Reply to: Should I accept payment in EUR or GBP

[Emma Power Mortgages]

OK, when I worked with Ben we didn't bother looking at "contractor" mortgages based on my daily rate (which IMO would lead to lending well in excess of what I could afford) but at lenders who used a combination of remuneration and net profit which was much more suitable for the way I work my business (lots more freelance projects and no long term continuous contracts).

We do explore all options, a lot of contractors don't have the accounts to back up the lending they require and that is when this may become a problem. It's not a one size fits all with you guys. I'm glad Ben found you the most suitable option for you

[TheCyclingProgrammer]

The contractor mortgages we arrange are based on your contract rate stated on your contract. We do not use accounts as generally the income these show is far less than what you actually earn.

Due to the new EU legislation that came in this month most mortgage providers will not lend to someone who is paid in a foreign currency

OK, when I worked with Ben we didn't bother looking at "contractor" mortgages based on my daily rate (which IMO would lead to lending well in excess of what I could afford) but at lenders who used a combination of remuneration and net profit which was much more suitable for the way I work my business (lots more freelance projects and no long term continuous contracts).

[psychocandy]

The EU directive came in this April, so I'm usure as to when it was you remortgaged but this is a new problem. If you just re fixed your rate with the same lender you wouldn't of needed to supply this information

The mortgages we arrange are generally based on contract rate. That way contractors can generally borrow more than if we used their accounts

Ah I see. It was a few years ago that I did it.

[Emma Power Mortgages]

EXACTLY. I fail to see why. Like this poster says it gets to books in £. Agreed - only difference is slight variation on £ rate dependent on exchange rate.

BTW - when I got paid in euros I remortgaged no problems. All they cared about was the accounts in £.

The EU directive came in this April, so I'm usure as to when it was you remortgaged but this is a new problem. If you just re fixed your rate with the same lender you wouldn't of needed to supply this information

The mortgages we arrange are generally based on contract rate. That way contractors can generally borrow more than if we used their accounts

[Emma Power Mortgages]

Why is this?

Regardless of the currency paid in it's going to hit your company books in GBP and increase your company turnover and profit so regardless of whether the mortgage provider is looking at company profits or salary + dividend I can't imagine what difference this would make.

At no point when I applied for my mortgage (based on director salary plus company profit) was I asked for the payment currency of my invoices.

The contractor mortgages we arrange are based on your contract rate stated on your contract. We do not use accounts as generally the income these show is far less than what you actually earn.

Due to the new EU legislation that came in this month most mortgage providers will not lend to someone who is paid in a foreign currency

[psychocandy]

Why is this?

Regardless of the currency paid in it's going to hit your company books in GBP and increase your company turnover and profit so regardless of whether the mortgage provider is looking at company profits or salary + dividend I can't imagine what difference this would make.

At no point when I applied for my mortgage (based on director salary plus company profit) was I asked for the payment currency of my invoices.

EXACTLY. I fail to see why. Like this poster says it gets to books in £. Agreed - only difference is slight variation on £ rate dependent on exchange rate.

BTW - when I got paid in euros I remortgaged no problems. All they cared about was the accounts in £.

[Contreras]

Agency is saying that I can charge them VAT and they have to claim the VAT from HMRC on a quarterly basis, they are insisting if I can charge them VAT on a quarterly basis or delay the payment of the VAT until the end of the quarter as agency can claim the VAT from HMRC only after a quarter. They are ready to pay my time worked on a monthly basis but wants to delay VAT payment.

1. Is this legal?

Nope. If the agency insist it's legal that is cause for concern in itself, let alone the obvious re cash flow. VAT must be added on every invoice. The terms of credit are whatever you agree however. For HMRC, YourCo can opt for VAT cash accounting, which would mean the VAT is owed on the value of receipts not invoices.

You could offer an early payment discount on invoices. VAT is calculated on the discounted amount even if the invoice is settled on the full amount*. The downside is obviously loss of rate unless planned and factored in advance, but it could reduce the exposure to bad debt and allows the agency (to think they have) an edge on the VAT at the same time.

* AFAIK, IANAA.

[TheCyclingProgrammer]

Not sure if this is something you have considered or even need to factor in. You will struggle to get a mortgage on a contract paid in euro's

Why is this?

Regardless of the currency paid in it's going to hit your company books in GBP and increase your company turnover and profit so regardless of whether the mortgage provider is looking at company profits or salary + dividend I can't imagine what difference this would make.

At no point when I applied for my mortgage (based on director salary plus company profit) was I asked for the payment currency of my invoices.

[Emma Power Mortgages]

Hi All,

I have just got a contract for a client in France. The Agency (based in UK) is insisting that I accept the payments in EUR. I have never accepted payment in EUR earlier and do not know what I am getting into and which currency should I accept for my contract. Is it troublesome to accept payment in EUR or should I insist the contract to be based in GBP only? The agency is using today's exchange rate to agree on daily rate in EUR for the contract.

Can anyone help me decide which currency I should go with.

Thanks

Not sure if this is something you have considered or even need to factor in. You will struggle to get a mortgage on a contract paid in euro's

[KentDogWalker]

Time to get my Euro passport, best of both worlds!

[tim123]

GBP is taking a hammering right now.

so then the OP should want to be paid in Euro

I have done 8 gigs in Europe (and one in China as the rep of a European company) and all but the first was paid in Euro (and one wasn't even in the Euro zone!).

And for the first I was royally ripped off because the agency gave me a lowball pound rate to "compensate" for him having to do the conversion. All the others I was on 50% more that I could achieve in the UK for the same skill-set so the minor costs of currency conversion was worth it.

You want the best rate, you get paid in whatever it is that that the client pays in. The agency aren't going to take the currency risk without charging heavily for it.

It is actually rare nowadays to find an agency who will let you work LtdCo in Europe, usually you have to be local PAYE or SE through a management company. You will all have seen the threads on the clamp down in Germany/Holland/Belgium on foreign consultants taking the Mick.

And finally, I know that the OP has reservations about this for other reasons, but you will find that Euro payments into your CaterAllen corporate account gets converted at a reasonable rate - you do all have CaterAllen corporate accounts, don't you

tim

[KentDogWalker]

Because they are being paid in Euro and, as they are only a middleman, don't see why it is they who should take the currency risk.

Most agencies think this way.

GBP is taking a hammering right now.

[tim123]

Personally, I'd insist on GBP, which reduces both your risk and hassle factor. It seems odd to me that one UK company (agency) would pay another UK company (YourCo) in EUR.

Because they are being paid in Euro and, as they are only a middleman, don't see why it is they who should take the currency risk.

Most agencies think this way.

[WordIsBond]

What what I've read so far I would be running (not walking) away from this contract, way too risky.

I'd run it through my shredder before running away from it.

Nothing wrong with being paid in euros, I do foreign currency stuff all the time. The rate has to be high enough to compensate you for the exchange rate risk, that's all. Everything's negotiable.

You put a value on the risk, and on the cost of exchanging currencies (pretty small if you find out what to do), and if you get paid enough to compensate you for that, go for it.

But this whole thing smells very bad.

[SlipTheJab]

What what I've read so far I would be running (not walking) away from this contract, way too risky.