Invoicing in dollars or pounds: how to do it right and why VAT always goes in euros

Invoicing in dollars or pounds: how to do it right and why VAT always goes in euros

An American client who pays in dollars, a British agency that works in pounds, a Swiss supplier who asks for francs. Invoicing in foreign currency is perfectly legal in Spain — what is not optional is how the VAT is expressed. Article 10 of the Invoicing Regulation (Royal Decree 1619/2012) says it plainly: the amounts on the invoice may be stated in any currency, but the VAT charged must be expressed in euros. Let's see what that means in practice.

The rule: any currency, VAT amount in euros

On an invoice to a client you may show the taxable base, the unit prices and the total in dollars, pounds or yen. However: if the transaction carries Spanish VAT (for example, a service to a foreign individual that is located in Spain for VAT purposes, or a domestic sale agreed in foreign currency), the VAT charged must also appear in euros, alongside the foreign-currency amount or in its place.

And which rate do you use to convert? Article 79.Eleven of the Spanish VAT Act sets the criterion: the selling exchange rate fixed by the Bank of Spain in force at the time of accrual. In practice, the Bank of Spain publishes the ECB reference rates, and that is the figure to take — not the rate your bank applies when you collect, nor the rate of whatever date suits you.

Two important consequences:

• The relevant rate is the one on the accrual date (delivery of the goods or completion of the service), not the issue date or the payment date.
• Once the transaction has accrued, the VAT amount in euros is fixed. Whatever the currency does afterwards no longer touches the VAT.

A complete worked example

Your company provides consulting to a Spanish SME, but the contract was signed in dollars: fees of 10,000 USD, service completed (accrual) on 14 November. On that day the reference rate is 1 EUR = 1.08 USD.

| Item | USD | EUR | |---|---|---| | Taxable base | $10,000.00 | €9,259.26 | | VAT 21% | $2,100.00 | €1,944.44 | | Total | $12,100.00 | €11,203.70 |

The invoice may show the whole column in dollars, but the VAT of €1,944.44 must appear in euros. It is also the figure that goes to your Form 303 and your VAT ledgers, which are always kept in euros.

What if the rate moves between invoice and payment?

The classic question. Continuing the example: the client pays the 12,100 USD two months later, when the rate stands at 1 EUR = 1.12 USD. On conversion, €10,803.57 lands in your account — around €400 less than the euro value on the accrual date.

• For VAT, nothing changes: the amount was fixed at €1,944.44 on accrual. You do not correct the invoice or adjust Form 303 for exchange differences.
• For accounting, that loss is a negative exchange difference (account 668); had the currency risen, it would be financial income (768). Your advisor will book it in the year's result, but outside the VAT circuit.

Worth knowing the other way round too: do not try to "recover" an unfavourable exchange difference via a corrective invoice. Corrective invoices exist for errors and for the taxable-base modifications defined by law, not for market volatility.

Transactions without Spanish VAT: the most frequent case

Most businesses invoicing in foreign currency do so to clients abroad: a US company, a UK client. In those cases the transaction usually carries no Spanish VAT (an exempt export of goods, or a service outside the scope under the place-of-supply rules). There is no VAT amount to convert — but the invoice still enters your ledgers and your informative returns at its euro equivalent, using the same accrual-date rate. The conversion does not disappear: it simply moves from the invoice to the ledger.

Foreign currency and compliant invoicing systems

Under the VeriFactu Regulation (RD 1007/2023, whose entry into force the Spanish tax agency has announced will be postponed to 6 October 2028, pending official publication), the billing records generated by your software capture the transaction amounts — and the VAT travels in euros. A good invoicing program should let you issue in foreign currency and solve only the ugly part: taking the correct rate, fixing the VAT in euros and leaving a coherent trail in the ledgers. In InvoSeal, for instance, the invoice shows the amount in the currency agreed with the client and the VAT in euros calculated at the accrual-date rate, with no auxiliary spreadsheets.

Good practices when agreeing a foreign currency

1. Agree the currency in writing in the quote or contract, including who bears the bank's conversion fees. 2. Show both amounts (currency and euros) on the invoice whenever there is a VAT charge: it avoids disputes and clarifies the 303. 3. Document the rate applied: date and source (published reference rate). In an audit, that is the justification for the VAT amount. 4. Watch advance payments: if you collect an advance in foreign currency, the VAT on the advance accrues on collection, at that day's rate — and the final invoice settles the remainder at its own rate. 5. Don't invoice in currency "for style": if the client is Spanish and pays in euros, invoicing in dollars only adds tax friction.

In short

Invoicing in foreign currency is legal and often commercially smart; the one non-negotiable point is that the VAT amount be expressed in euros, converted at the Bank of Spain selling rate in force on the accrual date. Once the VAT is fixed, later swings in the currency are an accounting matter, not a VAT one. With the currency agreed in writing, the rate documented and software that converts at the right moment, a dollar invoice takes exactly the same effort as one in euros.