A translation difference arises when financing is arranged in a foreign currency and the invoice for an installment is paid after its due date. No calculation of translation difference is done for gross amounts of up to HRK 10.00. Depending on the relevant exchange rate, a translation difference may represent a gain or loss to you. The amount in HRK specified in the invoice for an installment is the equivalence of the relevant amount in a foreign currency converted according to the exchange rate defined in the lease agreement applicable on the invoice date.
Our clients need to record the translation difference invoice in their accounts.
If an installment is paid in the exact amount in HRK as specified in the invoice and the translation difference invoice is a loss to the lessee, the invoice needs to be paid. If the translation difference invoice is a gain to the lessee, the next invoice payment should be reduced accordingly.
If an installment is paid based on the agreed exchange rate applicable on the installment payment date (provided that gross translation difference amounts of up to HRK 10.00 are ignored), the translation difference invoice only needs to be recorded.
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