How to Create a UBL Credit Note

When Do You Need a Credit Note?

A credit note is a formal document that partially or fully reverses a previously issued invoice. You issue a credit note when goods are returned, a pricing error is discovered, a discount is applied after the fact, or an entire transaction is cancelled. In the EU's e-invoicing ecosystem, credit notes must be structured and compliant just like invoices — the same EN 16931 rules apply, and the same transmission channels (Peppol network, Chorus Pro, government portals) are used.

InvoicePeppol lets you create a UBL 2.1 Credit Note from scratch using the same invoice builder you would use for a regular invoice. The process is straightforward: you specify the document type as a credit note, reference the original invoice, and fill in the details of what is being credited. Here is the full walkthrough.

Step-by-Step: Create a UBL Credit Note

Go to the Create Invoice page.
Navigate to Create Invoice from your dashboard. The same builder handles both invoices and credit notes — you will select the document type in the next step.
Select "Credit Note" as the document type.
Change the document type from "Invoice" to "Credit Note." This switches the output to use the UBL <CreditNote> root element (instead of <Invoice>) and sets the document type code to 381. The form fields remain the same, but the generated XML will be structured as a proper credit note.
Reference the original invoice.
Enter the number and issue date of the original invoice you are crediting. This is a critical field — it creates the audit trail that tax authorities require. The reference appears in the <BillingReference> element of the XML. Without it, the credit note may be rejected by validation or by the recipient's accounting system.
Fill in seller and buyer details.
Enter the seller (your company) and buyer details. These should match the original invoice exactly — same legal names, addresses, and VAT numbers. A credit note must be issued by the same entity that issued the original invoice, to the same recipient. Any mismatch will raise flags during processing.
Add credit line items.
Add the items being credited. Each line item should have a description, quantity, unit price, and VAT rate. For a full reversal, include all line items from the original invoice with the same quantities and prices. For a partial credit, include only the items being credited — for example, 2 out of 10 units returned, or a single service line being adjusted.

Important: in UBL credit notes, amounts are entered as positive numbers. The fact that the document is a credit note already indicates that these amounts reduce the buyer's liability. Do not enter negative quantities or prices — that is not compliant with EN 16931.
Review and download the XML.
Check the summary to verify the credit amounts, VAT breakdown, and total. Then download the UBL 2.1 Credit Note XML. You can submit it through your Peppol Access Point, upload it to a government portal, or send it to your buyer's accounting system.

Tips for Compliant Credit Notes

Always reference the original invoice: Every credit note should include the original invoice number in the billing reference. This is mandatory under most EU e-invoicing mandates and is a best practice even when not strictly required. Without it, the buyer's accounting system cannot automatically match the credit to the invoice.
Match the VAT treatment: The VAT rates on your credit note lines must match the VAT rates on the corresponding lines of the original invoice. If the original line was taxed at 21%, the credit line must also be at 21%. Mismatched VAT rates will cause validation failures and accounting discrepancies.
Partial vs. full credit notes: For a full reversal, credit every line item from the original invoice at the exact same quantity and price. For a partial credit, only include the specific items or quantities being credited. You can issue multiple partial credit notes against the same invoice — just make sure the cumulative credited amount does not exceed the original invoice total.
Use positive amounts: UBL credit notes use positive values. The document type (381) tells the system these amounts are credits. Entering negative amounts violates the EN 16931 standard and will fail Peppol validation.
Include a reason: While not always mandatory, adding a note explaining why the credit note is being issued (e.g., "Goods returned — delivery #12345" or "Price correction per agreement dated 2026-03-15") helps both the buyer and any auditors understand the transaction.

Partial Credit Note vs. Full Reversal

The distinction matters for both accounting and compliance:

Full reversal: You are cancelling the entire original invoice. The credit note contains all line items at the same quantities and prices. The total credited amount equals the total of the original invoice. After processing, the buyer's liability from that invoice is zero. You may issue a new corrected invoice separately if the transaction itself is still valid but was invoiced incorrectly.
Partial credit: You are adjusting part of the original invoice. This could mean returning some items, reducing the quantity on a line, applying a post-sale discount, or correcting the price on one line while leaving others unchanged. The credit note only contains the items and amounts being adjusted. The remaining balance on the original invoice stays active.

In both cases, the credit note must reference the original invoice, and the VAT treatment must be consistent. InvoicePeppol handles the XML structure for both scenarios — you simply include the line items you want to credit.

Frequently Asked Questions

Can I issue a credit note against an invoice that was not electronic?

Yes. Even if the original invoice was a paper invoice or a plain PDF, you can create an electronic credit note that references it. Enter the original invoice number manually in the billing reference field. The electronic credit note will stand on its own as a valid EN 16931 document.

Can I credit multiple invoices with a single credit note?

Technically, EN 16931 allows referencing multiple invoices in a single credit note. However, best practice — and what most Peppol Access Points and government systems expect — is to issue one credit note per original invoice. This keeps the audit trail clean and avoids processing complications. If you need to credit three invoices, create three separate credit notes.

How does the buyer process a credit note?

When the buyer's accounting system receives the credit note XML, it automatically reduces the open balance on the referenced invoice. If the original invoice showed a payable amount of EUR 1,000 and the credit note is for EUR 200, the outstanding balance drops to EUR 800. The buyer's input VAT deduction also decreases by the VAT amount on the credit note. Most modern accounting software handles this matching automatically.

Is a credit note the same as a refund?

Not exactly. A credit note reduces the amount owed — it is an accounting adjustment. A refund is an actual payment of money back to the buyer. In practice, a credit note often triggers a refund, but they are separate actions. You might issue a credit note and then refund the money, or you might apply the credit to the buyer's next invoice instead of refunding. The credit note documents the adjustment; the refund (if any) is a separate financial transaction.

Next Steps

Credit Note Format Guide — technical details on UBL credit note structure, document type codes, and country-specific rules
Peppol BIS 3.0 Guide — how credit notes fit within the Peppol specification
How to Create a Peppol Invoice — the invoice creation walkthrough if you need to issue a corrected invoice after crediting

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