A deposit is a part-payment a client makes before work is finished or goods are delivered, usually to cover upfront costs or to confirm the order. It reduces what's still owed, and the final invoice should show that: bill the full job, then subtract the deposit as a separate line below the total, leaving the balance due. In the EU a deposit has VAT consequences. VAT becomes chargeable when a payment on account is received (Article 65 of the VAT Directive), and a payment on account from a business customer needs its own invoice (Article 220), so request it with an invoice rather than an informal message. Example: job total €2,420 including €420 VAT; deposit invoice INV-0140 for €726 (30%); final invoice INV-0152 shows €2,420, less the €726 deposit invoiced on INV-0140, balance due €1,694. Common mistakes: charging VAT again on the part already covered by the deposit invoice, and not referencing the deposit invoice on the final one, so the client can't reconcile the two.
What is a deposit?
Also known as: advance payment.
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