Whether you are a European freelancer invoicing US clients, an EU exporter pricing goods in USD, or a business managing multi-currency accounts, understanding exchange rates is essential for accurate pricing and VAT compliance.
How Exchange Rates Work
An exchange rate tells you how much of one currency you receive for one unit of another. For example, if EUR/USD = 1.10, one euro buys 1.10 US dollars. Exchange rates fluctuate continuously throughout trading hours based on supply and demand in global currency markets.
There are two types of rates you will encounter:
- Mid-market rate (interbank rate) — the midpoint between the buy and sell rates used by banks when trading with each other. This is the rate shown in our currency converter and on financial data sites like Reuters or Bloomberg.
- Retail rate — the rate banks and payment processors charge their customers, which includes a markup (spread) of typically 0.5%–3%.
Which Exchange Rate Should You Use for Invoicing?
When invoicing across currencies, most EU tax authorities accept the European Central Bank (ECB) reference rate for the date of supply as the rate for VAT purposes. You can find the ECB reference rates at ecb.europa.eu/stats/exchange.
For practical invoicing, the key rules are:
- State the exchange rate used on the invoice
- Use the rate applicable on the tax point date (date of supply)
- Convert the net amount and calculate VAT in the domestic currency
Managing Currency Risk as a Freelancer
If you regularly receive payment in a foreign currency (e.g. USD invoices paid to a EUR account), you are exposed to exchange rate risk. Simple strategies to manage this:
- Invoice in your home currency — passes the exchange risk to the client
- Use a multi-currency account — services like Wise or Revolut Business let you hold USD, GBP and EUR in the same account and convert at near-mid-market rates
- Adjust prices quarterly — if you invoice in a foreign currency, review your rates every 3 months to account for significant rate movements
Popular EUR Currency Pairs (2026)
| Pair | Typical Range | Key Drivers |
|---|---|---|
| EUR/USD | 1.05 – 1.15 | ECB vs Fed interest rates, US economic data |
| EUR/GBP | 0.83 – 0.90 | UK trade policy, Bank of England decisions |
| EUR/CHF | 0.92 – 0.98 | SNB policy, safe-haven demand |
| EUR/JPY | 155 – 170 | Bank of Japan policy, global risk sentiment |