Foreign trade and currency accounting

Foreign trade differs from ordinary accounting not in the difficulty of the entries but in who is watching. The bank monitors the settlement deadlines under the contract, and being late there accrues interest daily – whether or not the delay was the foreign buyer’s fault.

So we take this on not “as it happens”, once the first payment has arrived, but from the contract: half the future problems are written into it.

What the service covers

• reviewing the foreign trade contract before signature: currency, delivery terms, settlement deadlines;
• accounting for currency earnings and watching the deadlines for crediting them;
• exchange differences at the transaction date and at the balance sheet date;
• VAT on imports and exports, and substantiating the zero rate;
• withholding tax on payments to non-residents and applying double taxation treaties;
• the certificates and documents the bank’s currency supervision requires;
• controlled transactions and the reporting on them, where your volumes fall under the rules;
• services bought from non-residents – place of supply and who accounts for the VAT.

Where money is usually lost

Settlement deadlines. Earnings not credited in time accrue interest automatically. Sometimes the situation can be saved in advance by changing the contract terms or obtaining a ruling; once the deadline has passed there are fewer options.

Exchange differences. Either not calculated at all, or calculated only at the payment date. The result is a distorted financial result and questions at inspection.

Payments to non-residents. Withholding tax is deducted at the moment of payment, and a reduced treaty rate applies only where a residency certificate exists – obtained before the payment, not after.

Services from abroad. Advertising, hosting, subscriptions: in some cases the recipient accounts for the VAT itself. People remember this once a year’s worth has accumulated.

Who needs it

Companies and sole traders selling services to foreign clients, importers and exporters of goods, IT companies contracting with non-residents. Formally this is part of ordinary accounting, and for clients on the monthly service we build it into the scope from the start rather than charging for it after the fact.

As currency volumes grow, the questions of VAT registration and of the tax model usually arrive alongside.

What it costs

It depends on the number of contracts and transactions a month, the currencies, whether goods are imported, and whether you need support with the bank’s supervision. We quote after a short conversation about your contracts.

Common questions

Can a sole trader work with foreign clients?

Yes, and it is a common arrangement. But it needs the right activity codes, a properly drafted contract and control over the crediting deadlines. The detail by group is on the sole trader bookkeeping page.

What if the client’s payment is late?

Act before the deadline, not after. The options depend on the contract: amending the terms, partial payment, documenting the reason for the delay. Come with the contract and we will see what is still possible.

Is a separate currency account needed?

Yes, settlements in foreign currency run through a currency account. We help open one and list the documents the bank will ask for against the contract.

Do you handle controlled transactions?

We establish whether your volumes fall under the rules and prepare the reporting. If full transfer pricing documentation is required, we say so plainly at the assessment stage.