Lump sum exchange differences - booking

Lump sum on revenues is a simplified form of business taxation. Entrepreneurs who settle accounts in this way pay tax on income, but they cannot reduce their income by the costs of obtaining it. What if the entrepreneur sells to foreign persons? How to take into account the existing exchange rate differences? The answer later in the article.

Exchange rate differences with a flat rate fee

Pursuant to Art. 6 sec. 1c of the Lump-sum Income Tax Act, exchange rate differences should be included in the taxable income.Thus, an entrepreneur using a flat rate on recorded revenues should determine the exchange rate differences on the value of services or goods sold to the contractor in a currency other than PLN. Positive exchange rate differences increase the entrepreneur's income, while negative exchange differences reduce the revenues obtained in the tax year in which they arose.

For the taxation of exchange rate differences, the tax rate should be the same as for revenues obtained by the taxpayer from his business activity. Therefore, they should be shown (both negative and positive) in the column in which the revenue due from sales was included and to which they were related.

Due to the fact that the form of taxation is a lump sum on recorded revenues, the entrepreneur does not take into account the exchange rate differences arising in connection with the costs incurred.

How to determine the exchange rate differences?

In order to be able to talk about an exchange rate difference, the sale must meet two conditions:

1. sales revenue must be in a foreign currency,

2. payment for a service or goods must be in a foreign currency.

In order to determine the exchange rate differences, it is also necessary to express in PLN:

• income due - this income is calculated according to the average exchange rate announced by the National Bank of Poland on the last business day preceding the day of obtaining income,

• revenue actually received - this is the revenue determined according to the exchange rate on the date of actual receipt of payment.

Important! Positive exchange rate differences arise when the value of due revenue is lower than the revenue on the day it is received. Negative exchange rate differences arise when the value of due revenue is higher than the revenue on the day it is received.

Example 1.

The subject of the economic activity conducted by the entrepreneur is the sale of building materials. The form of taxation is a lump sum on recorded revenues with a tax rate of 3%. The entrepreneur issued an invoice to a foreign contractor for the amount of EUR 100 on March 2, 2016. The actual payment for the goods was made by bank transfer on April 2, 2016. How should the revenue and the exchange rate difference be booked?

The average exchange rate of the National Bank of Poland on the last business day preceding the day of obtaining income (i.e. March 1, 2016) was PLN 4.3365. An entrepreneur should post an income in the amount of EUR 100 x PLN 4.3365 = PLN 433.65 in the revenue record in March 2016.

The actual payment for the goods was made on April 2, 2016, so the correct exchange rate is the average exchange rate of the National Bank of Poland on the last business day preceding the day of receipt of payment, ie April 1, 2016. On that date, the exchange rate was PLN 4.2387. The actual payment for the goods was EUR 100 x PLN 4.2387 = PLN 423.87.

The value of receivable income converted into PLN is lower than the value of the income received: PLN 423.87 - PLN 433.65 = - PLN 9.78. This means that there is a negative exchange rate difference. Therefore, in April, the entrepreneur should enter the amount of PLN 9.78 with a minus in the column in which he records income.