Credit Note (חשבונית מס זיכוי) - When You Need One and How to Issue It Correctly
A mistake, a cancelled deal, or a returned product after a tax invoice has already been issued can’t be fixed by editing or deleting the original document. The only tool for this is a credit note (חשבונית מס זיכוי, referred to in Israeli bookkeeping regulations as a “הודעת זיכוי”).
Why you can’t just delete the invoice
An issued fiscal document (a tax invoice, transaction invoice, or receipt) is a permanent legal record. Document numbering must be sequential with no gaps, and deleting a document that already has a number would break that sequence and create a mismatch against reports you’ve already filed. So even when the mistake is obvious, the only way to correct it is a new document that cancels the old one.
What a credit note actually is
A credit note is a separate document, with its own sequential numbering, that references the original invoice and cancels its amount, either in full or in part (a partial credit, for example when only one item from a larger order is returned). It’s digitally signed exactly like any other fiscal document.
When the document being cancelled is a receipt, meaning you’re returning money the customer already paid, the matching document is called a credit receipt.
When to issue a credit note
- The customer cancelled the order or service after an invoice was already issued.
- A product was returned, fully or partially.
- An error was found in the amount or details of the original invoice (for example, a typo in the quantity).
- Incorrect customer details printed on an already-issued document need to be corrected.
How it affects your VAT report
For a licensed dealer (עוסק מורשה), a credit note reduces output VAT in the period it’s issued, not the period the original invoice was issued in. If the original invoice and the credit note fall in different reporting periods, each report simply reflects what was correct for its own period, and there’s no need to amend a report you’ve already filed.
What about an invoice that received an allocation number
A credit note itself doesn’t need its own allocation number (מספר הקצאה) - that requirement only applies to tax invoices above the threshold. When crediting an invoice that did receive an allocation number, the credit note references the original invoice’s number, as required for any credit, so the cancellation is correctly tied to the right transaction.
How Slate helps with credit notes
Slate lets you issue a full credit note with one click, directly from the original document. For a partial credit, you open a new credit note, pick the source document, and edit the line items - the system makes sure the amount never exceeds what’s left on the original. Either way, the link between the documents is kept automatically, and the sequential numbering and VAT impact are calculated without any manual reconciliation.