CUSTOMER MAKES AN ADVANCE PAYMENT OR DEPOSIT FOR GOODS: IS AN INVOICE REQUIRED?
Whether an invoice must be issued when a customer makes an advance payment depends on whether the transaction involves the sale of goods or the provision of services, as the invoice issuance timing differs in each case.
Pursuant to Article 9 of Decree No. 254/2026/ND-CP, the regulations provide as follows:
Time of invoice issuance
1. The time for issuing an invoice for the sale of goods (including the sale or transfer of public assets and the sale of national reserve goods) is the time when ownership or the right to use the goods is transferred to the buyer, regardless of whether payment has been received.
For exported goods (including goods processed for export), the time for issuing an electronic commercial invoice, electronic VAT invoice, or electronic sales invoice shall be determined by the seller, but no later than the next working day from the date on which the goods are cleared through customs in accordance with customs regulations.
2. The time for issuing an invoice for the provision of services is the time when the provision of services is completed (including services provided to foreign organizations or individuals), regardless of whether payment has been received. Where the service provider receives payment in advance or during the provision of services, the time for issuing the invoice is the time when payment is received (excluding deposits collected in accordance with the Civil Code to secure the performance of a service contract).
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Accordingly, it is necessary to clearly determine whether the transaction is a sale of goods or a provision of services, specifically:
– For the sale of goods:
- No invoice is required at the time the advance payment is received.
- Invoice issuance time: the time when ownership or the right to use the goods is transferred to the buyer, regardless of whether payment has been received.
– For the provision of services:
- An invoice must be issued at the time the advance payment is received.
- Invoice issuance time: the time when payment is received, where the service provider receives payment in advance or during the provision of services.
Note: If the advance payment is a deposit collected in accordance with the Civil Code to secure the performance of a service contract, an invoice is not required at the time the deposit is received.
Where one party under a contract gives the other party a sum of money without clearly determining whether such amount is a deposit or an advance payment, such amount shall be considered an advance payment. (Article 37 of Decree No. 21/2021/ND-CP).
Therefore, if a deposit is received for the sale of goods, the invoice must be issued when the goods are transferred to the buyer. Meanwhile, if a deposit is received in accordance with the Civil Code to secure the performance of a service contract, an invoice is not required at the time the deposit is received.
Guidance on Accounting for Advance Payments Received for Multiple Periods from Service Provision Activities in Account 511 under Circular 99
Pursuant to Part B, Appendix II issued together with Circular No. 99/2025/TT-BTC, regarding Account 511 – Revenue from Sale of Goods and Provision of Services.
The accounting method for advance payments received for multiple periods from service provision activities is specifically as follows:
– When receiving advance payments from customers for multiple periods, record:
Debit Accounts 111, 112 (total amount received in advance)
Credit Account 3387 – Deferred Revenue
Credit Account 3331 – VAT Payable (if applicable)
– Periodically, calculate and recognize the revenue for the accounting period, record:
Debit Account 3387 – Deferred Revenue
Credit Account 511 – Revenue from Sale of Goods and Provision of Services …
– The amount to be refunded to the customer where the contract is not continued or the service performance period is shorter than the period for which payment was received in advance (if any), record:
Debit Account 3387 – Deferred Revenue
Debit Account 3331 – VAT Payable (VAT amount related to the service provision activity that is not performed and refunded to the customer) (if applicable)
Credit Accounts 111, 112, … (total amount refunded)
Conditions for Recognizing Revenue in Account 511 under Circular No. 99/2025/TT-BTC
Pursuant to Part B, Appendix II issued together with Circular No. 99/2025/TT-BTC, the conditions for recognizing revenue in Account 511 – Revenue from Sale of Goods and Provision of Services are specifically as follows:
(1) An enterprise shall recognize revenue from the sale of goods only when all of the following conditions are simultaneously satisfied:
– The enterprise has transferred the significant risks and rewards associated with ownership of the products and goods to the buyer;
– The enterprise no longer retains the right to manage the goods as the owner or control the goods;
– The revenue can be determined with reasonable certainty;
– The enterprise has received or will receive economic benefits from the sale transaction;
– The costs related to the sale transaction can be determined.
(2) An enterprise shall recognize revenue from the provision of services only when all of the following conditions are simultaneously satisfied:
– The revenue can be determined with reasonable certainty. Where the contract provides that the buyer has the right to return the purchased services under specific conditions, the enterprise shall recognize revenue only when such specific conditions no longer exist and the buyer no longer has the right to return the services provided;
– The enterprise has received or will receive economic benefits from the service provision transaction;
– The percentage of completion of the work at the reporting date can be determined;
– The costs incurred for the transaction and the costs to complete the service provision transaction can be determined.
