The proforma invoice is one of the most misunderstood documents in Bulgarian business. Many people issue and receive proformas every day without being sure what actually separates one from a real VAT invoice. The difference matters — it determines when VAT becomes due, when you gain the right to deduct input VAT, and what the customer actually owes. This article clears it all up.
What a proforma invoice is
A proforma invoice is a preliminary document — essentially an offer or a request for payment. It tells the customer what you are offering, in what quantity and at what price, before the supply has taken place. It often serves as the basis for an advance payment.
The key point: a proforma is NOT a tax document under the VAT Act or the Accountancy Act. That means it:
- creates no obligation to charge VAT;
- is not entered in the sales or purchase ledger;
- gives the recipient no right to deduct input VAT;
- is not booked as income or expense.
That is exactly why proformas usually carry the explicit label "Proforma" — so they cannot be confused with a VAT invoice.
What a (VAT) invoice is
The VAT invoice is the official accounting and tax document certifying that a supply of goods or services has taken place. It is issued when the tax event occurs — that is, upon delivery — or when an advance payment is received, and it must be issued within 5 days of the respective event.
The invoice contains the mandatory details under Article 114 of the VAT Act, charges VAT, is entered in the ledgers and gives the recipient the right to deduct input VAT when the legal conditions are met.
Differences between a proforma and an invoice
- Legal weight — the proforma is a proposal; the invoice is an official tax document.
- VAT — the proforma charges no tax; the invoice creates a VAT liability.
- Input VAT — none on a proforma; deductible on an invoice when the conditions are met.
- Accounting — the proforma is not booked; the invoice is entered in the ledgers.
- Numbering — proformas usually run in a separate sequence from VAT invoices.
- Payment — the proforma requests an advance; the invoice certifies an amount already due.
VAT and the proforma invoice
Because the proforma is not a tax document, issuing one creates no VAT obligations whatsoever. The tax becomes chargeable only at the tax event or upon actual receipt of the advance payment. The moment the customer pays the advance against the proforma, you are obliged to issue a VAT invoice for the advance within 5 days — and that invoice is what enters the sales ledger.
The reverse applies to the recipient: as long as all you hold is a proforma, you have no right to deduct input VAT. The right arises only once you receive a proper VAT invoice.
When to issue a proforma and when an invoice
- Issue a proforma when you want an advance, are sending an offer, or the customer needs a document to set a payment in motion.
- Issue an invoice when the supply has been made or you have received an advance payment — within the statutory deadline.
The typical commercial cycle looks like this: proforma → advance payment → VAT invoice for the advance → delivery → final invoice for the balance.
Converting a proforma into an invoice in Finsense
Retyping a proforma into a VAT invoice by hand is slow and error-prone. In Finsense's invoicing module you can issue a proforma and, once payment arrives, convert it into a proper VAT invoice in a single action — all lines, quantities and prices carry over automatically, and the system assigns it a correct number from the VAT invoice sequence.
From there the invoice flows automatically into your reporting, and when you prepare the VAT ledgers for the NRA it lands in the correct tax period. Proformas keep their own numbering and never mix with tax documents.
Mandatory details of a VAT invoice
Unlike a proforma, a proper VAT invoice must contain the details under Article 114 of the VAT Act to be valid and to carry the right to deduct input VAT:
- Sequential number and issue date.
- Name, address and VAT number of the supplier and the customer.
- Quantity and type of the goods or services.
- Taxable amount, rate and amount of tax.
- Total amount payable.
If any of these details is missing, the recipient risks losing the input VAT deduction — which is why automatic completion by the system is real protection against human error.
What about credit and debit notes
If the terms change after an invoice has been issued — a returned item, a discount, a price correction — you do not reissue the invoice itself. You issue a credit note (for a decrease) or a debit note (for an increase) that references the original invoice. Notes are tax documents too and enter the ledgers, while the proforma stays outside this logic entirely.
Frequently asked questions
Does a proforma invoice include VAT?
A proforma may show VAT as information for the customer, but it creates no tax liability and is not entered in the ledgers. The tax becomes chargeable at the tax event or when the advance is paid.
Can I book a proforma invoice?
No. A proforma is not an accounting document. For bookkeeping and input VAT you need a proper VAT invoice.
Is separate numbering for proformas mandatory?
VAT invoices must follow an unbroken chronological sequence. Good practice is to keep proformas in a separate sequence so they never mix with tax documents.
When does a proforma become an invoice?
When the supply has been made or the customer has paid an advance. You then issue a VAT invoice within 5 days.
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