Currency and Exchange Rate Rules for EU Invoices

Yes. Article 230 of the VAT Directive is explicit: "The amounts which appear on the invoice may be expressed in any currency, provided that the amount of VAT payable or to be adjusted is expressed in the national currency of the Member State, using the conversion rate mechanism provided for in Article 91."

This means you are free to invoice your German client in US dollars, your French client in British pounds, or your Spanish client in Swiss francs. The invoice total, the taxable amount, the line items — all of these can be in whatever currency you and your client agree upon.

There is no EU requirement to display amounts in euro (unless euro is your national currency). There is no requirement to show dual currency amounts. The only constraint is on the VAT amount itself.

The single mandatory requirement under Article 230 is that the VAT amount must be expressed in the national currency of the Member State where the taxation takes place. This is the Member State whose VAT rules apply to the supply.

For a domestic supply: if you are based in Germany and invoice a German client, the VAT amount must be in euro (Germany's national currency), even if the invoice total is in US dollars.

For an EU B2C supply: if you charge VAT on a B2C supply, the VAT amount must be in the national currency of the Member State where VAT is due — which is typically your own Member State under Article 45.

For a reverse charge supply: you issue the invoice with zero VAT. Since no VAT amount appears on your invoice, the currency question for the VAT amount is moot. The customer self-assesses VAT in their own currency.

Article 91(2) of the VAT Directive specifies the exchange rate rules for non-importation supplies. The conversion must use the latest selling rate recorded on the most representative exchange market or markets of the Member State concerned, at the time VAT becomes chargeable, or a rate determined by reference to that market in accordance with rules laid down by the Member State.

In practice, this means the exchange rate applicable on the date VAT becomes chargeable, using either the market selling rate or a Member State-determined rate derived from that market. Each Member State decides which exchange market is "most representative" and may set specific rules for how rates are determined.

The ECB rate: Article 91(2) of the VAT Directive provides that Member States shall accept the use of the latest exchange rate published by the European Central Bank as an alternative. This is accepted in all Member States and is the simplest option for most businesses.

For conversions between non-euro currencies (e.g., Swedish krona to Polish zloty), the euro is used as a bridge: convert to euro first, then to the target currency. In practice, conversions between non-euro currencies use the euro as a bridge — converting to euro first using the ECB rate, then to the target currency. This follows from the fact that ECB rates are expressed against the euro, though it is not explicitly stated in Article 91.

The European Central Bank publishes reference exchange rates every working day, typically around 16:00 CET. Rates are not published on weekends, public holidays, or TARGET closing days. These rates are available on the ECB's website.

Using the ECB rate has several advantages for freelancers and small businesses:

Universal acceptance: Every EU Member State must accept the ECB rate. You do not need to research which exchange market your Member State considers "most representative."

Easily verifiable: ECB rates are publicly available, date-stamped, and archived. If a tax authority questions your conversion, you can point to the published rate for the relevant date.

Consistency: Using the same source for all conversions simplifies your accounting and makes your approach auditable.

Article 91(2) ties the exchange rate to the moment "VAT becomes chargeable." This is the tax point, and it determines which day's exchange rate you use. The three main scenarios:

Supply completed (Article 63): VAT is chargeable when the goods or services are supplied. Use the exchange rate on the date of supply.

Successive payments or statements of account (Article 64): For supplies of goods or services giving rise to successive statements of account or successive payments, VAT is chargeable at the end of the period to which those statements or payments relate. Use the exchange rate on the last day of that period.

Advance payment received (Article 65): VAT is chargeable on receipt of the advance payment. Use the exchange rate on the date you received the payment.

The exchange rate is determined at the tax point — the moment VAT becomes chargeable. In most cases this is the date of supply, not the invoice date. However, under Article 66(a), some Member States provide that VAT becomes chargeable no later than the time the invoice is issued, in which case the invoice date is the tax point and determines the applicable exchange rate.

If your business is established in a non-euro EU Member State (Sweden, Poland, Czech Republic, Hungary, Romania, Denmark), the VAT amount must be expressed in your national currency — not in euro.

For example, if you are a Swedish freelancer invoicing a domestic client in US dollars, the VAT amount must be expressed in Swedish kronor (SEK). You convert the USD taxable amount to SEK using the applicable exchange rate at the tax point.

The ECB publishes exchange rates for all EU currencies against the euro. For a USD-to-SEK conversion, you can use the ECB rates for both USD/EUR and EUR/SEK, effectively using the euro as a bridge currency.

Some scenarios require two conversions. These are more common than you might expect:

Non-euro supplier, non-euro invoice currency: A Polish freelancer (PLN) invoicing in British pounds (GBP). The VAT amount must be in PLN. Convert GBP to EUR using the ECB rate, then EUR to PLN using the ECB rate.

Euro supplier, non-ECB currency: If you invoice in a currency that the ECB does not publish a rate for, you would need to use the "most representative exchange market" of your Member State as the primary source, with the ECB rate as a fallback where available.

In practice, the ECB covers the major currencies that freelancers and consultants typically invoice in: USD, GBP, CHF, SEK, DKK, PLN, CZK, HUF, RON, and others. Exotic currencies are the exception, not the rule.

The DG TAXUD Explanatory Notes on invoicing (2011) clarify that Member States cannot require information on the invoice beyond what is listed in Article 226. This means:

No exchange rate display requirement: You are not required to show the exchange rate used on the invoice. While it may be helpful for your client's records, it is not a mandatory invoice field under Article 226.

No conversion method requirement: You are not required to state whether you used the ECB rate, your bank's rate, or another source. Your records should document this for audit purposes, but the invoice itself does not need to include it.

No dual currency display requirement: There is no EU-level requirement to show the full invoice in both the transaction currency and your national currency. You only need to show the VAT amount in your national currency.

That said, best practice is to include the exchange rate and source on the invoice for transparency. This is not a legal requirement — it is a practical measure that reduces queries from clients and simplifies audits.

If you use the One Stop Shop (OSS) for B2C digital services or other eligible supplies, your OSS return is generally filed in euro. However, Member States of identification that have not adopted the euro may require returns in their national currency. The exchange rate used for the OSS return is the ECB rate published on the last day of the reporting period — or, if there is no publication on that day, on the next day of publication. For Union and Non-Union OSS schemes, the reporting period is a calendar quarter; for the Import OSS (IOSS), the reporting period is a calendar month.

This is a separate conversion from the one on your invoices. Your individual invoices show the VAT amount in the national currency of the Member State of taxation (which may not be euro for non-euro Member States). Your OSS return aggregates these amounts and converts them using the period-end ECB rate.

The result is that for OSS supplies, you may deal with three currency layers: the transaction currency on the invoice, the national currency for the VAT amount on the invoice, and euro for the OSS return.