Diego Arcos is a data consultant in Zaragoza. On 16 March 2026 he issued an invoice for 12,000 USD to an investment fund in Toronto for an analysis he had finished that same day. The client paid on 20 April, and a little under 10,700 € arrived in his Wise account, already converted. When preparing the payment on account for the first quarter, Diego found himself with three possible figures for the same invoice: the one he got with the exchange rate on the invoice date, the one that had reached his bank, and the one produced by the rate offered by his invoicing software, which had multiplied instead of dividing. Only one of the three is correct for each tax.
The date that counts: the tax point
The VAT rule is in article 79.Eleven of Law 37/1992, the Spanish VAT Law: when the consideration is fixed in a currency other than the euro, the rate applied is "the selling exchange rate, set by the Banco de España, in force at the time" the tax becomes chargeable, known as the devengo or tax point. For a supply of services, the tax point generally falls when the service is performed. It does not matter when you are paid.
The Spanish invoicing regulations (Royal Decree 1619/2012) complete the rule in article 12: the invoice may be expressed in any currency, but the VAT, where there is any, must be shown in euros, calculated with that same article 79.Eleven rate. For an invoice to Canada, which under the place-of-supply rules carries no Spanish VAT, there is no tax to convert, but the amount in euros is still needed for Modelo 303 (in the box for transactions not subject to the tax), for the income record book and for IRPF, Spanish personal income tax.
In income tax, business income is, as a general rule, allocated to the period in which it accrues, and valued in euros at that moment. Using the same rate for VAT and for IRPF is the consistent approach and the one that avoids mismatches between returns.
Where to get the rate
The Banco de España publishes, every working day, the euro reference exchange rates set by the European Central Bank. In practice, that is the source used to apply article 79.Eleven. It is sensible to choose one source, write it down and always use it: what causes problems is not so much choosing source A or source B as mixing one in the 303, another in the income record book and yet another in the income tax return.
For returns under the VAT One-Stop Shop (OSS) there is a separate rule of its own: you convert at the ECB rate for the last day of the return period. If you sell to private individuals in the Union in other currencies, we explain this in digital services to private individuals in the EU.
How to read the rate, and the mistake behind most requests for information
The ECB expresses the rate as the number of dollars one euro is worth: for example, 1 € = 1.0850 USD. To turn an invoice in dollars into euros you have to divide by that number, not multiply. It sounds trivial and it is, by some distance, the error that produces the most discrepancies: if you multiply, the income in euros comes out inflated; if the euro is worth less than a dollar, it comes out reduced. The second case is the more delicate, because your declared income ends up below what your bank and your payment platforms report.
Diego's invoice, step by step
We use assumed rates to illustrate the calculation; in a real case you look up the rates published for each date.
- Invoice of 16 March: 12,000 USD. Rate for that day (assumed): 1 € = 1.0850 USD.
- Business income in the first quarter: 12,000 ÷ 1.0850 = 11,059.91 €. This is the figure for the 303 and for the payment on account.
- Payment on 20 April. Rate for that day (assumed): 1 € = 1.1200 USD. Value of the 12,000 USD at the rate on the day of payment: 12,000 ÷ 1.1200 = 10,714.29 €.
- Difference between the amount recognised and the amount received: 11,059.91 − 10,714.29 = 345.62 €. It is a negative exchange difference in the second quarter, not a correction of the March invoice.
- Wise charged 38 € for the conversion: a business expense, with its supporting document.
- What reached the account: 10,714.29 − 38 = 10,676.29 €.
| Item | Amount | Quarter | Where it is reflected |
|---|---|---|---|
| Income from the invoice | 11,059.91 € | Q1 | 303 (not subject) and income record book |
| Negative exchange difference | −345.62 € | Q2 | Income or expense record book, as a financial result of the business |
| Conversion fee | −38.00 € | Q2 | Expense record book |
| Typical error: multiplying | 12,000 × 1.0850 = 13,020 € | — | Income inflated by 1,960.09 € |
If Diego had declared as income the 10,676.29 € that reached the bank, his 303 and his record book would not reflect the amount invoiced, and the 383.62 € difference (345.62 of exchange and 38 of fee) would have vanished without explanation. Declaring the net amount received looks simpler, but it wipes out the trail linking invoice, payment and fee.
When the dollar rises between the invoice and the payment, the difference is positive and increases your income even though you have not invoiced any more. Ignoring it because "it is small" leaves income undeclared. And even if the amount is small, a series of invoices in foreign currency over several years can add up to enough for a tax check to adjust it with a surcharge or a penalty.
When the payment stays in dollars
Many self-employed people do not convert when they are paid: they leave the dollars in a multi-currency account and change them weeks or months later. In that case the exchange difference does not arise on payment, but on conversion. Your records must make it possible to follow each block of currency from the moment it comes in until it is changed. If those accounts are outside Spain, they also count towards the threshold for Modelo 720, the return on assets held abroad, added to your other accounts abroad.
Three checks before filing
- That the rate used in the 303 and in the income record book is the same for each invoice.
- That the amount in euros of the invoice does not happen to match the amount received: if it does, the wrong rate has probably been used.
- That exchange differences appear in the quarter of the payment or of the conversion, with a positive or negative sign.
The guide to the exchange rate for each invoice sets out the documents worth keeping. If you have already filed several quarters using the wrong approach, it can be corrected with a supplementary return or a request for correction, depending on which way the error goes; we explain this in how to correct a return already filed. You can send us the year's foreign-currency invoices and statements through the form for self-employed people with international clients.
If you are also paid through platforms that convert and deduct fees on their own account, the problem multiplies: it is dealt with in being paid through Stripe, Wise or PayPal.
The obligations of people who invoice clients outside Spain in several currencies are explained together on the Salama Tax page for self-employed people with international clients.