Transaction Invoice, Tax Invoice and Receipt
A transaction invoice documents a transaction; a tax invoice is a tax document; a receipt documents the receipt of payment.
The word “invoice” alone is not sufficient: check the type of document. A transaction invoice is not a tax invoice and does not prove that payment was received. A tax invoice is issued by a VAT-registered business under the law and can be used for input tax deduction when the conditions are met. A receipt documents a payment received. A tax-invoice-receipt combines the two roles where it is appropriate to issue both documents together. The timing of the tax invoice depends on the type of transaction and the charging rules, and is not always identical to the time of payment. A price quote is not a receipt.
A designer sent a transaction invoice for 200 ₪ before payment. The document does not state that 200 ₪ has already been received. When the payment is received it must be recorded in a receipt according to the rules.
Match: documentation of payment received, documentation of a transaction and tax document — to each document type.
Official information and further reading ↗Check your understanding
What does a receipt prove?
- That the payment recorded in it was received
- That the business is exempt from all tax
- That a price quote was received
Answer and explanation
That the payment recorded in it was received. A receipt documents a payment received; it does not replace any other document.
Does a transaction invoice alone prove that payment was received?
- Yes
- No
- Only if the amount is large
Answer and explanation
No. A transaction and a payment are two events that may occur at different times.
Continue learning
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Exempt Dealer and VAT-Registered Dealer: Exempt from What? — Exempt Dealer and VAT-Registered Dealer are classifications for VAT purposes; being exempt does not mean exempt from all taxes.
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