Flat rate differences - how to calculate?

Lump sum on registered revenues is a simplified form of taxation. The main advantage of this method of accounting is that there is no requirement to keep a book of revenues and expenses, i.e. more detailed records. Only records of revenues, records of fixed assets and intangible assets should be kept. An entrepreneur who has opted for taxation in this form determines the tax - according to the appropriate percentage rate - on the tax base, which is the income obtained. The specificity of this form of settlement is that the costs incurred are not deducted from the income obtained. How to settle exchange differences in the case of foreign currency transactions? Check the answer in the article!

When do the exchange rate differences arise?

Pursuant to Art. 24c of the PIT Act, exchange rate differences arise when:

• the value of incurred costs in a foreign currency converted into PLN according to the average exchange rate announced by the National Bank of Poland is higher or lower than the value of this cost on the day of payment converted according to the actually applied exchange rate,

• the value of due income expressed in a foreign currency after conversion into PLN at the exchange rate announced by the National Bank of Poland is lower or higher than the value received at the actually applied exchange rate.

Lump sum and exchange rate differences

Entrepreneurs settled on the basis of a lump sum on recorded revenues in accordance with art. 6 sec. 1c of the Lump-sum Income Tax Act, they are required to show exchange rate differences, but only those related to sales. Positive exchange rate differences are shown on the revenue side, increasing the revenue. Negative differences are also shown on the revenue side, but with a minus sign, thus reducing revenue. Please note that for both positive and negative exchange rate differences, the same tax rate should be applied as appropriate for the service to which the exchange rate differences relate. For example, if exchange differences arise in connection with the sale of construction work, they must be taxed at a rate of 5.5%.

Important! In the case of lump sum taxation, only negative and positive exchange differences related to sales and not to expenses are disclosed.

Example 1.

Mr. Artur, who settled as a lump sum on recorded revenues, purchased an advertising service from abroad. The invoice received was in a foreign currency. Should positive or negative exchange differences be included in the settlements in this case?

Due to the fact that the entrepreneur settles under the lump sum, he is obliged to settle only those exchange differences (positive or negative) related to the obtained income. Exchange rate differences related to the expense do not affect the amount of taxable income with the registered lump sum.

In this case, the entrepreneur does not show exchange differences in connection with the expenses incurred.

How to determine the amount of exchange rate differences?

Exchange rate differences arise if two conditions are simultaneously met:

• sales revenue is expressed in a foreign currency,

• payment for a service or goods was made in a foreign currency.

Exchange rate differences on sales should be calculated by comparing:

• due income, i.e. the value that we should receive - the conversion of values ​​is made according to the average exchange rate announced by the National Bank of Poland on the last business day preceding the day of obtaining the income,

• the revenue actually received, i.e. the revenue that was actually received in relation to the exchange rate applied by the bank or in the case of receipt of the payment on a foreign currency account - the average NBP exchange rate on the last business day preceding the day of receipt of the payment.

Important! We deal with negative exchange rate differences when the value of due revenue is higher than the revenue actually received. Positive exchange rate differences arise when the revenue due is lower than the revenue actually received.

Example 2.

Mr. Jeremi settles on the basis of a lump sum on recorded revenues. He made a sale to a domestic contractor, however, both the invoice and the payment were in a foreign currency. The invoice was issued on July 4, and the entrepreneur received the payment on July 10 into a foreign currency account. The invoice was for 100 euros. Is it necessary to show exchange differences in connection with a sale in a foreign currency? The answer is yes, and the calculation scheme will be presented below.

The average NBP exchange rate on the last business day preceding the day of obtaining income was 4.3921. In the revenue record, the entrepreneur should include the amount of EUR 100 x 4.3921 = PLN 439.21.

The actual payment was made on July 10. Therefore, the conversion rate from the day before the inflow should be used - it was 4.4295.

EUR 100 x 4.4295 = PLN 442.95

The difference between the revenue due and the actual revenue is:

PLN 439.21 - PLN 442.95 = -3.74 PLN (positive exchange rate differences)

Mr. Jeremi received PLN 3.74 more than indicated in the invoice. Therefore, such an amount should be booked as income and taxed at the appropriate lump sum.

Example 3.

Mr. Janusz settles on the basis of a lump sum on recorded revenues. He issued a sales invoice for EUR 200 on July 6 and received the payment on July 8.

The average NBP exchange rate on the last business day preceding the day of obtaining income was 4.4501. In the revenue record, the entrepreneur should include the amount of EUR 200 x 4.4501 = PLN 890.02.

The actual payment was made on July 8, and an exchange rate of 4.4380 should be used for the conversion. Thus, the account of Mr. Janusz received 887.60 zlotys

PLN 890.02 - PLN 887.60 = PLN 2.42 (negative exchange rate differences)

Therefore, Mr. Janusz received PLN 2.42 less than indicated in the invoice, and therefore such an amount should be booked on the revenue side as a negative value, which will lower the tax base.