Decree 254/2026/ND-CP This allows businesses to avoid issuing invoices when receiving deposits, as stipulated by civil law. However, the application of this regulation does not depend on the name of the amount but on the legal nature of the transaction. If it is essentially an advance payment (prepayment), the business must still issue an invoice as required.
Therefore, correctly distinguishing between deposits and advances is crucial for determining the right time to issue invoices and minimizing tax risks.
1. Regulations on invoicing for deposits according to Decree 254/2026/ND-CP
Decree 254/2026/ND-CP The decree supplements regulations regarding the timing of invoice issuance for certain advance payments. Specifically, in cases where a business receives a deposit as stipulated by civil law, it is not required to issue an invoice at the time of receipt. However, this decree does not define what constitutes a "deposit." Therefore, to determine whether an amount falls under this category, businesses need to refer to the regulations on deposits in the relevant legal framework. Điều 328 Bộ luật Dân sự 2015.
This means that the tax authorities will not only base their decision on the name of the amount in the contract but also consider whether that amount actually meets the nature of a deposit as stipulated in the Civil Code. Therefore, to determine whether an invoice is not required, businesses need to... The nature needs to be considered. of the amount of money as stipulated in the deposit regulations of civil law.
2. What is considered a deposit?
Article 328 – Civil Code 2015 (amended and supplemented in 2017):
Article 328. Deposit
- A deposit is the act of one party (hereinafter referred to as the depositor) giving to another party (hereinafter referred to as the recipient of the deposit) a sum of money or precious metals, gemstones, or other valuable assets (hereinafter collectively referred to as the deposited assets) for a specified period to guarantee the conclusion or performance of a contract.
... "
Regulations at Điều 328 Bộ luật Dân sự 2015This serves as a legal basis for determining the nature of the money in each transaction. Therefore, when considering whether a sum of money constitutes a deposit, businesses should evaluate the contract as a whole and the purpose of the money, rather than just looking at the name.
For example: Customers deposit 5 million VND to reserve a spot on a tour departing during a holiday. When the tour is organized, this amount is deducted from the tour price. Although deducted from the contract value, the money is still available. Essentially, it's a deposit. Because they are tasked with ensuring that customers participate in the tour as agreed.
Criteria for determining whether a deposit can be considered valid:
- Purpose of the money: Is the money provided to guarantee the conclusion or performance of a contract, or to fund the business in providing services?
- Content contract: Does the contract clearly state that this is a deposit and include a mechanism for handling breaches by either party?
- How the parties conduct the transaction: After receiving payment, does the business simply reserve the reservation or schedule, or does it begin providing goods or services as per the contract?
In other words, businesses need to comprehensively assess the purpose, content of the contract, and how the parties conduct the transaction. Only when the money is used to secure the conclusion or performance of the contract can it be considered a deposit under the Civil Code.
3. The deposit can also be deducted from the contract value, so how is that different from an advance payment?
One point of confusion is Article 328 of the Civil Code, which stipulates that a deposit may be deducted to fulfill the payment obligation when the contract is performed.
In fact, both deposits and advance payments can be offset against the contract value when the transaction is completed. This is why many businesses confuse these two concepts. However, whether or not the final amount is offset is merely a consequence of the contract being executed, and not a basis for determining the nature of the amount from the moment the parties enter into the agreement.
|
Criteria |
Deposits |
Advance payment |
|
Purpose |
Ensuring the conclusion or performance of a contract. |
Partial or full payment of the contract value is required upfront. |
|
Nature |
Security measures |
Payment |
|
Invoice issuance time |
No invoices are issued when receiving deposits. If the deposit is deducted from the contract value, an invoice should be issued at the time the obligation arises, in accordance with regulations for goods and services. |
Issue an invoice immediately upon receiving the advance payment, in accordance with the regulations regarding the timing of invoicing for advance payments. |
|
Handling cases of non-performance of contracts. |
Provisions regarding forfeiture of deposit or penalty for breach of deposit agreement may apply, as stipulated in the Civil Code. |
Refunds or processing are usually by agreement and are not guaranteed. |
|
Recognizing signs |
There are often clauses about "guarantee," "loss of deposit," "deposit penalty," and "reservation" associated with the terms of the contract. |
Common terms include "advance payment," "prepayment," "gradual repayment," and "offsetting according to progress." |
Therefore, the final amount deducted from the contract value is not the basis for determining whether it is a deposit or an advance payment.
4. What should businesses keep in mind?
Determining the true nature of the payment is more important than the name in the contract. In fact, The tax authorities may base their assessment of the nature of the transaction on the entire transaction record, including the contract, payment documents, the purpose of the funds, the progress of contract execution, and how the parties fulfill their obligations. Therefore, simply recording the amount as a "deposit" in the contract will not automatically qualify for the regulation that no invoice is required if it is actually an advance payment.
Decree 254/2026/ND-CP This creates a basis for businesses not being required to issue invoices for deposit payments according to civil law regulations. However, to apply this regulation correctly, Businesses need to draft contracts that clearly state the purpose of the money and define the true nature of the transaction from the outset.Distinguishing between a deposit and an advance payment is not only important. This helps ensure timely invoicing while also mitigating tax and invoicing risks. when the competent authority conducts an inspection or audit.