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What exchange rate do I use for tax settlement?
Most tax authorities (or regions in the case of the EU) only accept tax payment in their native currency.
If you are a merchant who sells in another currency you will need to convert the currency to one that is acceptable to the tax authority.
Some tax authorities require you to use an exchange rate at the end of the tax settlement period, while others require you to use an exchange rate based on the transaction date.
The source of the exchange rate will be set by the tax authority/region, e.g. daily T.T.M. rates for Japan/quarterly ECB rates for EU.
Within the EU there are also tax authorities that are not part of the Eurozone and their requirements also vary. Taxamo has explored these issues in a blog here.
Currency exchange rate conversion is a key feature of the Taxamo solution.