6 What should I do if my business wants to accept payment in euro? What should I do if my business wants to accept payment in euro? You are not obliged to accept payment in euro – the euro is not legal tender in the UK. Some people think that “not legal tender” means that you are not allowed to accept euro. This is not true. You are free to accept payment in euro if you decide this is best for your business, just as you are free to accept payment in another foreign currency, such as the US Dollar or Japanese Yen. It is an option for any business to accept payment in euro. This may be particularly valuable if your business provides goods and/or services to visitors from the euro area. Even if you have not yet been asked to accept a payment in euro, you may want to prepare for such requests in future. Some businesses choose to trade within the UK in euro because they either receive euro income or have regular outgoings in euro. If your business supplies goods and/or services to a UK business that has a euro income stream, you may want to consider accepting payment in euro, particularly if your business has an outlet for that foreign currency. If a customer offers payment in euro, what should you do? How can you convert prices in sterling to prices in euro? How should you display prices in euro? Are you and your staff familiar with euro notes and coins? How should you deal with euro income? Converting sterling prices to euro prices As with other foreign currencies, find out the exchange rate between sterling and euro. You can get this information from many places, including the financial pages of newspapers, or your bank. Multiply the sterling price by the exchange rate. (Make sure you are using the rate to convert from sterling to euro, £1 = €x. Some sources print exchange rates in the form €1 = £x.) You may wish to ensure that any additional costs you could incur are reflected. You may want to consider steps to manage your foreign currency exposure if the exchange rate moves significantly after you have published a price list. You may want to say how long the price list is valid for, and/or say that you reserve the right to adjust published prices if the exchange rate varies by more than a certain percentage. Pricing in euro UK businesses that offer products in retail outlets to consumers must show prices in sterling. Retailers may also provide pricing information in foreign currencies provided it is fully transparent – the selling price in foreign currency or exchange rate between sterling and the foreign currency must be clear. If you decide to do this, you should clearly display what currencies you will accept together with any additional handling costs for accepting foreign currency. www.euro.gov.uk 6 What should I do if my business wants to accept payment in euro? Descriptions and explanations of the law on price indications and misleading prices is available on the DTI website at: http://www.dti.gov.uk/consumers/buyingselling/index.html If you only receive occasional euro payments, it may be better to pay receipts directly into your sterling account. You should be aware that banks will charge exchange costs for each transaction. Check with your bank what the charges will be. Remember that the bank will convert from euro to sterling using the exchange rate at the time the money reaches your bank account – this could be different from the one you used at the time you accepted the payment, especially if there has been a delay between accepting the payment in euro and paying the euro into the bank. If you make regular transactions in euro, you may prefer to open a euro bank account. Talk to your bank about the best option for your business. Giving change in euro Businesses with low turnover may find it easier to have a separate float of euro notes and coins, as this will allow them to accept and give change in euro. This approach will be more easily understood by customers than mixed currency transactions, ie pounds and euro. The downside is that you will need to consider carefully what you will do with any inflows of coins, as your bank is very unlikely to accept foreign coins due to the cost of repatriation. As with other foreign currency, banks generally only accept euro notes. Cheques and credit card transactions The length of time a cheque takes to clear depends on the issuing bank, not the currency it is drawn in. A euro-denominated cheque drawn on a euro account at a UK bank may 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 process may take several weeks. Bank charges in excess of those for a cheque issued against a UK bank will apply. Talk to your bank for more information. Credit card transactions are processed in the same way, whatever the issuing organisation. If 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. Giving change in sterling Work out the change in euro first, then work out the equivalent amount in sterling. For example, if the price in euro is €4.06, and the customer offers €5, the change will be €0.94. Convert the euro amount into sterling by dividing the euro amount by the exchange rate. Euro notes and coins See Factsheet 8 for information on euro notes and coin including details of the security features. Banking and cash handling Talk to your bank manager about opening a euro account and the other euro-related services your bank offers. You need to be clear what you will be charged for and whether it would be cost effective to have a euro account. What should I do if my business wants to accept payment in euro? 6 The issuing organisation will later convert the sterling amount to euro, or other currency, at the exchange rate which applies at the time of this conversion, and debit the customer’s credit card account by the relevant amount (plus any charges that apply). Keeping records of euro transactions If you issue an invoice in euro for a supply made within the UK, you will have to show the amount of any VAT charged, and the total amount, in sterling. All tax returns must be completed in sterling, so if you receive taxable income in euro, you must convert to sterling. HM Revenue and Customs accept payment of tax and National Insurance liabilities in euro. See Factsheet 8 for more details. Cross-border euro payments Under cross-border banking regulations charges levied for certain small value cross-border noncash payments in euro within the EU (€12,500 to 31 December 2005, €50,000 thereafter) must be the same as the charges levied by that institution for corresponding domestic payments in euro. This only applies for transactions in euro and not for corresponding charges for transactions in sterling. Getting the right information Factsheet 9 lists the contact names and addresses of organisations that can help you with further information and support.