It has been agreed that an invoice for 1000 USD, which equals 1800 DEM in local currency, is to be paid in CHF. The amount agreed upon is 1480 CHF.

At the time of payment, 1 CHF equals 1.2 DEM.

Let us assume that exchange rate differences are posted by the payment program, and the specified account is tax-relevant.

In this case the tax is calculated on the difference amount (in the same way as cash discount). Using a tax rate of 15%, this would result in a profit of 20.87 DEM and an input tax amount of 3.13 DEM.

Tax is always calculated based on the amount in document currency, so it is not possible to run a tax adjustment for a line item with 0 amount. For this reason, the system creates two additional line items in difference account 1 and difference account 2:

You must also define the second difference account in Customizing. Both difference postings can also be made to the same account. For this to be possible, the account must be tax-relevant and permit postings without tax codes.