Exchange Rates for VAT on Foreign-Currency Invoices: Which Rate, Which Date, Which Publisher

What the VAT rules in the EU, UK and Switzerland say about converting foreign-currency invoices, which published rate each accepts, the date that counts, and how to apply it consistently in your ERP.

An invoice in a foreign currency has to be converted into the currency of the VAT return, and VAT law does not leave the choice of rate to you. It names a publisher, fixes the date, and expects the same method every time. Get it wrong and the amount of VAT declared is wrong, which is an error on the return rather than a rounding difference. This page sets out the rules for the three regimes we are asked about most and how to apply them without a manual step per invoice.

European Union

Article 91(2) of the VAT Directive (2006/112/EC) applies when amounts on an invoice are in a currency other than the member state's. The rate is the latest selling rate recorded on the most representative exchange market of the member state at the time VAT becomes chargeable, or a rate determined by reference to that market. Member states must also allow the latest rate published by the European Central Bank at that time, and a national rate where the currency is not one the ECB quotes. In practice most businesses use the ECB reference rate for the date of the chargeable event, and several member states publish their own tables through the national central bank, for example the National Bank of Poland or the Czech National Bank, which local rules may require.

The date that counts is the chargeable event, normally the supply date, not the invoice date and not the payment date, unless the member state applies a cash-accounting or invoice-date rule you have opted into. Confirm the rule per country your entity is registered in.

United Kingdom

HMRC lets you convert using the UK market selling rate at the time of supply, the HMRC period rates of exchange published monthly, or, with written agreement, another method. Most businesses use the HMRC monthly table because it applies to a whole month and removes the daily lookup. Once you choose a method you keep it. The relevant guidance is VAT Notice 700, section 7.6, and the monthly rates are published by HMRC in advance of the month.

Switzerland

The Federal Tax Administration accepts the monthly average rate or the daily rate published by the federal authorities. The monthly customs rates from the Federal Office for Customs and Border Security (BAZG) are the table most finance teams use for VAT. Group companies may also use an internal group rate if it is applied consistently and documented.

Applying it in the ERP

The problem is rarely knowing the rule. It is that the accounting system's currency table holds a market rate refreshed at some time of day, with no publisher and no publication date. The fix is to replace that table with the official one for the currencies and dates you invoice in:

• Dynamics 365 Business Central: point the built-in Currency Exchange Rate Service at the official feed. No code.
• Xero and QuickBooks Online: set the official rate per invoice through the accounting API, since neither lets you replace the organisation-wide feed.
• SAP: load the official table into TCURR for the exchange rate type you use for tax.
• Odoo: write the daily official rates as currency rate rows.

Every rate we return carries the institution, the table, the publication date and whether a non-publication date was rolled back to the previous published one, so the evidence for each invoice is in the record, not in someone's memory. See audit evidence for what to retain.

Frequently asked questions

Can I use the rate my bank charged me for VAT?

Generally no. VAT rules name a published reference rate or a tax-authority table, not the rate on your bank statement. The bank rate includes a spread and is not verifiable by the tax authority.

What if the invoice date falls on a weekend or a holiday?

Use the last rate the institution published before that date, unless the local rule says otherwise. The ECB publishes on TARGET business days only; HMRC monthly rates apply to the whole calendar month. AllRatesToday applies the institution's own rule when you ask for a rate on a non-publication date and tells you which published date it used.

Do I have to use the same method for every invoice?

Yes. Both EU and UK guidance expect a consistent method once chosen. Switching between the daily rate and a monthly rate invoice by invoice is the pattern that draws questions in an audit.

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