Receive payments in euros
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If your business provides goods and/or services to visitors from or
those living in the euro zone, it may be beneficial for you to accept payments
in euros. As with other foreign currencies, regularly check the exchange rate
between sterling and euros, and update your price list accordingly. Latest
exchange rates can be found in the financial pages of newspapers, on websites
or details may be obtained from your bank. You may wish to reserve the right to
adjust published prices if the exchange rate varies significantly. Paying euro into your sterling accountIf you
only receive occasional euro payments, it may be better to pay receipts
directly into your sterling account, to be converted into sterling. Banks will,
however, charge exchange costs for each transaction so you will need to check
the scale of the charges with your bank. The bank will also convert from euros
to sterling using the exchange rate at the time the money is credited to your
bank account which may be different from the one used when the payment was
first accepted.Opening a euro accountIf you make regular
transactions in euro, you may prefer to open a euro bank account. However this
will not necessarily speed up the process, as the length of time a cheque takes
to clear depends not on the currency it is drawn in but on the issuing
bank.A euro-denominated cheque drawn on a euro account at a UK bank can
clear as quickly as a sterling-denominated cheque drawn on a UK bank account.
However, cheques drawn on banks in other countries, including euro area
countries must be returned to the original bank for clearing. This can mean
that the process takes weeks. Credit card transactionsIf a customer from the
euro area pays by credit card in the UK, the transaction is in sterling, and
the amount will be credited to your business account in the normal way. The
issuing organisation will later convert the sterling amount to euros, or other
currency, at the exchange rate that applies at the time of this conversion, and
debit the customer's credit card account by the relevant amount (plus any
charges that apply).VAT & tax issuesIf you issue an invoice in
euros for goods or services delivered within the UK, you will still have to show
the amount of any Value-Added-Tax charged, and also the total amount, in
sterling.Tax returns must be completed in sterling, so if taxable income is
received in euros, it must be converted to sterling. Note that while HM Revenue & Customs accepts payment of tax and National Insurance liabilities in euros, at
no extra charge, it does not bear the risk of currency fluctuations, and will
apply the exchange rate at the time they receive the money from the clearing
bank.
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