Billing in Euros to UK company for services provided in the UK

[davetza]

I am waiting for my accountant to get back to me on this but I thought I would check on here as well. There is a very good chance I will be getting a role that will be based in the UK but for which I will need to bill the UK agency in Euro's as the end client is based in the Netherlands. My understanding from reading these forums and a brief conversation with the VAT man is that I will need to add VAT at 20% to the invoice based on a credible exchange rate which will need to be included on the invoice. I then need to decide if I want to have the money paid into a Euro or Sterling bank account. The only thing I have not figured out is what happens if the exchange rate changes a lot between the invoice being raised and paid.

With regards to tax my understanding is that as I am providing the service in the UK i would not be subject to any Netherlands's taxes. Would that be correct

[SimonMac]

I am waiting for my accountant to get back to me on this but I thought I would check on here as well. There is a very good chance I will be getting a role that will be based in the UK but for which I will need to bill the UK agency in Euro's as the end client is based in the Netherlands. My understanding from reading these forums and a brief conversation with the VAT man is that I will need to add VAT at 20% to the invoice based on a credible exchange rate which will need to be included on the invoice. I then need to decide if I want to have the money paid into a Euro or Sterling bank account. The only thing I have not figured out is what happens if the exchange rate changes a lot between the invoice being raised and paid.

With regards to tax my understanding is that as I am providing the service in the UK i would not be subject to any Netherlands's taxes. Would that be correct

I think you are over complicating it, you will invoice in Euros, and add 20% on top of that for VAT, exchange rate on the invoice is not necessary as you are expecting payment in Euro anyway.

If you are paid into a EURO account you have control as to when to transfer it to GBP so you can wait until its in your favor, not sure how it would affect your VAT returns as I have only ever seen an entry for GBP, so for ease its probably best you get it paid into a GBP bank account so you have a sterling figure to add to your accounts.

[WTFH]

Pretty much what Simon says. You invoice in Euro and add on VAT at 20% in Euro. You get paid in Euro and then you put Euro into your business bank account. The first time exchange rates get involved is when the money hits your account.
I just used my business account to convert (might not have been the absolute best, but it was zero hassle for me.). I'd get a note from the bank saying "We have received €20,000 and deposited this into your account at €1.1113..."
Some months you're better off, some months you're worse off.

[davetza]

Pretty much what Simon says. You invoice in Euro and add on VAT at 20% in Euro. You get paid in Euro and then you put Euro into your business bank account. The first time exchange rates get involved is when the money hits your account.
I just used my business account to convert (might not have been the absolute best, but it was zero hassle for me.). I'd get a note from the bank saying "We have received €20,000 and deposited this into your account at €1.1113..."
Some months you're better off, some months you're worse off.

Ok thanks that sounds a lot easier. Does the VAT return happen in Euro then as well?

[SimonMac]

Ok thanks that sounds a lot easier. Does the VAT return happen in Euro then as well?

No you have to convert it to GBP, you have two options both are listed here

https://www.gov.uk/guidance/foreign-...tour-operators

[davetza]

Thanks. My accountant has just confirmed everything said here :-)

[m0n1k3r]

I am waiting for my accountant to get back to me on this but I thought I would check on here as well. There is a very good chance I will be getting a role that will be based in the UK but for which I will need to bill the UK agency in Euro's as the end client is based in the Netherlands. My understanding from reading these forums and a brief conversation with the VAT man is that I will need to add VAT at 20% to the invoice based on a credible exchange rate which will need to be included on the invoice. I then need to decide if I want to have the money paid into a Euro or Sterling bank account. The only thing I have not figured out is what happens if the exchange rate changes a lot between the invoice being raised and paid.

With regards to tax my understanding is that as I am providing the service in the UK i would not be subject to any Netherlands's taxes. Would that be correct

The currency is irrelevant. Your most immediate customer is in the UK and you will them in whatever currency they desire and add UK VAT on top. The only difference is that aside from stating the VAT amount in euro, your invoice should also state the VAT amount in the corresponding Sterling amount as at the exchange rate of the date of the invoice.

[ASB]

If you are concerned about xchange ratr movements you could enter a currency hedge to ensure the gbp value of the euros is maintained at todays rate.

Obviously has no impact on on the accounting. The profir or loss on the hedge is a taxableevent of course.