AT · Ofício Circulado 25120/2026
Credit notes are not for cancelling invoices: what AT Circular 25120/2026 changes
- Who it affects
- Any company issuing invoices in Portugal.
- What changes
- Credit notes correct value or VAT. They can no longer be used to cancel an invoice.
- D365FO impact
- Cancel and reissue with the original supply date, and VAT-only credit and debit notes after 2026.
On 28 July 2026 the Portuguese tax authority (AT) published Ofício Circulado 25120/2026. It sets out how to rectify invoices and correct VAT. It replaces a circular from 1993. The short version for anyone who builds or configures billing software: a credit note is no longer the tool to cancel an invoice.
This is my reading of a public document. It is not tax advice.
The main rule
If the taxable value or the VAT amount of an operation changes, you issue a rectifying document, which is a credit note or a debit note. This is required by article 29(7) of the VAT Code. The rectifying document counts as part of the original invoice.
A credit note should only change the elements that need changing. The circular says it cannot be used to cancel invoices.
When you cancel and reissue instead
Two cases do not call for a credit note:
- Formal errors that do not touch the taxable value or the VAT, for example a wrong tax number, address or description.
- An invoice for an operation that never happened.
In both cases you cancel the invoice in the billing system. For a formal error you then issue a corrected invoice. It must state the date the goods or services were actually supplied, so the VAT due date stays the same, and there is nothing to fix in the VAT return. For an operation that never happened there is no new invoice. If the VAT return for that period has not been filed yet, cancelling is enough. If it has, a replacement return is needed to remove the VAT.
The circular also separates this from a real operation that later ends, such as a return of goods or a cancelled contract. That case still uses a credit note.
VAT charged too much, or too little
Recovering VAT charged in excess is optional. If you do it, the credit note and the proof described below are required.
| Situation | Document | Return | Time limit |
|---|---|---|---|
| Too much VAT (in favour of the taxpayer) | Credit note, plus proof the customer knew | Field 40 | 2 years from the date the VAT became due for billing errors, 4 years for errors of law |
| Too little VAT, billing or calculation error | Debit note, mandatory | Field 41 | Same or next period without penalty. After that, a replacement return for the original period, with interest and fines |
| Too little VAT, error of law (wrong rate, wrong exemption, wrong reverse charge) | Debit note, mandatory | Replacement return for the period the VAT originally became due | Interest and fines may apply |
| Mistake only in the books | No document | Correct in accounting. In favour of the taxpayer, field 40. In favour of the State, a replacement return | 2 years in favour of the taxpayer, limitation period with interest and fines in favour of the State |
Proof that the customer knew
To recover VAT you charged too much, you need proof that the customer received the correction or was refunded. The circular gives examples that work: a reply email confirming receipt, a log from a customer portal showing who opened which document and when, a signed copy, or a bank refund clearly linked to the credit note.
What does not work is tacit acceptance, such as “no objection within 15 days”. For final consumers, when proof that they knew can’t be obtained, proof of the refund is enough, including a deduction from a later purchase.
The transition for software
The circular knows that some billing programs cannot issue a credit or debit note that only carries VAT. Until the end of 2026, those taxpayers may cancel the whole operation with a credit note and issue a new invoice. The new invoice must refer to the invoice it corrects and state the original supply date.
After 2026, a full cancel and reissue is still possible, but then both the supplier and the customer must file replacement returns for the period of the original operation. In practice, VAT-only notes become the realistic option.
What I would check in an ERP
- Can a posted invoice be cancelled and reissued with the original supply date?
- Can you issue a credit or debit note that changes only the VAT, without touching the taxable base?
- Is there a debit note flow for VAT that was charged too little?
- Are delivery confirmations and portal logs stored and linked to the credit note?
- Does any process still treat silence as acceptance?
- When a cancelled document was already reported to the tax authority, is that communication corrected too? The circular points to the Portal das Finanças guidance for this.
In certified software a cancelled document normally stays in the records with a cancelled status. It is not deleted. That matters for how you design the cancel step.
Sources: Ofício Circulado 25120/2026 on the AT website, Cuatrecasas summary.