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Businesses that make taxable supplies are entitled to recover Latvian VAT incurred on expenditure (known as 'input VAT') including domestic purchases, intra-EU acquisitions and importation of goods and services used for the purpose of making these taxable supplies in Latvia or in other countries on condition that it would be subject to taxation if provided within Latvia.

VAT on local purchases of goods and services can be deducted on the receipt of the goods or services and the valid VAT invoice (see Appendix 27A) or, in cases of a prepayment, at the moment of receipt of the prepayment note. Businesses that make only exempt supplies cannot recover input VAT. Businesses that make both taxable and exempt supplies can partly recover input VAT (see 27.40).

Depending on the type of purchase transaction, input VAT will consist of the following:

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   •ÌýÌýÌýÌý VAT on the acquisition of goods and services as listed on