In France, so that all transactions are retained, a business is not allowed to delete or modify an invoice after it has been issued. To legally correct a previously issued invoice, a business must issue a credit note. In this article, we will discuss the credit note, including how it’s defined, what its benefits are, how it’s created, how it impacts value-added tax (VAT), and more.

What's in this article?

• What’s a credit note and what’s its purpose?
  
• When is a credit note issued?
  
• What distinguishes a credit note from other types of invoices?
  
• Creating a compliant credit note
  

What’s a credit note and what’s its purpose?

A credit note is an accounting document issued by a company to modify the details of a previously issued invoice. It functions as a corrective invoice that allows the business to cancel the original invoice and issue a revised, updated version. The credit note is also called an avoir in French, or a credit memo.

Note: as an accounting document, the credit note must be retained for at least 10 years.

When is a credit note issued?

A credit note must be issued in the following instances:

• If there has been an invoice error, such as the business overcharging
  
• If merchandise is returned
  
• To provide a discount or rebate after the original invoice has been issued
  
• In the event of a defect or failure to supply products or services
  

For example, if a customer is not satisfied with a service you provided, you can issue a credit note to provide a partial refund or credit. In addition, if a product has become unavailable due to a stock issue, you can issue a credit note providing a full refund. The credit note allows you to document your price adjustments for the customer and maintain a friendly relationship with them.

What distinguishes a credit note from other types of invoices?

Normally, the purpose of an invoice (such as a deposit invoice, a standard invoice, or a progress invoice) is to obtain payment of a sum due. It indicates the amount the customer owes, details about the goods or services provided, as well as the terms of sale.

Conversely, a credit note allows for a correction to be made to an error on a previously issued invoice, to compensate for returned merchandise or a failure to supply products or services, or to adjust the price as a goodwill gesture. Most often, a credit note recognizes a debt to the customer and allows the business to legally record reimbursement or a credit in its accounts.

Creating a compliant credit note

A credit note follows standard invoicing rules. It must include certain mandatory information and use uninterrupted sequential numbering. You can use a different numbering series for your credit notes than you do for your standard invoices.

Each credit note must contain:

• The word “avoir” on the document
  
• References linking it to the initial invoice
  
• The reimbursement amount before tax
  
• The corresponding VAT amount (if applicable)
  

The amounts indicated must be accompanied by the words “net à créditer” (net to be credited) or “net à déduire” (net to be deducted) instead of “net à payer” (net payable). Sophisticated invoicing software such as Stripe Invoicing can automate your invoice creation (including credit notes) as well as manage and streamline your accounts receivable without you having to write a single line of code.

What about VAT?

Companies that benefit from the basic VAT exemption regime are exempt from collecting VAT payments. Therefore, if an initial invoice is issued without VAT, the corrective invoice also will not include VAT.

However, if the company is subject to the normal or simplified tax regime (régime réel normal ou simplifié) and the initial invoice included VAT, the credit note must indicate the amount of VAT to be reimbursed.

Reform to electronic invoicing between companies

Starting in 2026, electronic invoicing gradually will become mandatory for all transactions carried out between businesses that are subject to VAT. This requirement goes into effect on:

• September 1, 2026, for large and intermediate-size businesses
  
• September 1, 2027, for small and medium-sized enterprises (SMEs) and microbusinesses
  

By these same dates, credit notes also will be required to be issued electronically using a partner dematerialization platform (PDP). The PDP is responsible for transmitting electronic invoices to recipients and transaction data to the government. You will also start receiving electronic invoices from your suppliers.