Construction invoices are not “just paper.” The IRS checks whether they are account type (eInvoice profile) and method of service/work description in accordance with the law. If they are not, there will be penalties, and they are not small.
In Croatia, eInvoice is used UBL profili od P1 do P12 i time postali zakonska obaveza od 1.1.2026. Svaki profil označava a different situation: invoice according to contract, advance payment, situations, delivery of materials, cancellation, etc. If you send an invoice with wrong profile, e.g. as a “contract invoice” (P1) when it is actually an “advance payment” (P4) or a “situation” (P11), the tax authority may assess that the invoice is not in accordance with the law and impose a sentence.
That's why it's important to know in which situation which profile to useThis is a summary for construction sector.
P1 – Invoice per contract and order
It is used when there is a contract and an order and works are performed or materials are delivered under that contract. In construction: standard construction works, additional works ordered through an order. Payment usually to a transaction account (e.g. 30–60 days). It is the most common and safest choice if you work on a contract basis.
P2 – Periodic invoicing per contract
UBL profile P2 used for continuous services which are provided over a certain period and are invoiced monthly, quarterly or according to another predefined billing period, in accordance with the contract.
Applies when the service not related to individual situations or phases of work, but is performed continuously throughout the duration of the contract.
Application in construction
P2 is most often used for:
- professional supervision
- designing
- maintenance of facilities
- long-term engineering and consulting services
Method of payment
Payment is made upon expiry of the billing period, by deposit into a transaction account, within the deadlines defined in the contract.
Important note
It is a common mistake to use the P1 profile for these types of services. If the service is continuous and contracted for a period, P2 is the correct and tax-safe choice, because it clearly reflects the true nature of the service.
P3 – Invoice without contract (ad hoc)
UBL profile P3 is used only in situations where there is no formal contract or order, and the service has been agreed upon orally or ad hoc, most often due to urgency or a smaller scope of work.
When P3 is justified
P3 is the correct choice when:
- the works were not agreed upon in advance in writing
- it's about minor or emergency procedures
- there is no contractual obligation to continue cooperation
- the service is performed once
Application in construction
In practice, P3 is used for:
- emergency repairs (e.g., broken installations, emergency repairs
- smaller private operations
- occasional work without contractual documentation
Important note (critical for monitoring)
P3 profile should be used with great caution.
If there is:
- contract
- order form
- offer accepted by email
- or recurring relationship with the same client
➡️ then P3 does not consider it the correct choice.
In tax supervision, the incorrect application of the P3 profile is often interpreted as an attempt to circumvent the contractual relationship, which may lead to invoice disputes and additional tax liabilities.
P4 – Advance invoice
UBL profile P4 is used when Payment is made before the start of work., most often to secure funds for procurement of materials, mobilization of the construction site or covering initial project costs.
When to use P4
P4 is the correct choice when:
- there is a contract or agreement on advance payment
- works have not yet started or are in the initial phase
- advance represents advance, not the final payment for the service
Application in construction
In construction practice, P4 is used for:
- mobilization of the construction site
- advance payment according to the contract
- procurement of materials before the start of work
Important note
Advance invoice is not a substitute for situations or final accounts.
The advance amount must be refuse later through:
- temporary situations (P11)
- or final settlement
Incorrectly issuing an advance payment as a standard invoice (e.g. P1) is a common mistake that can lead to tax audits. VAT discrepancies and invoice disputes
P5 – Payment on the spot
Smaller private works, cash or card. In construction rarely used and is not intended for more serious construction projects.
P6 – Payment before delivery
P7 – Invoice with shipping note
P8 – Invoice with shipping note and receipt confirmation
P9 – Approval / refund
P10 – Corrective invoice (cancelled)
P11 – Partial and final invoicing (situations)
When to use P11
P11 is the correct choice when:
- works are being carried out in stages or over time
- calculation is done according to actually performed quantities
- there is a contract and/or cost estimate
- invoicing is done through monthly or other temporary situations, and the final situation
Application in construction
In practice, P11 is used for:
- monthly situations
- temporary (partial) situations
- final situation upon completion of the works
Payment is made for every situation, in accordance with the agreed deadlines.
Important note
For the construction sector, P11 is one of the most important UBL profiles.
Using other profiles (e.g. P1) for situations is a common mistake that can lead to the conclusion that tax audits the invoice does not reflect the actual progress of the work.
If you invoice by completed situations — P11 is not an option, but an obligation.
How NetSourcing solves the UBL profile problem
Every service delivery and every work order in NetSourcing is indexed with a KPD tag that is directly linked to
with the delivery of goods and services. NetSourcing has an interface for issuing B2C and B2B invoices where B2B invoice items are linked to KPD codes,
Work categories and UBL profiles linked through system logic, eliminating the risk of incorrect posting.
If you want to be sure that your e-Invoices in construction are compliant with the law before the Tax Office checks it
administration, it's time for a forward-thinking system.
