Advance invoice (avansa rēķins)
In Latvian: Avansa rēķins
An advance invoice (avansa rēķins), also called a prepayment invoice (priekšapmaksas rēķins), is an informative payment request for goods not yet delivered or services not yet provided. That is how paragraph 34.1 of Cabinet Regulation No. 877 defines it.
If the advance invoice is paid in full, no final invoice is required. Delivery is then evidenced by a goods delivery document or another document that shows clearly that the advance invoice was paid in full. Between businesses this shortcut only applies if the advance invoice was issued as a structured e-invoice.
A VAT payer must also issue a tax invoice for an advance payment received, no later than the 15th day after receiving it, and report the VAT on the advance in the return for the period in which the money arrived. Advances for supplies of goods to another EU member state are the exception.
So before payment an advance invoice is only a request to pay, but once the money arrives the VAT payer owes VAT on that amount.
Example
On 2 April SIA "Ozols" sends a client an advance invoice for half of a furniture order: EUR 1,500 plus EUR 315 VAT. The client pays EUR 1,815 on 7 April, so SIA "Ozols" issues a tax invoice for the advance by 22 April and reports the EUR 315 VAT for the period in which the money arrived.
Legal basis
- Cabinet Regulation No. 877, paragraphs 34.1 and 34.2 likumi.lv
- VAT Law, Section 127 likumi.lv
- VAT Law, Section 120 likumi.lv
This explanation is for information and does not replace tax or legal advice. The law in its current consolidated text prevails.