Invoicing in another currency without throwing the 303 out
The client pays in dollars and Hacienda collects in euros. The law says at what rate it is converted and at what moment, and getting that wrong means declaring a taxable base that does not match the invoice. Cairos applies it by itself and leaves it frozen.
What the law decides and what you decide
Almost everything on this screen comes from a single sentence in the VAT Act. It is worth knowing which one, because it explains why the program will not let you do certain things.
The rate is the one at the chargeable event
Article 79.Once of the VAT Act says it in so many words: for transactions set in another currency, the exchange rate in force at the moment of the chargeable event applies. Not today's, not the one on the day you are paid, and not the last rate stored.
And it is frozen in the invoice
The rate applied is stored inside the document. Recalculating it afterwards would change a taxable base already declared on a filed 303, and the invoice would stop matching the return. No screen rewrites the rate on an invoice that has been issued.
The invoice carries both amounts
The one in the currency, which is what you are paid, and the euro equivalent of the taxable base and of the VAT, which is what is declared and what you have to be able to evidence if anyone asks. Both of them, on the same piece of paper.
The difference on payment, to its own account
Between issuing and being paid, the currency moves. That difference is neither more sales nor fewer: it is a financial result, and it goes to account 768 if it is positive and to 668 if it is negative. Putting it into the VAT taxable base would mean declaring too much or too little.
Thirty-six currencies, with their decimal places
And with the decimal places each one is due, which are not always two: the Japanese yen, the Korean won and the Icelandic króna are not divided into fractions. Writing «¥1,200.00» is as wrong as putting cents on something counted one by one.
The rate can be typed in
What the law calls the Banco de España rate is today, in practice, the European Central Bank's reference rate. But your bank applies its own, so the invoice's rate can be edited while it is a draft. What is never touched is the rate on an invoice that has been issued.
Screenshot of the ERP: What the law decides and what you decide
The four expensive mistakes of invoicing abroad
None of them raises an error when you save. All four turn up months later, in an inspection, and by then they have been repeated fifty times.
- Converting at today's rate. A March invoice declared at October's rate matches nothing, and the difference grows with every month that passes.
- Recalculating an old invoice. It changes a taxable base that has already been declared, so the 303 you filed stops matching the accounts.
- Putting the exchange difference into the taxable base. It is not a sale: it is a financial result, and slipping it into the VAT means filing wrongly in both directions.
- Putting cents where there are none. An amount in yen with two decimal places gives away that the conversion was done by eye.
- The euro amount is not worked out when you look at the screen: it is stored with the invoice, so two people see the same number.
- The euro equivalent is the one that goes into the record book and into the tax form, with no intermediate steps and no spreadsheets.
Why a spreadsheet does not fix this
The usual way of solving it when the program does not is to invoice in euros and put the amount in dollars in the item, or to keep a separate spreadsheet with the rates. Both work until the first inspection.
The underlying problem is that the rate on a transaction is a piece of data about that transaction, not a calculation redone every time somebody opens the invoice. As soon as it lives outside the document, it is lost the moment things change hands: the spreadsheet stays on the computer of whoever was keeping it, and nobody can reconstruct why that March invoice was declared at those exact euros.
And there is a practical reason you notice sooner: whoever buys from you abroad wants the price in their own currency. Sending them an invoice in euros and asking them to do the conversion is handing them work and an argument, and it usually ends in being paid less, which nobody chases because it is not worth it.
The exchange difference: what it is and where it goes
You issue an invoice for 4,200 dollars in June, at that day's rate. You are paid at the end of July, at a different rate. The dollars are the same; the euros that reach your account are not.
That difference does not touch the invoice. The invoice is already issued, declared and recorded, and its taxable base in euros is the one at the chargeable event for ever. What has changed is the value of the payment, and that is a financial result: account 768 if you were paid more euros than you expected, 668 if you were paid fewer.
It looks like accounting small print and it has a very concrete consequence: if that difference slipped into the taxable base, your 303 would declare a figure different from the one on the invoice you showed the client. It is the hardest discrepancy to find afterwards, because each invoice on its own looks right.
What this module does not do yet
- Fetching the day's rate by itself, every day. Rates are stored and can be typed in; what there is not is an automatic daily download.
- Issuing the document in another language. This is the most requested thing along with the currency, and it is what is missing: the invoice comes out in Spanish even if the amount is in dollars.
- Keeping the whole accounts in another currency. The books and the tax forms go in euros, which is what filing in Spain requires.
If you invoice outside the European Union or inside it, look as well at form 349 and at checking the intra-Community VAT number on the VIES register, which go hand in hand with this.
Issue your first invoice in another currency
Free plan up to 30 documents a year, no card needed.
Frequently asked questions
Invoice in their currency and file in yours
With the rate at the chargeable event frozen in the document, and the difference on payment where it belongs.
No minimum term · VeriFactu included · Native support in Spanish, Catalan, Galician, Basque and English