Proforma Invoice vs Invoice vs Quotation (and Estimate): What Each One Does

Quotation, proforma, invoice and advance-payment invoice side by side

Each tax cell says which jurisdiction it covers. “Ours” means the default in our own generators.

Proforma invoice vs invoice (final or tax invoice)

The short version: a proforma describes a sale that has not happened yet; the invoice records the sale. Only the invoice counts for VAT.

United Kingdom: what HMRC says

“You cannot reclaim VAT using an invalid invoice, a pro-forma invoice, a statement or a delivery note.”

GOV.UK, Keeping VAT records

“A pro-forma invoice, in normal circumstances, cannot be considered to be an accounting document and has no place in the books of account of the trader either issuing or receiving it. Pro-forma invoices should always be clearly described as such and should preferably be endorsed ‘This is not a VAT invoice’.”

HMRC VAT Traders' Records Manual, VATREC9010

“Pro-forma or similar invoices are not, therefore, acceptable evidence. … If the issuer of a pro-forma invoice subsequently receives payment and/or makes a supply, a full VAT invoice must be issued within 30 days. The tax point will follow the normal rules.”

HMRC VATREC9020

HMRC defines pro-formas as commercial documents “that contain some or all of the information normally contained on an invoice, but which do not fulfil that primary function” (VATREC9010). So a proforma can show the VAT you expect to charge, but it is not the document the VAT is reclaimed on.

European Union: what counts as an invoice

The EU VAT Directive (2006/112/EC, consolidated text of 14 April 2025) does not mention pro forma invoices at all. What it sets out is when an invoice must be issued and what it must contain, and that is what the buyer needs:

• Deduction needs an invoice. To deduct VAT on goods or services, the buyer “must hold an invoice drawn up in accordance with Sections 3 to 6 of Chapter 3 of Title XI” (Art. 178(a)).
• Advance payments need an invoice too. An invoice must be issued for “any payment on account made to him before one of the supplies of goods referred to in points (1) and (2) was carried out” and for “any payment on account made to him by another taxable person or non-taxable legal person before the provision of services was completed” (Art. 220(1)(4)-(5)).
• VAT on advances. “Where a payment is to be made on account before the goods or services are supplied, VAT shall become chargeable on receipt of the payment and on the amount received” (Art. 65).
• Invoice content. Art. 226 lists the details required on those invoices, starting with “(1) the date of issue; (2) a sequential number, based on one or more series, which uniquely identifies the invoice”.

Member States apply the Directive through national law, so check your own country’s VAT rules as well. Text quoted from EUR-Lex.

United States

The US has no national VAT. The Congressional Research Service puts it this way: “Most countries have VATs; the United States is an exception. Individual states within the United States generally impose a consumption tax in the form of a retail sales tax” (CRS, IF13037). For sales tax, follow the rules of the state concerned. US customs law does use the term: for some imports, if no invoice is available, “a pro forma (or substitute) invoice, as provided for in § 141.85, shall be filed” (19 CFR 141.83(d)). That is a customs question for goods crossing a border, covered in proforma vs commercial invoice.

India (GST)

We found no CBIC statement about proforma invoices, so we do not state a GST rule for them. The CGST Act provides for a tax invoice for the supply (section 31) and, “on receipt of advance payment”, “a receipt voucher or any other document, containing such particulars as may be prescribed, evidencing receipt of such payment” (section 31(3)(d), CBIC).

Comparing with a commercial invoice instead? A commercial invoice is the invoice for goods sold and shipped internationally. See commercial invoice vs invoice and proforma vs commercial invoice.

Proforma vs quotation and estimate

Both come before the sale. A quote or estimate offers a price so the customer can decide; a proforma is laid out like the invoice and is sent when you want payment, or sign-off on an exact amount, before you deliver.

• A quote is usually enough when the customer is still choosing, or when you will invoice after delivery on normal terms.
• Buyers ask for a proforma when they must pay before delivery and need an invoice-style document to approve or pay against: HMRC notes pro-formas are “frequently used to offer goods or services to customers who are: not known to the supplier, or of doubtful creditworthiness” (VATREC9010).
• Estimate vs quotation: our quotation and estimate generators use the same layout and print the same notice. The estimate has the title ESTIMATE and numbers starting at EST-<year>-001.

What our documents actually print

Proforma vs retainer or deposit invoice

A proforma asks for money without being an invoice. A retainer or deposit invoice is an invoice for an advance payment, so the invoice rules apply to it from the start.

• UK: if you receive a payment or issue a VAT invoice before the basic tax point, “the tax point for the amount you invoice or receive is the date you issue the invoice or receive the payment, whichever happens first” (VAT Notice 700, 14.2.2). HMRC adds: “Most deposits serve primarily as advance payments and will create tax points under paragraph 14.2.2(a) when you receive them” (14.2.3). A paid pro-forma is followed by “a full VAT invoice … within 30 days” (VATREC9020).
• EU: VAT on a payment on account becomes chargeable “on receipt of the payment and on the amount received” (Art. 65), and an invoice is required for the payment on account (Art. 220(1)(4)-(5)).

Which to send: use a proforma when you want payment before you commit to the supply and will issue the invoice once paid. Use an invoice for the deposit when you want the advance on your books as an invoiced amount. Retainer terms themselves (what the retainer covers and how it is drawn down) belong in your contract; see consulting billing best practices.

We have no separate retainer tool. For a deposit invoice, use the invoice generator. For the final bill, the consulting, contractor and freelance invoice generators have a “Deposit Paid” line; when it is above zero, the PDF shows the remaining amount as “Balance Due”.

Your customer paid the proforma: what to issue next

1. Issue the invoice. UK: “a full VAT invoice must be issued within 30 days” of receiving payment or making the supply, and “The tax point will follow the normal rules” (VATREC9020). EU: an invoice is due for the payment on account (Art. 220(1)(4)-(5)); national law sets the deadline. US: there is no VAT invoice to issue; businesses normally send the final invoice for the order, marked as paid or showing the payment received.
2. Give it its own invoice number. Use your invoice sequence, not the proforma number, and quote the proforma number as a reference if you like.
3. Send a receipt if the customer asks for proof of payment. Use the receipt generator.

In our generators: the proforma and invoice generators keep separate drafts in your browser on this device, and no button turns a proforma into an invoice. To bill a paid proforma, open the invoice generator and enter the details again. Download and keep each PDF you need.

Which document should you send?

• The customer is still deciding and wants a price→ Quotation or estimate
• You want payment, or approval of an exact amount, before you supply→ Proforma invoice
• You have supplied the goods or services, or the proforma has been paid→ Invoice
• You want a deposit or retainer invoiced as an invoice→ Invoice for the advance
• You have been paid and the customer wants proof→ Receipt
• The goods are being shipped abroad→ Proforma vs commercial invoice

For every invoice type in one place, see types of invoices.

Frequently asked questions