Prepayment (priekšapmaksa)
In Latvian: Priekšapmaksa (avanss)
A prepayment (priekšapmaksa, avanss) is a payment the buyer makes before goods are delivered or services performed. It is usually requested with an advance invoice (avansa rēķins, priekšapmaksas rēķins), which is an informational request for payment, not the final invoice.
The accounting regulations let a business skip the final invoice when an advance invoice has been paid in full: delivery is then evidenced by a delivery note or other document that clearly shows full payment was made. Between companies this applies only if the advance invoice was issued as a structured electronic invoice.
A VAT payer who receives an advance payment must issue a VAT invoice for it, except for an advance on goods supplied to another EU country, no later than the fifteenth day after receiving it.
Example
SIA "Ozols", a VAT payer, receives a EUR 1,210 advance for furniture it will deliver next month. Within 15 days it issues a VAT invoice for the advance showing EUR 1,000 plus EUR 210 VAT, and on delivery it offsets the advance in the final invoice.
Legal basis
- Cabinet Regulation No. 877, Paragraphs 34.1 and 34.2 likumi.lv
- Value Added Tax Law, Section 127 likumi.lv
- Value Added Tax Law, Section 131 likumi.lv
This explanation is for information and does not replace tax or legal advice. The law in its current consolidated text prevails.