In our practice, we often meet with clients whose activities are aimed at markets outside the European Union, in connection with which their main business operations may be carried out in any other currency other than the euro. This may include supply contracts, loan agreements, and acquisitions and financing of subsidiaries located outside the Netherlands. By assessing a company's economic environment, it is possible to determine whether its functional currency is the euro or another currency such as the dollar or the ruble.
What happens if it turns out that your company's main cash flows are not calculated in euros? You acquire serious risks in the formation of exchange rate differences due to fluctuations in the exchange rate, which in our time is no longer something unexpected. What does this mean for your business? The complexity of forecasting and calculating potential profits and, of course, the amount of tax on this profit or the resulting loss.
How to properly protect yourself from unexpected expenses? You can request tax permission to report in your functional currency, i.e. in the currency in which you primarily conduct your business. To do this, you need to send a request to the tax office. Tax permission is issued only from the year following the year in which the request was sent. Therefore, if you decide to change the reporting currency starting next year (in the current situation - from 2021), you need to send this request now, because It is important to do this before the end of 2020.
If you would like us to help you assess your situation and figure out whether it is worth changing the reporting currency of your company, or for us to send a request to the Dutch tax office, Nalog.nl will be happy to provide you with such a service.
Below you can leave a request:
