Invoice in a Foreign Currency 2026: How to Correctly Convert the Exchange Rate

Invoicing a foreign client in euros or dollars and unsure which exchange rate to use? You are not alone. Foreign currency conversion in the Czech Republic has two layers that are often confused: one for income tax and one for VAT. And each follows a different rule. This guide explains when to use the daily CNB exchange rate, when to use the annual fixed rate, how to convert VAT based on the date of supply, and what must appear on an invoice in a foreign currency.

TL;DR: the essentials in five points

• Income tax (self-employed without double-entry accounting): choose either the daily CNB exchange rate or the annual fixed rate. One method for the whole year, no mixing.
• VAT (VAT payer): always the CNB exchange rate valid on the day the obligation to declare tax arises, that is the date of taxable supply. The fixed rate option does not apply to VAT.
• Fixed rate for 2025: 24.66 CZK/EUR and 21.84 CZK/USD (instruction GFR-D-75).
• On a VAT payer's invoice: the tax amount must be stated in crowns, even if the total amount is in a foreign currency.
• Weekend or public holiday: the last CNB rate announced before that day is used.

Two layers of conversion: why an invoice involves two different rates

The root of most confusion is that foreign currency conversion is governed by two different laws, each with its own logic.

For income tax, Act No. 586/1992 Coll. on Income Taxes applies. It gives individuals who do not keep double-entry accounting flexibility: conversion becomes a matter for the annual tax return.

For VAT, Act No. 235/2004 Coll. on Value Added Tax applies. This is stricter and ties the conversion to the specific day the obligation to declare tax arose.

Which exchange rate to use for income tax (self-employed without double-entry accounting)

If, as a self-employed person, you keep tax records or claim flat-rate expenses (that is, you do not keep double-entry accounting), Section 38(1) of the Income Tax Act gives you a choice between two options. As confirmed by the Financial Administration and the methodology on fixed rates, both methods are legal, but they cannot be mixed within a single year.

The fixed rate is more practical for many self-employed people. It is calculated as the average of the exchange rates announced by the CNB on the last day of each month of the given year, and the General Financial Directorate publishes it by instruction after the year ends. For the 2025 tax period this was instruction GFR-D-75, which set, among other values:

Currency	Fixed rate for 2025
1 EUR	24.66 CZK
1 USD	21.84 CZK

The daily rate is useful if you only have a handful of foreign invoices per year, or if it works out more favorably. You use the CNB foreign exchange market rate valid for the day you received the income (for tax records, the actual cash flow is decisive), or the rate on the date of supply.

Which exchange rate applies to VAT

If you are a VAT payer, foreign currency conversion is governed by Section 4(8) of the VAT Act. This is unambiguous: the rate valid for the person carrying out the conversion on the day the obligation to declare tax arises is used. This day is generally the date of taxable supply, or the day payment was received, if that occurred earlier.

According to the Financial Administration's methodology, you can choose between:

• the foreign exchange market rate announced by the Czech National Bank, or
• the last exchange rate published by the European Central Bank (conversion between currencies other than the euro is done via the euro).

For VAT, the annual fixed rate is not used. The option of a single figure for the whole year exists only for income tax. For VAT you must always take the rate tied to the specific date of supply.

How to convert VAT for a EUR invoice, step by step

Practical example: a service invoiced in EUR to a domestic VAT payer

You issue an invoice for a consultation worth 1,000 EUR excluding VAT to a Czech client. The date of taxable supply is 12 June 2026, and the CNB rate on that day is, say, 24.70 CZK/EUR.

• Tax base: 1,000 EUR x 24.70 = 24,700 CZK
• VAT 21%: 24,700 x 0.21 = 5,187 CZK
• Total: 24,700 + 5,187 = 29,887 CZK (i.e. 1,210 EUR at the same rate)

On the invoice you state the amount in EUR and the calculated tax of 5,187 CZK in crowns. This is a requirement of a tax document's mandatory particulars under Section 29 of the VAT Act.

When VAT on a foreign currency invoice does not apply at all

For services to another EU country for businesses (B2B), the obligation to declare tax usually shifts to the customer (reverse charge), and you invoice without Czech VAT. In that case you do not deal with VAT conversion, the invoice simply shows the amount in the foreign currency and a note about the reverse charge mechanism. Even so, you still convert the income for income tax purposes at year-end. For more details on invoicing abroad, see our separate guide on invoicing abroad.

What must appear on a foreign currency invoice

An invoice in EUR or USD has the same mandatory particulars as a regular invoice, with a few specifics:

• Currency must be clearly stated on the document (EUR, USD, GBP).
• VAT payers must state the tax amount in crowns, even if the total amount is in a foreign currency. The tax base and total amount can remain in the foreign currency.
• Non-VAT payers can issue the invoice purely in a foreign currency, a crown conversion on the document is not required.
• The exchange rate and its date should ideally be stated on the document, so it is traceable how you arrived at the tax amount.
• A bank account number for payment in the foreign currency (ideally including IBAN and SWIFT/BIC) makes it easier for a foreign client to pay.

Common mistakes in conversion

• Mixing methods within the same year. You cannot convert part of your income using the daily rate and part using the fixed rate. One method for the whole year.
• Using the fixed rate for VAT. The fixed rate only applies to income tax. VAT always uses the daily rate on the date of supply.
• Wrong exchange rate date. What matters is the date of taxable supply or the day payment was received, not the invoice issue date or the payment date.
• Missing tax in crowns. A VAT payer's tax document must include VAT in crowns, otherwise it does not comply with the law.
• Converting an advance payment twice. An advance already taxed is not converted again when the final invoice is issued, only the difference is settled.

Conclusion

Converting a foreign currency is not complicated once you separate the two layers. For VAT, the rule is clear: the CNB rate on the date of supply, no option for the fixed rate. For income tax, as a self-employed person you have the freedom to choose between the daily and fixed rate, but only one method for the entire year. Once you follow this and remember to state the tax in crowns on the invoice, you are done.

If you invoice in EUR or USD regularly and do not want to look up exchange rates by date manually, a tool that tracks the supply date and rate for you comes in handy. DokladBot keeps track of documents and invoices in one place and handles conversion using the correct date without manual work.

Sources: Act No. 586/1992 Coll. on Income Taxes, Section 38, Act No. 235/2004 Coll. on VAT, Section 4, Financial Administration: converting foreign currency to Czech currency, fixed rate for 2025 (instruction GFR-D-75).