Advance invoice
An advance invoice, or prepayment invoice, is a request for payment for goods not yet delivered or services not yet rendered, and paragraph 34.1 of Cabinet Regulation No. 877 treats it as an informative document. It states both parties, the order, the advance amount and the due date, but once the advance is received a VAT-registered seller must also issue a tax invoice with the requisites of VAT Act Art. 125 within 15 days (Art. 127(1)(2) and Art. 131(1)).
Download the template
Filled-in example
Advance invoice
No. PA-2026/038
Seller
SIA “Paraugs”
Reg. No. 40000000001
VAT No. LV40000000001
Parauga iela 1, Rīga, LV-1001, Latvia
AS “Banka”, account LV00BANK0000000000001
Buyer
SIA “Pasūtītājs”
Reg. No. 40000000002
VAT No. LV40000000002
Klientu iela 2, Valmiera, LV-4201, Latvia
- Based on
- Quote No. PP-2026/015, accepted 16 September 2026
- Order total excl. VAT
- 1,572.00 EUR
- Advance share
- 50%
| No. | Description | Unit | Qty | Unit price excl. VAT, EUR | Amount, EUR |
|---|---|---|---|---|---|
| 1 | 50% advance for website development | pcs | 1 | 786.00 | 786.00 |
- Advance excl. VAT
- 786.00
- VAT 21%
- 165.06
- Total due, EUR
- 951.06
This is a prepayment invoice, a request for payment. Within 15 days of receiving the advance we will issue a tax invoice for it, and the advance will be deducted on the final invoice.
- Payment method
- bank transfer
- Payment reference
- Advance invoice No. PA-2026/038
Prepared by
Jānis Bērziņš, board member, signature
The companies, numbers and accounts in the example are fictional.
In practice “advance invoice” covers two different documents. The first is the prepayment invoice you send before payment, often called a pro forma. The second is the tax invoice for the advance, which a VAT-registered seller must issue after the money arrives, except for an advance on a supply of goods to another EU country.
If a prepayment invoice is paid in the full value of the order, no separate final invoice for payment has to be prepared: receipt of the goods or services is then confirmed by a delivery document or other transaction document showing that payment was made in full under the advance invoice (Cabinet Regulation No. 877, para. 34.1). Between companies this relief applies only if the advance invoice was a structured e-invoice (para. 34.2).
Under a contract for work, the contractor may demand payment in advance only if this was expressly agreed (Civil Law Art. 2223). So put the advance amount and due date in the quote or contract before you issue an advance invoice.
Required details
The first rows apply to the prepayment invoice you send before payment. The last rows apply to the tax invoice a VAT-registered seller must issue once the advance is received.
| Detail | Required | Legal basis |
|---|---|---|
| Document name, for example “Advance invoice” or “Prepayment invoice” | Required | Accounting Act Art. 11(5)(1) |
| Date and number | Required | Accounting Act Art. 11(5)(2) and (3) |
| Both parties’ names and registration numbers | Required | Accounting Act Art. 11(5)(4) and (5) |
| Description of the order and the advance amount | Required | Accounting Act Art. 11(5)(7) |
| Reference to the contract or quote where the advance was agreed | Recommended | Civil Law Art. 2223 |
| Due date, bank account and payment reference | Recommended | Not required |
| Tax invoice for the advance received, with every requisite in VAT Act Art. 125 | If it applies | VAT Act Art. 127(1)(2) |
| Date the advance was received, if it differs from the tax invoice date | If it applies | VAT Act Art. 125(1)(7) |
| Tax invoice issued no later than the 15th day after the advance is received | If it applies | VAT Act Art. 131(1) |
| The advance and its VAT deducted on the final invoice | Recommended | Not stated directly; avoids charging VAT twice |
How to fill it in
- Agree the advance in writing State the advance share, for example 50%, and its due date in the quote or contract. Under a contract for work you cannot demand payment in advance without such an agreement (Civil Law Art. 2223).
- Issue the prepayment invoice Give it the name “Advance invoice”, a number, both parties, a reference to the quote or contract, the advance amount and the due date. In the XLSX template the VAT and total calculate themselves.
- After payment, issue the tax invoice for the advance A VAT-registered seller does this no later than the 15th day after receiving the advance (VAT Act Art. 131(1)) and states the date the advance was received if it differs from the invoice date.
- Include the advance VAT in your return VAT on an advance goes into the return for the tax period in which the payment was received under the tax invoice (VAT Act Art. 120(2)).
- After delivery, issue the final invoice The final invoice shows the whole transaction and deducts the advance already received and its VAT, so the client is not charged VAT twice. With full prepayment, check whether the relief in para. 34.1 of Cabinet Regulation No. 877 applies to you.
Common mistakes
- No tax invoice for the advance is issued within 15 days of receiving it.
- The advance is not deducted on the final invoice, so VAT on the same amount is charged twice.
- An advance is demanded although the quote or contract never agreed one.
- The advance invoice does not refer to a quote or contract, so later nobody knows which deal the money belongs to.
- Between companies, no final invoice is prepared in reliance on para. 34.1, although the advance invoice was not a structured e-invoice.
Fakts issues the final invoice for you
Once the work is delivered, Fakts issues the invoice with the VAT worked out, the next number in the series and the buyer’s details from the Enterprise Register. The account is free.
Create a free accountFrequently asked questions
Is an advance invoice the same as a pro forma invoice?
In practice yes: both names mean a request for payment before delivery. Cabinet Regulation No. 877 calls this document an advance invoice, or prepayment invoice, and treats it as an informative document for payment (para. 34.1).
Is VAT due on an advance payment?
Yes, if you are VAT-registered. You issue a tax invoice for the advance received (VAT Act Art. 127(1)(2)) and report the VAT in the return for the period in which the payment was received (Art. 120(2)). The exception is an advance for a supply of goods to another EU country.
When must the tax invoice for an advance be issued?
No later than the 15th day after the advance is received (VAT Act Art. 131(1)). If the advance arrived on a different day from the invoice date, the invoice also states the date it was received (Art. 125(1)(7)).
After full prepayment, is a final invoice still needed?
Para. 34.1 of Cabinet Regulation No. 877 lets you skip the final invoice for payment if the advance invoice was paid in full and receipt is confirmed by a delivery or other transaction document noting the full payment. Between companies this applies only if the advance invoice was a structured e-invoice (para. 34.2).
Can I ask for an advance if the contract does not mention one?
Not under a contract for work: Civil Law Art. 2223 lets the contractor demand payment in advance only if this was expressly agreed. Put the advance in the quote or contract before work starts.