When should you issue a VAT invoice in Vietnam? Before or after payment?
When should you issue a VAT invoice in Vietnam? Learn the latest rules for goods, services, advance payments, deposits and milestone-based contracts.
When a customer transfers money to your business, do you need to issue a VAT invoice immediately? Or can you wait until the work is completed?
The answer depends on the type of transaction and the applicable invoicing rules. An invoice is not always issued after payment, and not every advance payment or deposit is treated in the same way.
Under Decree 254/2026/ND-CP, effective from 1 July 2026, the timing of invoice issuance differs between the sale of goods and the provision of services.
1. When should you issue a VAT invoice?
There are three general principles to understand:
- Sale of goods: Issue the invoice when ownership or the right to use the goods transfers to the buyer, regardless of whether payment has been received.
- Provision of services: Generally, issue the invoice when the service is completed, regardless of whether payment has been received.
- Advance or interim payments for services: In general, the invoice must be issued when payment is collected, except for deposits made under the Civil Code to secure the performance of a service contract.
Specific rules may apply to certain transactions, including staged deliveries, services handed over in separate phases and particular types of services that have their own invoicing timelines.
The first step is therefore to identify the nature of the transaction before deciding when to issue the invoice.
2. Selling goods: invoice when the goods are transferred
For the sale of goods, the general rule is that the invoice must be issued when ownership or the right to use the goods transfers to the buyer.
This means:
- The customer pays in advance, but the goods have not been transferred: Receiving payment alone does not generally trigger the invoice under the standard goods rule.
- The business delivers the goods before receiving payment: The invoice must still be issued at the time of transfer, rather than waiting for payment.
- The customer pays when receiving the goods: The transfer and payment may happen at the same time.
Example: A company sells office equipment for VND 20 million. The equipment is delivered on 10 August, but the customer pays on 15 August. Under the general rule, the invoice should be issued when the goods are transferred on 10 August, not when payment arrives five days later.
3. Providing services: when should you issue the invoice?
For services, the general rule is to issue the invoice when the service is completed. However, if the service provider collects payment before or during the provision of the service, the invoice generally needs to be issued when the payment is received.
This distinction matters for service businesses working under contracts.
Example 1: Design services
A design agency agrees to create a brand identity. The customer pays in full after receiving the final deliverables, and the service is completed at handover.
In this typical scenario, the invoice is issued when the service is completed.
Example 2: Monthly marketing services
A marketing agency provides services throughout August and collects payment before starting the work.
If the payment is an advance payment for the service, the general rule may require the invoice to be issued when the money is received, rather than waiting until the end of August. However, certain services are subject to specific invoicing timelines, so businesses should check whether a special rule applies to their service.
Example 3: Software development
A software company develops a product under a contract with payments linked to different project stages.
If individual stages are handed over separately, the business needs to consider the invoicing requirements for each corresponding part of the service. If payments are collected before or during service delivery, the advance-payment rule must also be considered.
4. Do you need to issue a VAT invoice when receiving a deposit?
Not every deposit is treated in the same way.
Decree 254/2026/ND-CP excludes deposits made under the Civil Code to secure the performance of a service contract from the general rule requiring an invoice when payment is collected before or during service delivery.
However, simply calling a payment a “deposit” in a contract or bank transfer reference does not automatically qualify it for this exception. The business needs to consider the actual nature of the payment, the contractual terms and whether the arrangement meets the applicable legal requirements for a security deposit.
For example, money paid in advance to settle the price of a service may be treated differently from a genuine deposit intended to secure performance of the contract.
If the distinction is unclear, consult your accountant or tax adviser before deciding when to issue the invoice.
5. Milestone payments: do you need multiple invoices?
For contracts with multiple payment stages, businesses should not determine invoice timing solely from the payment schedule.
Under the general rules, where goods are delivered in multiple batches or individual service items or stages are handed over separately, an invoice must be issued for the corresponding volume and value of the goods or services delivered or handed over.
Consider a website design and development project worth VND 60 million, with payments divided as follows:
- 30% at project commencement
- 30% after design approval
- 30% after development is completed
- 10% upon final handover
This schedule helps both parties manage cash flow and agree on payment expectations. However, the payment schedule alone does not determine when invoices must be issued. The business needs to assess whether each payment is a security deposit, an advance payment or payment for a stage of work already handed over, and check whether any specific invoicing rules apply.
For contracts with several independent deliverables, issuing separate quotations for individual stages may help make the scope and payment terms clearer. However, splitting a contract into multiple quotations is not mandatory for every project.
6. Common mistakes when issuing VAT invoices
Several misunderstandings can lead to invoices being issued at the wrong time.
Waiting for payment after delivering goods. For goods, the general invoicing point is the transfer of ownership or the right to use the goods, not the date payment arrives.
Assuming every service invoice can wait until completion. If payment is received before or during service delivery, the receipt date may trigger the invoicing obligation, unless an exception or specific rule applies.
Assuming any payment labelled “deposit” is exempt. The actual nature of the payment and the applicable legal conditions matter.
Checking invoice timing only at the end of a project. For contracts with multiple stages, businesses should establish a clear approach to deliverables, payments and invoicing from the beginning.
7. Manage quotations and VAT invoices in one place with invoi.vn
When customer information, quotations, payments and invoices are scattered across different tools, businesses can waste time entering the same information repeatedly and lose track of individual transactions.
Invoi helps businesses manage customer information, create quotations and prepare VAT invoices on one platform. When it is time to issue an invoice, users can reuse information from the quotation instead of entering everything again. This saves time and reduces the risk of manual data-entry errors.
Business owners and customer-facing staff can prepare quotations and transaction details, while accountants can review the information and handle the accounting work that requires their expertise. Everyone works with shared, centrally stored information instead of relying on data being passed between separate tools.
Learn more: What is a quotation? How is it different from an invoice?
Conclusion
The timing of a VAT invoice in Vietnam does not depend solely on whether the customer has paid.
For goods, the general rule is to issue the invoice when ownership or the right to use the goods transfers. For services, both completion of the service and receipt of advance or interim payments may determine the timing, depending on the circumstances.
Businesses should identify the type of transaction, review the contract terms, understand when each stage is handed over and determine the nature of any advance payment or deposit before issuing an invoice. For unusual transactions or unclear cases, check the current regulations and seek professional tax advice.
This article provides general information and does not replace tax or legal advice for a specific transaction. Always check the applicable rules, including Decree 254/2026/ND-CP and Circular 91/2026/TT-BTC.
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