Credit Note

What is a credit note?

A credit note is an accounting document that fully or partially cancels a previously issued invoice. You use it when an amount you have already invoiced needs to be reduced — for example after a return, a cancelled order, a pricing error, or a discount granted after the purchase. To keep the audit trail and VAT correct, the credit note should reference the number of the original invoice.

Why does a credit note matter?

A credit note is the documentation that you are correcting your books — it is not the same as the refund itself. The refund is the physical transfer of money back through your payment gateway, while the credit note is the record that makes the bookkeeping balance. Under EU and Danish VAT rules, a credit note is precisely how you reverse the output VAT you originally charged on the order. Without one, you risk paying VAT on revenue you have actually returned to the customer.

Common use cases

• Return: A customer sends an item back, and you issue a credit note for the returned amount.
• Cancelled order: An already-invoiced order is cancelled in full before delivery.
• Pricing or billing error: An incorrect amount was invoiced and needs to be corrected.
• Post-sale discount: You grant a later price reduction or goodwill compensation.
• Partial refund: Only part of the order is credited, e.g. a single product.

Shopify perspective

Shopify does not automatically create a formal, VAT-correct credit note. When you refund an order in the admin, a refund record is created internally — but not a standalone credit note document. To get a valid PDF, you typically need an invoicing app such as Sufio or Order Printer that generates the credit note and links it to the original invoice. See an overview of relevant tools in our guide to the best Shopify accounting apps and the best Shopify returns apps. Also note that a refund does not remove any chargeback fee already incurred.