requirements for Credit Notes

A credit note will be issued in Greece in situations defined by the VAT Law (Law 2859/2000) and its amendments. It will apply when goods are returned by a customer, services are not delivered, discounts are applied after issuing an invoice, or clerical errors are found in pricing or tax. The credit note ensures that the value of the transaction and the VAT reported match the actual outcome of the sale.

If a business charged VAT on items that were later cancelled or refunded, a credit note will reduce the VAT liability. The document will adjust both the amount on the invoice and the tax reported to AADE.

For example, when a customer returns defective goods worth €5,000 excluding VAT, a credit note of the same net value plus the corresponding VAT will be issued. The supplier and customer will record the adjustment so that accounts stay correct. Without issuing a credit note, the VAT output would be overstated and may lead to non-compliance risks.

Information Required on a Credit Note

In Greece, a credit note follows the same rules as an invoice and acts as a correction document. It must include the following details:

• Date of Issue:
   The date the credit note is created. This establishes when the correction took effect and determines the VAT period in which the adjustment should be reported.

• Unique Serial Number:
   Each credit note must have a distinct, sequential number to ensure traceability and proper record-keeping for audits.

• Supplier Details:
   The supplier’s full legal name, business address, and VAT registration number in the Greek format (e.g., EL123456789) must be shown. This identifies the business responsible for the correction.

• Customer Details:
   The name, address, and VAT number (if applicable) of the customer receiving the credit note must be included for accurate cross-referencing.

• Reference to the Original Invoice:
   Every credit note must clearly mention the number and date of the original VAT invoice it corrects. This links both documents and prevents confusion in accounting records.

• Reason for the Adjustment:
   A short explanation such as “goods returned,” “discount applied,” or “invoice error” should be included. This helps justify why the credit note was issued.

• Description of Goods or Services:
   The corrected goods or services should be described clearly, just as in the original invoice, to specify what part of the transaction is being adjusted.

• Financial Details:
   The document must show the net amount reduced, the VAT rate applied, the VAT amount reduced, and the total credited amount (net + VAT).

• Heading “Credit Note”:
   The title must clearly state “Credit Note” so that both the supplier and the customer understand it is a correction and not a new invoice.

Credit Note and VAT Adjustment

A credit note in Greece will adjust the VAT reported by a supplier and a customer. When a credit note is issued, the supplier will reduce output VAT, and the customer will reduce input VAT claimed (provided the customer was entitled to input tax deduction). The adjustment ensures that the VAT declared in the period matches the actual value of the transaction and prevents over-payment or under-payment of tax.

The VAT adjustment should be made in the period in which the credit note is issued. For example, if the VAT for Q2 has been filed but a credit note is issued in July, the adjustment will be reflected in the following period’s return. Businesses must ensure both parties record the change in the same VAT period to maintain correct records.

 Maintaining clear and organised records of every credit note supports compliance with Greek VAT rules and helps in audit situations. Proper records help businesses avoid penalties and provide evidence of adjusted VAT. According to invoicing guidance for Greece, invoices (and analogous corrective documents) must be stored for at least six years.

Process of Issuing a Credit Note in Greece

The process of issuing a credit note in Greece ensures that the value of a transaction and VAT reporting are corrected accurately. A credit note will be issued when an error or change in a transaction is identified and must follow specific steps under Greek practice and accounting standards (e.g., Law 4308/2014). The steps typically are:

1. Identifying the error or change in transaction
    The supplier first reviews the original invoice and identifies any error in pricing, VAT, or returned goods or services. This step ensures the reason for the adjustment is clear and documented.

2. Preparing the credit note with all required details
    A credit note is prepared including the heading “Credit Note”, supplier and customer details, VAT registration number, reference to the original invoice, description of goods or services, the amount reduced, VAT adjustment, date of issue, and a unique serial number. This ensures the document is valid for accounting and tax purposes.

3. Sending the credit note to the customer
    The supplier issues the credit note to the customer on the date of adjustment. This allows the customer to update their records and input VAT (if applicable) correctly.

4. Recording the credit note in the accounts of both supplier and customer
    Both parties update their accounting records with the value of the credit note. The supplier reduces sales and output VAT, and the customer reduces purchases and input VAT claimed (provided the original invoice allowed deduction).

5. Adjusting the VAT return for the relevant period
    The adjustment of VAT is made in the return for the period in which the credit note is issued. This ensures that the VAT declared to AADE reflects the correct value of the transaction. Failure to adjust accordingly may lead to mismatches in the system, especially given Greece’s increasing electronic reporting obligations (such as the myDATA platform).

Record-Keeping and Compliance

Under Greek law, all VAT-registered businesses must keep records of invoices, credit notes and related documents for the statutory period. For invoices, Greek VAT guidance states storage must be for at least six years. A credit note will normally be stored as part of those records.

 Each credit note should have a unique and sequential serial number to ensure clear tracking of a transaction. A business should ensure that credit notes are referenceable to the original invoice and reason for cancellation or adjustment. Maintaining accurate records of credit notes ensures compliance with Greek VAT rules and simplifies reconciliation of accounts. A business that does this avoids penalties, reduces disputes with customers and ensures that VAT reporting on returns is correct and complete.

Penalties for Non-Compliance

Non-compliance in Greece includes not issuing a credit note where required, missing required details on the document, failing to record the credit note in accounts, or failing to adjust the VAT return accordingly. According to Greek VAT rules, incorrect or incomplete VAT returns may result in financial penalties and interest based on the amount of unpaid or overstated VAT identified during an audit. Additionally, late submission of VAT returns or failure to store invoices and related documents can lead to procedural penalties.

Therefore, failure to issue or record a credit note correctly may result in:

• Excess VAT being declared or paid

• Financial penalties from AADE

• Interest charges for late VAT payment or adjustment

• Loss of credibility with customers or disruption of accounting records

Conclusion

Credit notes in Greece are issued under the rules of the Greek VAT system (Fóros Prostithémenis Axías, ΦΠΑ) and they have a direct effect on VAT compliance of a business. A credit note will correct errors on a VAT invoice, reduce a tax liability, and ensure that the VAT declared on the return is accurate. The supplier must issue a credit note promptly with all required details and record it properly in the accounts. Failure to issue or record a credit note correctly may lead to penalties and excess payment of VAT.

 A business that follows the rules for credit notes will maintain accurate accounts, strengthen trust with customers, review invoices carefully, issue credit notes on time, and keep records of each credit note for the statutory storage period to remain compliant with Greek VAT regulations.

FAQs

1. What is a credit note in Greece?
    A credit note in Greece is a document used to reduce the value of a VAT invoice that was previously issued.

2. When must a credit note be issued in Greece?
    A credit note must be issued when goods are returned, services cancelled, or a tax invoice error is found under Greek VAT law.

3. What details must a credit note contain in Greece?
    A credit note in Greece must show supplier and customer details, VAT registration number, reference to the original invoice, description of goods or services, amount reduced, VAT rate and VAT amount.

4. How long must credit notes be kept in Greece?
    Credit notes (as part of VAT invoicing records) must be kept for at least six years in Greece.

5. What happens if credit notes are not issued in Greece?
    If credit notes are not issued or recorded correctly in Greece, excess VAT may be declared and penalties from the tax authority may apply.