Pro forma invoice in Cyprus: asking for money, not tax

A painter in Paralimni — a μπογιατζής with a three-man crew — signs a 7,800 euro exterior repaint on an old block of flats and needs 2,600 euro before he starts, for paint and a week of scaffolding. The customer says: send me an invoice and I will pay it. He sends an invoice. The ΦΠΑ on that 2,600 euro becomes due in the quarter he sent it, and the customer pays ten weeks later.

That is not a cashflow problem caused by a slow customer. It is a cashflow problem caused by choosing the wrong document, and the right one has a name in both languages.

What actually makes the tax due

The Cypriot time of supply rules fit in three sentences, and they are worth reading as written rather than as remembered:

A supply of goods is treated as taking place at the time of the removal of the goods or at the time when the goods are made available to the person to whom they are supplied. A supply of services is treated as taking place at the time when the services are performed. As an exception to the above, if an invoice is issued or a payment is received before or an invoice is issued within 14 days after the removal of the goods and the performance of services, the supply of goods or services is treated as taking place at the time the invoice is issued or the payment is received.

Two things follow that matter to anybody who takes deposits.

An invoice makes the tax due by itself. Not the payment, not the completion — the issue of the document. Send an invoice in March for work starting in May and the ΦΠΑ belongs in the March quarter.

A payment does the same. Money received in advance brings the tax point forward to the day it arrives, for the amount that arrived.

So there are two triggers and a trade business controls only one of them.

The document that is deliberately not an invoice

A pro forma invoice — προτιμολόγιο — is a request for payment that is not an invoice. It carries no ΦΠΑ amount, takes no number from the outgoing invoice series, and gives the customer no right to deduct anything. Nothing in the VAT Law names it, and that is not a gap in the Law: it is the reason the document works. A sheet the Law does not recognise cannot be the invoice that starts the clock.

The boundary is the part to get right, and it is about content rather than the heading. A document headed προτιμολόγιο that carries a number from your invoice series, lists the Tenth Schedule particulars and states a ΦΠΑ amount is an invoice with a misleading title, and treating it as harmless is the version of this that ends badly. The label has to match what is on the page:

• Heading: Pro forma invoice / προτιμολόγιο, and one line saying it is not a tax invoice and gives no right to deduct ΦΠΑ.
• Your own reference, from a separate series. Never a number from the outgoing invoice run.
• The work, the amount, and the treatment that will apply when the real invoice follows — 5 %, 19 %, or the Article 11B note where the customer is a taxable person.
• A validity date and the payment details.

Naming the treatment in advance is the half people leave out, and it is the half that prevents the argument. A customer who pays 2,600 euro against a προτιμολόγιο and then receives an invoice with 19 % on it, having assumed 5 %, has been given a surprise he will take out of the final account. Which of the three applies is decided by his registration rather than by the job — that is The VAT number in Cyprus decides the rate on your invoice.

What has to happen the day the money lands

The pro forma did nothing. The payment does everything.

On the day the customer's προκαταβολή reaches the account, the tax point falls for that amount, and a proper invoice has to follow carrying the ΦΠΑ. The pro forma is not amended, not re-sent and not turned into an invoice — it has done its job and it stays where it is, in its own series, as the record of what was asked for.

The return itself is quarterly, and it is due within forty days of the end of the last month of the quarter. That forty days is the whole of the practical difference between the two routes: a payment that lands on 9 April is declared in a return that falls due in August, while an invoice issued on 24 March is declared in one that falls due in May.

Where the software has to hold the line is at the second document, not the first. Zirko has no pro forma document type, so the pro forma you send is something you produce alongside the invoice series rather than inside it. What the invoice series does guarantee is that nothing consumes a number before it is finished: a draft carries no number at all, and the number is issued by the server only at the moment the invoice is completed. What Zirko does not do is decide the moment your tax point falls — that follows from when the money arrived and when the work was done, and it is a matter of fact rather than of settings.

What your customer can and cannot do with it

The half of this that gets forgotten is the other side of the desk, and it is worth saying out loud on the document itself.

He cannot reclaim anything from it. A pro forma carries no ΦΠΑ and none of the Tenth Schedule particulars, so it gives no input tax. A business customer who puts one through his books as a purchase invoice has claimed tax on a document that never charged any.

He cannot treat it as a debt owed. It is a request, not a claim. That is a disadvantage for you and the reason a pro forma is the wrong document once the work is done: an unpaid tax invoice sits in an ageing list with a due date on it, and an unpaid προτιμολόγιο sits in a drawer.

He can, and usually will, ask when the real one comes. The answer is: when the money arrives. Saying so in the covering line — the tax invoice follows on receipt of payment — removes the one question a pro forma reliably generates, and it is also an accurate statement of the time of supply rule above.

Where a pro forma is the wrong tool

Once measurable work has been done, the pro forma stops being prudent and starts being evasive.

A staged construction job with completed sections, an agreed measure and a retention needs a real interim invoice, with a number, the treatment on its face and a place in the ageing list. Repeating a pro forma through a six-month contract does not defer tax on work already performed; the services were performed, and the basic tax point applies whether a document was issued or not. It only defers the paperwork, which is the opposite of what a retention dispute needs.

Under Article 11B the calculation changes shape as well: where the customer accounts for the ΦΠΑ, there is no tax on the invoice to fund in the first place, so the reason for taking a deposit is materials and nothing else. The mechanics are in Cyprus VAT reverse charge in construction: Article 11B, and whether any of this applies to you at all begins with Cyprus VAT registration: 15,600 euro, and 30 days.

Two jobs, one week, and the quarter they land in

The same painter, the same last week of March, two private customers.

The old block of flats, 5 per cent. He issues a τιμολόγιο for the 2,600 euro deposit on 24 March. The tax point is that day. The 130 euro of ΦΠΑ belongs in the quarter ending 31 March, and the return falls due forty days later, around 10 May. The customer pays on 2 June. He funded his customer's tax for three weeks — and had the customer walked away, the 130 euro would still have been due on money he never received.

The new villa, 19 per cent. For the 6,000 euro deposit he issues a προτιμολόγιο on the same 24 March, naming 19 % as the rate that will apply. The customer pays on 9 April. The tax point is 9 April, so the 1,140 euro of ΦΠΑ belongs in the following quarter and the return falls due around 9 August. The money sat in his account for four months instead of the authority's, and every cent of it was always going to be paid.

Same painter, same week, same rules. The difference is one word at the top of a sheet of paper, and it was worth 1,140 euro of working capital and the risk on 130 euro he had not been paid.

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Position as at 24 September 2026. This article describes the law and is not tax advice. Nothing in the VAT Law names a pro forma at all, which is exactly why its treatment can only ever change through the time of supply rules — if those are amended, the day your money becomes taxable moves with them, and the document at the top of the chain will not tell you.

What Zirko does here: an invoice number is issued by the server only when the invoice is finished, in an unbroken run, and a finished invoice can no longer be edited — a correction is a credit note or a cancellation with its own number. What Zirko does not do: it has no separate pro forma document type today, so the request for payment is something you produce alongside the invoice series rather than inside it; and it does not decide when your tax point fell, or turn a pro forma into an invoice behind your back — the second document is written when the money arrives, by you.