How to Invoice in a Foreign Currency & Handle FX Rates

Working with clients abroad often means invoicing in a currency that isn’t your own. That raises practical questions: which currency should you use, do you need to show an exchange rate, how is VAT handled, and why did you receive less than you invoiced? This guide answers them with examples.

Can you invoice in a foreign currency?

In most countries, yes. You can generally issue invoices in any currency you agree with your client. The main exceptions are tax-related: in VAT systems such as the EU and UK, you can invoice in a foreign currency, but the VAT amount must also be shown in your local currency (more on that below). Some countries also restrict which currency domestic transactions may be settled in, so check local rules if you’re invoicing domestic clients in a foreign currency.

Choosing the currency

Some practical rules of thumb:

• Agree the currency in the contract or quote, not on the invoice for the first time.
• If you price in the client’s currency, build in a buffer for exchange-rate movements and conversion fees on longer projects.
• For long or large contracts, consider an exchange-rate clause — e.g. prices are reviewed if the rate moves more than 5%.

How to show the currency on an invoice

Ambiguity costs money. “$” could mean US, Canadian, Australian, Singapore or many other dollars. Use the ISO 4217 three-letter code at least once, ideally next to the total:

• USD 2,400.00 or US$2,400.00
• EUR 1.850,00 (in many European countries, a comma marks decimals and a period marks thousands)
• GBP 3,000.00
• JPY 250,000 (no decimals)

State the currency on every amount column, or once in a clearly labelled header (“All amounts in EUR”).

VAT and foreign currencies

EU

Under the EU VAT Directive, an invoice may be issued in any currency, but the VAT payable must be expressed in the national currency of the member state where VAT is due (for example, Polish złoty, Swedish krona or Czech koruna for local VAT in those countries). The conversion uses the latest rate on the most representative exchange market, and member states may allow the latest European Central Bank rate. Euro-area businesses invoicing in USD, for instance, show the VAT in EUR.

UK

If you’re UK VAT-registered and invoice in a foreign currency, the invoice must show the total VAT in sterling. HMRC accepts several conversion methods, including the market rate at the time of supply and HMRC’s published period rates, applied consistently.

Reverse charge and exports

When no VAT is charged — for example, under the reverse charge or for an export — there’s no VAT amount to convert, but you still need the local-currency value of the sale for your VAT return and accounting records.

Example: Polish VAT-registered supplier invoicing in EUR

(The exchange rate shown is illustrative. Use the rate and source your country’s rules require — in Poland, for instance, the rules refer to National Bank of Poland rates.)

Getting paid: bank fees and payment methods

International bank transfers can arrive short because of intermediary bank fees. With SWIFT transfers, the sender chooses who pays charges:

To protect yourself:

• State on the invoice: “Please pay in EUR with charges type OUR, or ensure the full invoice amount is received.”
• Provide local bank details in the client’s currency if you have a multi-currency account — clients can then pay as a domestic transfer, which is cheaper and faster.
• For SEPA payments in euros within the SEPA area, charges are generally shared, and transfers are usually low-cost.
• Card and online payment providers make foreign payments easy but charge conversion and processing fees; check the total cost.

Include IBAN and BIC/SWIFT codes for international transfers; US clients may need your bank’s address too, and US accounts are paid with an account number and ABA routing number.

Exchange-rate differences in your accounts

If you invoice in a foreign currency, the amount you receive in your own currency will usually differ from what you recorded on the invoice date. That difference is a realised exchange gain or loss.

Example: a UK freelancer invoices USD 2,000 on 1 October when the rate is 1.30 USD/GBP — recorded as £1,538.46. The client pays on 31 October when the rate is 1.33; the bank converts USD 2,000 to £1,503.76 (before fees). The £34.70 difference is a foreign-exchange loss in the accounts. The invoice itself does not change, and the client still owed — and paid — USD 2,000.

How exactly you record this depends on your accounting method and country; ask your accountant if you invoice in foreign currencies regularly.

Checklist for foreign-currency invoices

• Currency agreed in writing before invoicing
• ISO currency code shown next to the total
• Number format clear (decimal and thousand separators)
• VAT shown in local currency, with the rate and its source, where required
• Correct VAT treatment (domestic, reverse charge, export) noted
• International payment details (IBAN, BIC/SWIFT, or local details in the client’s currency)
• Bank charges instruction (e.g. OUR) if you expect the full amount
• Exchange rate on the invoice date recorded for your books

Doing it in BillKit

The BillKit invoice generator supports a wide range of world currencies and formats amounts for the selected currency. Choose the client’s currency, add your international bank details, and use the notes field for the local-currency VAT figure and the exchange-rate source when your rules require it. For one-off export orders where the buyer needs paperwork before paying, start with a proforma invoice.

Currency, VAT and accounting rules vary by country. This guide is general information, not legal, tax or accounting advice.