Input VAT: What You Can Deduct

Every PVN-registered business in Latvia has the right to deduct the VAT paid on purchases used for taxable economic activities. In theory, this is straightforward: you paid PVN, you claim it back. In practice, the average Latvian SIA under-claims input VAT by EUR 1,200 to EUR 3,500 annually — not from ignorance of the rule, but from sloppy documentation and missed invoices.

What Qualifies for Deduction

Any PVN charged on goods or services used for your taxable business activities is deductible. Common categories:

• Office expenses: Rent, utilities, office supplies, cleaning services
• Professional services: Accounting, legal, consulting, audit
• Technology: Software licenses, hardware, cloud services, web hosting
• Marketing: Advertising, design services, print materials, trade show participation
• Travel: Business-related transport, hotel stays, fuel (with conditions)
• Raw materials and inventory: Goods purchased for resale or production
• Equipment and fixed assets: Machinery, vehicles (with restrictions), furniture

The key condition: the expense must have a genuine business purpose. VID does not accept "it might be useful someday" as justification.

What You Cannot Deduct (or Can Only Partially Deduct)

Passenger vehicles: Only 50% of input PVN on the purchase, lease, fuel, maintenance, and insurance of passenger cars is deductible. The exception: vehicles used exclusively for business (taxis, delivery vans, company cars with proven 100% business use). Proving exclusive business use to VID requires GPS logs, mileage records, or similar documentation — a high bar.

Representation and entertainment: PVN on client entertainment, gifts, and hospitality is generally not deductible. Business meals with clients fall in a grey area; VID accepts deduction only when the business purpose is clearly documented.

Personal consumption: Any expense with a personal element — a laptop used for gaming, a phone plan that covers family members, office furniture taken home — loses deductibility to the extent it serves personal use. Partial deduction may apply, but requires documented allocation.

Purchases from non-PVN-registered suppliers: If your supplier is not registered for PVN, they should not be charging it. If they do, you cannot deduct it. Always verify your supplier's PVN status before processing invoices.

The Invoice Requirement

To claim input PVN, you must hold a compliant invoice (rēķins) containing: supplier name and PVN number, buyer name and PVN number, invoice date, description of goods or services, taxable amount, PVN rate, and PVN amount. A receipt without these details — a gas station slip, a restaurant bill — is not sufficient for PVN deduction without a proper supplementary invoice.

(The most common failure we see: invoices that exist but were never collected. The supplier sent it to an old email. The freelancer forgot to request one. The cash payment has no documentation at all. Each missing invoice is money left unclaimed.)

Disciplined invoice collection — requesting, verifying, and archiving every purchase invoice at the time of transaction — is the single most effective way to maximize your input PVN recovery.

For the complete PVN framework, see our VAT in Latvia guide.

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Underclaimed Input PVN Is Money Left on the Table

We review client expenses monthly to ensure every eligible deduction is captured and every supplier invoice meets Latvian requirements. Most businesses we onboard discover they have been missing legitimate PVN deductions for months or years.

Recover your unclaimed input VAT →