Invoice for Deposit: How to Bill an Upfront Payment, With an Example

An invoice for deposit asks your client to pay an agreed part of the price upfront, before you deliver anything. You issue it like any other invoice: own number, both parties, one line for the deposit, tax where it applies, and a due date. When the job is done, the final invoice shows the full price and subtracts what was already invoiced.

The rest of this guide covers the wording, the tax timing and a full worked example with both invoices.

What is an invoice for deposit?

A deposit invoice, also called an advance payment invoice or down payment invoice, bills a fixed share of a price you and the client have already agreed. It does three jobs:

• It secures the booking. A client who has paid 30% is far less likely to cancel the week before you start.
• It funds your upfront costs. Materials, licences and subcontractors are paid with the client's money, not yours.
• It creates a paper trail. The client gets a document they can book and pay against, and you get a record the final invoice can refer to.

A deposit is part of the price. It is not an extra fee and not a security deposit that you hand back at the end. That difference matters for tax, as you will see below.

How to invoice a deposit step by step

1. Agree the deposit in writing first. Put the percentage or amount, the due date and the refund terms in the quote or contract. The invoice should only bill what was agreed.
2. Calculate the deposit on the net price. 30% of 5,000.00 EUR net is 1,500.00 EUR. Tax is added on top of that figure.
3. Issue the invoice with the next number in your sequence. A deposit invoice does not need a separate numbering series.
4. Describe the line as a deposit. Name the project, the percentage and the quote or contract it relates to.
5. Set a short due date. Most sellers ask for the deposit on receipt or within a few days, and start work once it lands.
6. Deduct it on the final invoice. Show the full price, subtract the deposit and quote the deposit invoice number.

What to include on a deposit invoice

A deposit invoice carries the same mandatory fields as any invoice in your country. You can check those in the guide to invoice requirements by country. On top of the standard fields, make these deposit-specific details clear:

Wording you can copy and adapt:

Line description:
30% deposit for website redesign, as per quotation Q-2026-014

Note:
This invoice requests an advance payment. The balance of 3,500.00 EUR
plus VAT will be invoiced on delivery. Work starts once the deposit
has been received.

Deposit invoice example with the final invoice

A designer agrees a website redesign for 5,000.00 EUR net with a 30% deposit. The VAT rate in this example is 21%.

Deposit invoice example for a 30% upfront payment

Final invoice that deducts the deposit already paid

Check the two documents against the deal: 1,815.00 + 4,235.00 = 6,050.00 EUR, which is 5,000.00 EUR plus 21% VAT. The VAT lines add up the same way: 315.00 + 735.00 = 1,050.00 EUR.

When is VAT due on a deposit?

In the EU, a payment on account that arrives before the goods are delivered or the service is performed makes VAT chargeable on receipt of the payment, and on the amount received. That is Article 65 of the EU VAT Directive. Article 220 of the same directive requires an invoice for such payments on account in business sales.

In practice this means:

• The deposit carries VAT at the rate of the underlying supply. You do not wait for the final invoice to charge it.
• You declare that VAT in the period the deposit is received, not the period the job is finished.
• The final invoice charges VAT on the balance only.

Each member state sets its own details, such as the deadline for issuing the invoice and what the document is called. The European Commission summarises the common VAT invoicing rules.

The UK works in a similar way. A deposit that is part payment for a supply creates a tax point when you receive it or when you issue the VAT invoice for it, whichever comes first. HMRC explains this in VAT Notice 700.

Outside VAT systems the logic changes. In the United States, for example, sales tax rules are set by each state, so check how your state treats advance payments.

Deposit invoice vs retainer, proforma and partial payment

These documents all involve money before the end of a job, and they are easy to mix up.

If your client pays a recurring fee for availability, read the guide to the retainer invoice. If you only want to show the client what the deposit will be before you bill it, a proforma invoice does that without creating a tax document. For jobs billed in three or more stages, see how a partial payment invoice works.

How to make a deposit invoice in BlueInvoice

The BlueInvoice invoice editor runs in the browser with no sign-up and exports a PDF. It has no dedicated deposit field, so you build both documents from ordinary line items.

For the deposit invoice:

1. Enter the invoice number, the date and a due date a few days out.
2. Fill in your details and the client's address block, including VAT numbers where you need them.
3. Add one line item: the deposit description, quantity 1 and the net deposit as the rate.
4. Type your VAT rate into the tax field. The editor works out the tax and the total as you type.
5. Use the notes field to state the remaining balance, then preview and download the PDF.

For the final invoice: quantity and rate fields start at zero, so there is no negative line for the deduction. Enter the balance as the line instead and spell out the deduction in the description:

Website redesign, agreed price 5,000.00 EUR net,
less deposit of 1,500.00 EUR net, invoice 2026-031

With quantity 1, a rate of 3,500.00 and the tax field at 21, the editor shows 735.00 EUR tax and 4,235.00 EUR total, matching the example above.

The editor applies one tax rate per invoice. If you agreed the price with a quotation first, the same editor has a Quotation document type.

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