A debit note, also known as an accounting note, is an accounting document. Unlike invoices, it does not document the sale of goods or services but is used for billing in other cases, such as charging additional fees or charging a counterparty for costs related to a contract. In this article, we will explain what a debit note is, how to issue it, and its use in business and tax practice.
What is a debit note?
A debit note is an accounting document used for financial settlements between counterparties in situations that do not require an invoice. It is used when charging costs not directly related to the sale of goods or services. The note allows you to document additional financial receivables or liabilities formally.
When is a debit note used?
The debit note is used in situations such as:
- Charging a counterparty with additional costs, such as for a delay in the execution of a contract,
- Charging contractual penalties,
- Settlements resulting from cost sharing, e.g., shared office rental,
- Charging for transportation or return of goods,
- Re-invoicing of expenses that are not subject to VAT (e.g., postage).
How to issue a debit note?
Issuing a debit note does not require using a unique accounting program – it can be drawn up manually or in any word processor. However, the note must meet specific formal requirements.
Elements of a debit note:
- Heading of the document - Marked “Debit note” or “Accounting note.”
- Date of issue - The date of preparation of the document
- Document number - A unique sequence number that allows identification of the note
- Data of the parties: Data of the issuer (name, address, TIN), data of the recipient (name, address, TIN)
- Description of the object of the debit - A detailed description of the reason for issuing the note (e.g., contractual penalty for late performance of a service)
- Amount of the debit - Value expressed in currency, usually in zlotys
- Signature of the issuer - Optional signature of the person responsible for issuing the note
Debit note - sample
Below is a sample sample of a debit note:
DEBIT NOTE NO. 01/11/2024
Date of issue: 04.11.2024
Issuer: XYZ Sp. z o.o., ul. Przykładowa 1, 00-001 Warsaw, NIP: 123-456-78-90
Recipient: ABC S.A., 10 Testowa Street, 00-002 Kraków, NIP: 987-654-32-10
Description: Charge for untimely implementation of the agreement by paragraph 10 of the contract no. 123/2024 dated 01.01.2024.
Amount: 5,000.00 PLN
Signature:
[Name of issuer].
Is the debit note an expense?
A debit note is not a document confirming a cost within the meaning of tax regulations. However, if it meets the criteria for a deductible expense, it may become the basis for accounting for costs in certain situations.
When is a debit note a cost?
- If it complies with the provisions of the contract between the contractors.
- If it documents actual, legitimate business expenses.
- When it is not subject to invoicing (e.g., contractual penalties).
When is a debit note a tax expense?
A debit note must meet the requirements of the Corporate Income Tax Act (CIT) or the Personal Income Tax Act (PIT) to be considered a tax expense.
Examples of situations in which a note can be a tax expense:
- Charging a contractual penalty - If a company is penalized for failure to perform a contract on time, and the penalty arises from the contract, it can be included as an expense.
- Reimbursement of shared office expenses - A note for sharing rental costs can be the basis for including the payment as an expense.
- Transportation costs - When the note documents sharing the cost of transporting goods between contractors.
Remember that the debit note must be appropriately documented and by the regulations.
Debit note vs. invoice - application
A debit note differs from an invoice in that it does not document the sale of goods or services. It is also not an accounting document required for VAT settlement. A debit note is used in situations where an invoice would be an inappropriate accounting tool.
Examples of differences:
- Debit note - Used when no VAT transaction (e.g., charging a contractual penalty).
- Invoice - Documents the sale of goods and services, subject to VAT regulations.
Correction of a debit note - what should be kept in mind?
Correction of a debit note may be necessary in case of errors in the amount, counterparty data, or other document elements. In the case of a correction, a new document that refers to the original note should be issued.
What should a note correction contain?
- Information about the corrected document (number, date of issue).
- An explanation of the reason for the correction.
- New, correct data.
- The date on which the correction was made.
A debit note is a valuable tool in financial settlements between counterparties in situations that do not require an invoice. Its proper drafting allows the formal documentation of additional receivables or costs. Although the note does not report transactions subject to VAT, it can be considered a tax expense if it meets certain conditions. Entrepreneurs should remember to draft and make correct notes to avoid billing problems.
