A deposit invoice (sometimes called an advance invoice) asks for part of the money up front, before you lift a finger on the work. For freelancers it's a great way to cover materials, protect your time, and filter out tyre-kickers — but the VAT and the maths have to be handled correctly.
What to include
Every valid deposit invoice should show: 1. a “deposit / advance” label; 2. the percentage of the total; 3. the balance remaining; 4. your VAT number; and 5. the expected completion date. Miss any of these and the document gets harder to enforce — and for VAT, it can become invalid.
How the tax/calculation works
A deposit invoice requests part of the total before you start. VAT is usually charged on the deposit; the final invoice then deducts what was already paid. The rate applied here is 19%. When you bill business customers in another country, check before you finalise the total whether the reverse-charge or zero-rating rule applies.
Example line items
Invoice
deposit invoice
- Invoice no.
- INV-2026-014
- Date
- 2026-07-15
From
Your Company
123 Business Rd, Your City
To
Client Name
Client Company, Client City
| Description | Qty | Rate | Amount |
|---|---|---|---|
| Deposit – 40% of project | 1 | $2,000.00 | $2,000.00 |
- Subtotal
- $2,000.00
- Tax (19%)
- $380.00
- Total
- $2,380.00
Notes
This is a 40% deposit. The balance will be invoiced on completion.
Example preview — not a real invoice
A typical deposit invoice lists a single line such as: Deposit – 40% of project (1 x $2000). Always show the quantity, unit price, and tax amount on the line so the total is transparent and easy to verify.
Practical tips
Keep it clean: 1. State clearly that this is a partial payment. 2. Carry the deposit forward on the final invoice so the client isn't double-charged. 3. Charge VAT on the deposit in most jurisdictions. Consistent numbering, clear payment terms, and prompt delivery reduce late payments and build trust.
A deposit invoice is peace of mind for both sides — you're covered for starting, they know exactly what's left. Just remember to deduct it on the final bill. You can put one together with the invoice generator if you'd like the maths done for you.