What Is a Commercial Invoice in International Trade?
A commercial invoice is the primary trade document used by customs to determine duty and VAT. Learn what it must contain.
Key Takeaways
- A commercial invoice is required for every international shipment and triggers customs duty assessment
- It must show accurate value, description, origin, quantity, and HS code
- Undervaluing goods on a commercial invoice is customs fraud
- HMRC can request a commercial invoice for up to four years after import
What a commercial invoice is
A commercial invoice is the primary trade document accompanying an international shipment. It serves as the seller's bill to the buyer and is the document customs authorities use to assess import duty and VAT. Every commercial cross-border shipment requires one.
Required contents
A compliant commercial invoice must include: seller and buyer name and address, invoice number and date, description of goods, quantity and unit of measure, unit price and total value, country of origin, HS tariff code, Incoterms (e.g. FOB Shanghai), and delivery address. Missing or vague information causes customs delays.
Valuation accuracy
Customs authorities use the commercial invoice value as the basis for calculating duty and VAT. The value must be the actual transaction price — the real price paid for the goods. Deliberately understating the value to reduce duty is customs fraud, carrying penalties including fines, seizure of goods, and prosecution.
Pro forma vs commercial invoice
A pro forma invoice is a preliminary bill issued before goods are shipped, often used to apply for an import licence. It is not an official customs document. A commercial invoice is issued when goods actually ship. Both must agree on product description and value — discrepancies cause suspicion during clearance.
Retention requirements
UK importers must retain commercial invoices and all associated customs documentation for a minimum of four years. HMRC has the right to request these documents for post-clearance audits. Digital records are acceptable — scan and archive all commercial invoices by supplier and shipment date.