Invoicing a VAT-exempt supply in Latvia

When a VAT-registered business makes a supply exempt under Section 52 of the Latvian VAT Act, such as renting housing to private persons, medical care or insurance, the invoice charges no VAT and gives a reference to the exemption (Section 125(1), point 15). No VAT invoice is required for domestic exempt supplies (Section 127(2)), but if you issue one it must carry the reference; this is the rule as of September 2026.

Updated:

At a glance

Wording on the invoice
Atbrīvots no PVN saskaņā ar PVN likuma 52. panta pirmās daļas [punkts] The point depends on the supply: for housing rented to private persons, point 25(a). A reference to the VAT Directive or another reference to the legal basis also works; “Exempt from VAT” can be added in English.
VAT on the invoice
Exempt
Peppol VAT category
E
VAT return, supplier
row 49 Row 49 (supplies not subject to VAT), counted in row 40.
Legal basis
Latvian VAT Act, Section 52(1)

Sample invoice

SIA “Parauga Nami”
Invoice No. PN-2026/310
Date of issue
25/09/2026
Due date
05/10/2026
Supplier SIA “Parauga Nami” Reg. No. 40000000092 VAT No. LV40000000092 Parauga iela 92, Rīga, LV-1092
Customer Jānis Paraugs Parauga iela 93-4, Rīga, LV-1093
DescriptionQtyUnitUnit priceAmount
Flat rent, October 20261month650.00650.00

Atbrīvots no PVN saskaņā ar PVN likuma 52. panta pirmās daļas 25. punkta a apakšpunktu (exempt from VAT)

Total due
650.00 EUR
A specimen with made-up companies, numbers and amounts.

Which supplies are exempt

The list is in Section 52(1) of the VAT Act, and many points carry conditions. The most common:

  • Postal services of the universal service provider (point 1).
  • Medical services of healthcare institutions and mandatory health checks (point 3), dental technicians (point 7).
  • Social care and rehabilitation by registered social service providers (point 9).
  • Pre-school education, state-recognised educational institutions and teachers’ private lessons within education programmes (points 11 to 14).
  • Theatre and circus shows, concerts, visits to state-recognised museums and libraries (point 17).
  • An author’s fee for a work and its use (point 18).
  • Insurance and financial services such as lending and payments (points 20 and 21).
  • Sales of real estate other than new property and building land (point 24), and renting housing to private persons, except guest accommodation (point 25(a)).

What the invoice must show

  • A reference to the exemption: the point of Section 52(1), the VAT Directive article or another reference (Section 125(1), point 15).
  • No VAT amount.
  • If one invoice mixes taxable and exempt supplies, their values are shown separately (Section 129(4)).
  • Every other ordinary detail, including both parties’ VAT numbers where they exist.

Is an invoice needed at all?

The VAT Act does not require a VAT invoice for insurance, financial services and fund management, or for other domestic exempt supplies (Section 127(2)). The books still need a source document, and any invoice you do issue must refer to the exemption.

Exempt is not 0%

With a 0% rate (exports, intra-EU supplies of goods) a VAT payer keeps the right to deduct input VAT on related costs. With an exemption, VAT on costs used for exempt supplies cannot be deducted, and it goes in row 66 of the return (Cabinet Regulation No. 40, point 17.28).

Some exempt supplies (insurance, financial services, fund management, real estate sales and residential rent) count towards the 50,000 euro registration threshold (Section 59(2), point 2).

In a Peppol e-invoice

The line takes VAT category E (exempt) at a rate of 0, and the VAT breakdown must carry an exemption reason code or text (rule BR-E-10), such as “Exempt from VAT, Latvian VAT Act Section 52(1), point 25(a)”.

Common mistakes

  • Labelling an exempt supply “VAT 0%”. Exemption and the 0% rate are different, with different input VAT consequences.
  • Giving no reference to the basis of the exemption.
  • Treating guest accommodation as exempt rent. It takes 12% (Section 42(10)).
  • Deducting input VAT on costs used for exempt supplies.

Frequently asked questions

How do I show on a Latvian invoice that a supply is VAT exempt?

With a reference to the basis, e.g. “Atbrīvots no PVN saskaņā ar PVN likuma 52. panta pirmās daļas 25. punkta a apakšpunktu” (VAT Act, Section 125(1), point 15).

Do I need to issue an invoice for an exempt supply?

A VAT invoice is not required for domestic exempt supplies (Section 127(2)), but the books need a source document.

What is the difference between exempt and 0% VAT?

With 0% you may deduct input VAT on related costs; with an exemption you may not. 0% applies to exports and intra-EU supplies of goods, the exemption to Section 52 supplies.

Which VAT return row is for exempt supplies?

Row 49, which is counted in row 40.

Are author’s fees exempt from VAT in Latvia?

Yes, an author’s fee for a work and its use is in Section 52(1), point 18.

Issue the invoice with the right VAT statement

Fakts keeps the reason on every 0% line, prints the statement under the lines and files the matching Peppol VAT category. The account is free.

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Sources