Germany exported goods worth over €1.5 trillion in 2024. To invoice international customers correctly, German businesses are permitted to issue invoices in currencies other than euros. Therefore, businesses that invoice in foreign currencies need to know the legal regulations regarding exchange rates, value-added tax (VAT), bookkeeping, and tax reporting.

In this article, we explain the legal basics for invoicing in foreign currencies, including the requirements for issuing this kind of invoice. We also explain how to handle VAT and record invoices in foreign currencies on business accounts. Finally, we outline the specifics that apply to e-invoices and how digital invoicing solutions can help businesses with their international billing.

Key takeaways

• German businesses can issue invoices in foreign currencies if the currency of payment has been agreed upon with the customer
  
• Invoices in foreign currencies must contain the same mandatory invoice details as invoices in euros and must clearly indicate the currency used
  
• Value-added tax (VAT) treatment is determined by the type of sale, place of supply or delivery, and status of the customer or business receiving the supply or delivery, rather than the invoice currency
  
• Invoices in foreign currencies are recorded in euros on the accounts of German businesses
  
• E-invoices can also be issued in foreign currencies, provided the structured dataset contains full details of the currency and invoice totals
  

Are German businesses allowed to issue invoices in foreign currencies?

German businesses are allowed to issue invoices in euros or in foreign currencies. VAT law does not stipulate a specific invoice currency. However, the contract parties must have reached an agreement on the currency to be used for payment.

This agreement can be made explicitly or implicitly within the framework of a contract. An implicit agreement is based on the parties' behaviour. For example, if a quote contains prices in US dollars (USD) only and the customer accepts this quote without comment, then both parties have agreed to payment in USD.

The legal basis for this rule is the German Civil Code (BGB). According to Section 244, Paragraph 1 of the BGB, a debt payable in foreign currency within the territory of Germany can be made in euros, unless payment in the foreign currency has been explicitly agreed upon.

Statutory requirements for invoices in foreign currencies

Invoices in foreign currencies are subject to the same statutory requirements as invoices in euros. However, there are a few additional requirements that help avoid ambiguity and ensure compliance with tax regulations.

Requirements for invoices in foreign currencies

The foreign currency must be clearly indicated on the invoice. The currency used for the invoice total must be explicitly indicated. It is important to use International Organization for Standardization (ISO) currency codes to avoid confusion. Examples include using "USD" for US dollars or "GBP" for pound sterling.

With taxes, businesses must use relevant exchange rates. Section 16, Paragraph 6 of the German VAT Act (UStG) explains how to convert invoice amounts into euros. According to the UStG, the VAT exchange rates published by the German Federal Ministry of Finance must be applied as standard. The euro foreign exchange reference rates published by the European Central Bank (ECB) also provide information on changes in exchange rates. However, VAT conversions must be performed according to the provisions of Section 16, Paragraph 6 of the UStG.

Mandatory Invoice details

Invoices issued by businesses registered in Germany must fulfil the statutory content requirements, whether they are denominated in euros or in foreign currencies. According to Section 14, Paragraph 4 of the UStG, an invoice only fulfils the statutory requirements if it contains the following mandatory invoice details:

• Full name and address of the business supplying the goods or services
  
• Full name and address of the recipient of the goods or services
  
• Invoice issue date
  
• Date of delivery, supply, or performance period
  
• The tax number issued to the business by the tax office or the VAT identification number (VAT ID) issued by the Federal Central Tax Office (BZSt)
  
• A sequential, unique invoice number
  
• Quantity and type of products or scope and type of services
  
• The net price and total amount (i.e., gross)
  
• The applicable tax rate and the corresponding tax amount or a reference to the tax exemption
  
• Any other legally mandated notices, such as "reverse charge applies"
  

Businesses can also include the following optional information on their invoices:

• Payment deadlines or concrete payment due dates
  
• Details on discounts, including the discount's percentage and valid time frame
  
• Details on special settlement terms, such as instalment payments or progress payments
  
• The business's bank details, including the International Bank Account Number (IBAN) and Bank Identifier Code (BIC), where applicable
  
• The commercial register entry details, including registry court and registered number
  
• Details on the business's management or owners
  
• The business's telephone number, email address, or website, in case of queries
  

What VAT rate applies to invoices in foreign currencies?

The currency used on an invoice does not affect how VAT is applied. What matters is the type of sale, place of supply or delivery, status of the party receiving the supply or delivery, and any other special rules that might apply.

Invoicing other EU member states

Cross-border B2B sales within the EU are separated into supplies of goods and services. In the case of a service, Section 3a, Paragraph 2 of the UStG stipulates that the place of supply is generally the state where the customer is located. If the customer is liable for VAT in this state, then the invoice is issued without German VAT and must contain a note indicating that the customer is responsible for VAT. In such cases, the reverse charge procedure applies.

On the other hand, a supply of goods to another EU member state can qualify as a tax-free intracommunity supply of goods (ICS), provided it satisfies the requirements of Section 4, No. 1 and Section 6a of the UStG.

Invoices issued to private individuals in other EU member states are subject to different rules because the reverse charge procedure only applies to transactions between businesses. Supplies of goods to private individuals within the EU are subject to the rules on distance sales under Section 3c of the UStG. The place of supply of intracommunity distance sales is the destination country. Subject to certain criteria, an EU-wide threshold of €10,000 in yearly revenue applies to businesses established in a single EU member state.

On the other hand, Section 3a, Paragraph 1 of the UStG stipulates that supplies of services to private individuals are, in principle, performed at the place where the business is headquartered. In this case, invoices are issued with German VAT, except where special regulations apply.

Invoicing third countries

Transactions with businesses outside of the EU are also divided into supplies of goods and services. Exports of goods can be exempt from German VAT subject to certain eligibility criteria and documentation requirements. For many B2B services, the place of supply is the headquarters of the recipient business, according to Section 3a, Paragraph 2 of the UStG. This means German VAT does not apply. The local law in the recipient's state determines what rules apply (e.g., reverse charge procedure, mandatory registration with local tax authority).

The VAT rules for sales to private individuals outside of the EU also differ depending on the type of sale. Exports of goods can be tax-free. Supplies of services are often taxed at the headquarters of the business performing the service. However, depending on the type of supply, the place of performance can also be the state where the private individual resides. Therefore, businesses need to assess whether they are required to indicate German VAT on a case-by-case basis.

How are invoices in foreign currencies recorded on a business's accounts?

Invoices in foreign currencies present particular challenges regarding bookkeeping. While the invoice total can be indicated in a foreign currency when dealing with business partners, amounts that are required for taxation and annual reporting purposes must be calculated in euros.

Bookkeeping systems can also record the original foreign currency, but the annual financial statement must be prepared in euros, according to Section 244 of the German Commercial Code (HGB).

Recording invoices in foreign currencies

When recording invoices in foreign currencies, businesses in Germany need to start by converting invoice totals into euros using the applicable exchange rates at the time of the transactions. The exchange rate needs to be clearly documented so the record can be reviewed later as necessary.

Both incoming and outgoing invoices require conversion. For incoming invoices from an overseas supplier, the total due is recorded at its equivalent euro value, even though payment can be made later in a foreign currency. Similarly, outgoing invoices to overseas customers are recorded on the accounts at their corresponding euro values.

Handling changes in exchange rates

Since exchange rates are constantly changing, the euro value of an asset or liability in a foreign currency can change between the time of invoicing and the time of payment. The resulting difference is known as a "foreign exchange (forex) difference."

Changes in exchange rates can result in businesses generating forex gains or forex losses. These changes must be taken into account when paying or calculating amounts in foreign currencies and must be recorded on the accounts appropriately.

Creating annual financial statements

Assets and liabilities in foreign currencies that are outstanding as of balance sheet dates must be assessed according to the valuation principles of the HGB. According to Section 256a of the HGB, assets and liabilities denominated in foreign currencies must be converted according to the spot exchange rate as of the balance sheet date. Line items with a remaining term of one year or less qualify for special relief.

Careful documentation of the exchange rates used, sources of those rates, dates of conversion, and conversions performed makes it easier to understand journal entries and supports proper financial reporting.

What are the specific requirements for e-invoices in foreign currencies?

Electronic invoices (e-invoices) can also be issued in foreign currencies. The currency used does not impact the general requirements applicable to the e-invoice format. What matters is that the invoice details are transmitted correctly and fully in a structured format.

Foreign currencies on e-invoices

As with other invoices, the currency used for an e-invoice total must be clear and obvious. It must be indicated within the structured invoice dataset using the corresponding currency code. This is particularly important to ensure that accounting and payment systems can process invoices automatically and so invoice totals can be allocated and processed correctly.

Formats for e-invoices

The standard e-invoice formats in Germany are XRechnung and Central User Guide of the Forum for Electronic Invoicing Germany (ZUGFeRD). XRechnung contains structured invoice data without an embedded portable document format (PDF) version. ZUGFeRD uses hybrid profiles that combine structured Extensible Markup Language (XML) data with a readable PDF.

In the event of differences between the structured dataset of a hybrid e-invoice and its visual component, the structured part takes priority. Nevertheless, the invoice details need to match, including the invoice currency.

How Stripe Invoicing helps businesses invoice in foreign currencies

Multiple currencies and differences in payment processes can make it complicated to bill international transactions. Digital invoice solutions – such as Stripe Invoicing – help businesses create invoices in multiple currencies and process international payments more efficiently.

Create invoices in multiple currencies

With Invoicing, businesses can create invoices in different currencies and offer their customers personalised settlement options. The platform supports over 135 currencies, 100 payment methods, and more than 25 languages.

Its multicurrency capabilities might be of particular interest to businesses with international customers. These capabilities allow businesses to indicate invoice totals in agreed-upon payment currencies and process payments directly.

Automate payment management

In addition to creating and sending invoices, Invoicing helps businesses manage their open invoices. The system can track invoice status, send out automatic payment reminders, and centrally manage payment flows. This reduces manual processes related to debtor accounting.

Additionally, invoice and payment data can be transmitted automatically via interfaces with existing accounting and enterprise resource planning (ERP) systems. This makes it easier to coordinate international payment flows and helps businesses more efficiently process invoices in foreign currencies.

FAQs about invoices in foreign currencies