On many occasions, self-employed workers or companies that have just started their activity and are engaged in foreign trade, regularly or sporadically, may encounter this question at the time of issuing the invoice. Therefore, can an invoice be made in a currency other than the euro?
The billing regulations regulated in the Royal Decree 1619/2012, of November 30, which approves the Regulation regulating billing obligations It is clear, since in its article 12.1 it establishes that "the amounts appearing on the invoices may be expressed in any currency."
The only condition established in the regulations is that the currency for which the amount is being reflected on the invoice is indicated. For example, if an operation is carried out with the US in dollars, it must be indicated that the amounts have been reflected in USD.
Types of currencies according to the PGC:
This is how the PGC distinguishes it when talking about “functional currency” which is the one in which operations are usually carried out and the “presentation currency” which is the one in which the company presents the Annual Accounts and which, in the latter, must be expressed in euro currency.
In relation to the first type of currency, the functional currency, the company may choose the type of currency in which to carry out its operations, being an optional option of the company itself. Although, and unless the company does not provide anything in this regard, it will be presumed that the functional currency is the euro.
In relation to the second type of currency, the presentation currency, it is unavoidable that the company must indicate and express its annual operations in the euro currency, so the Annual Accounts must be presented in a currency other than this one before the Commercial Registry. , your deposit would be rejectable.
How is the exchange rate applied?
Keeping in mind that in accounting all invoices must be reflected and accounted for in the same currency, the exchange rate must be set appropriately and in accordance with the exchange rate issued by the Bank of Spain for each day of the year. For this reason, and even though the invoice has been issued in a different currency, the currency must be changed to be recorded in the currency in which it is expressed.
If the company carries out a number of important operations in currencies of different countries, it may record the operations using an average exchange rate for the period. However, this average period cannot be longer than one month and they must be stable currencies whose variations are not significant.
Foreign currency and its treatment in the PGC:
The operations carried out and carried out by companies in foreign currency find their regulatory basis in the registration and valuation standard 11 of the PGC:
a.-) Monetary items: Treasury, items receivable and payable (collection rights and debts) and investments in debt instruments.
b.-) Non-monetary items: the rest of the elements, such as fixed assets, inventories, investments in equity instruments, advances on fixed assets and inventories, etc.
Foreign currency in accounting:
In accounting and with regard to monetary items, it is common that, due to exchange differences, there are positive or negative differences caused by the exchange rate, so these differences must be allocated directly to the profit and loss account. :
- Account 668: “Negative exchange differences.”
- Account 768: “Positive exchange rate differences.”
In this case, and assuming that a company has a bank account in dollars worth 35,000 dollars and whose book value is 25,000 euros and having that at the end of the year the exchange rate is 1 dollar = 0.92 euros, it must be carried out the following setting:
- Book value of the bank account = 25,000 euros.
- Balance updated at the closing exchange rate = 23,000 (25,000 x 0.92)
Negative adjustment in foreign currency for 2,000 euros.
Account | Has to | To have | |
573 | Banks, foreign currency | 2.000 | |
668 | Negative exchange rate differences | 2.000 |