Sales to foreign contractors and exchange rate differences

Service-Tax

When selling goods or services to foreign recipients, you have to take into account the fact that there will be exchange rate differences. The important thing is that on the day of sale - invoice issuance - there is a different exchange rate and a different one at the time of receiving payment for it. Depending on the amount of the change, this may have an impact on the entrepreneur's income or costs.

How to use the exchange rate on the invoice

When issuing an invoice to a foreign recipient, the amount of income expressed in a foreign currency should be converted according to the average exchange rate of the National Bank of Poland from the last business day preceding the day of obtaining the income, i.e. usually the day of issuing the invoice. So how should the value of the obtained sales revenue be adjusted if the amount paid by the contractor converted into PLN will be lower or higher than the value due?

Payment in currency to the company account

By receiving the payment on the account in the Polish currency - the amount due from foreign contractors is converted according to the exchange rate set by the bank on the day of the actual receipt of the payment. When an entrepreneur has an account in a foreign currency and there is no currency conversion, then the average exchange rate announced by the National Bank of Poland on the business day preceding the receipt of the payment should be used.

Method of calculating exchange rate differences

The method of calculating the exchange rate differences is not complicated. Well, from the amount of the receivable, determined according to the appropriate exchange rate, the value of the invoice converted into the Polish currency should be subtracted. If the result of the difference is positive, it constitutes income for the taxpayer, and when it is negative - a tax expense.

Changes after posting exchange rate differences

After the exchange rate differences are calculated, the income amount will change. As a rule, sales volumes should not be adjusted. The way out of this situation is to book the value of the exchange rate differences in other columns of the tax revenue and expense ledger.

According to Art. 24 c of paragraph 1. 1 of the PIT Act, if there are positive exchange rate differences, they constitute the taxpayer's income and should be included in column 8. PKPiR - "Other income". However, in the case of negative differences, they constitute the entrepreneur's tax cost and should be booked in column 13. PKPiR - "Other expenses".

Calculating exchange rate differences on the basis of examples

Example 1.

On September 3, 2013, the taxpayer sold commercial goods to the customer from Germany - the total value of the invoice was EUR 2,000. The transaction was booked as an intra-community supply of goods on September 3, 2013. When converting into the Polish currency, the average exchange rate of PLN 4.2507 / EUR was used, announced by the National Bank of Poland on September 2, 2013 (table no. 169 / A / NBP / 2013).

  • EUR 2,000 x PLN 4.2507 / EUR = PLN 8,501.40 - entered in the PKPiR column 7 - "Value of goods and services sold".

A foreign customer paid the amount due on September 25, 2013. The taxpayer's bank converted the amount according to the purchase rate of the currency at the level of 4.2304 PLN / EUR.

  • EUR 2,000 x PLN 4.2304 / EUR = PLN 8,460.80.

Thus, the actual income of the taxpayer is PLN 8,460.80, and not the initial PLN 8,501.40. In this way, a negative exchange rate difference of PLN 40.60 was created, which reduces the company's income.

In this case, an internal ID card should be created and the amount of PLN 40.60 should be entered in the column 13 PKPiR - "Other expenses" as a settlement of exchange rate differences.

Example 2.

Let us also take into account the case of an intra-Community supply of goods, this time with a Greek contractor. The value of sales of August 22, 2013, confirmed by an invoice issued on the same day, is EUR 1,200, and the average exchange rate announced by the National Bank of Poland of August 21, 2013 is PLN / EUR 4.2440 (table no. 161 / A / NBP / 2013) . So the converted amount will be:

  • EUR 1,200 x PLN 4.2440 / EUR = PLN 5,092.80

The above amount was booked in column 7 PKPiR - "Value of goods and services sold" on 22 August 2013.

A customer from Greece paid the amount due a month later, on September 23, 2013, to a taxpayer's euro account in which no currency conversion takes place. Therefore, you should use the exchange rate announced by the National Bank of Poland on the business day preceding the payment (September 20 - Friday), and it amounts to PLN / EUR 4.2144 (table no. 183 / A / NBP / 2013). After conversion, the amount due will be:

  • EUR 1,200 x PLN 4.2144 / EUR = PLN 5,057.28.

The actual income of the taxpayer was PLN 5,057.28, which resulted in a negative exchange rate difference of PLN 35.52 - reducing its income. In this case, the resulting difference should be recorded in the col. 13 PKPiR - "Other expenses" on the basis of the issued internal ID.