This article is for: admins and finance teams.
Employees spend in many currencies, and your accounting needs the right tax on every receipt. Set your currencies and tax types once, and Factorial converts foreign expenses and records VAT for you, so reimbursements are right and you can reclaim the tax you're owed.
Currencies
Overview
Every expense has two currencies:
- Document currency: the currency on the receipt or invoice (shown as Receipt currency or Invoice currency). Any currency is accepted.
- Reimbursable currency: the currency the employee is paid back in. By default, the currency of the employee's legal entity.
When they differ, Factorial converts the amount using the exchange rate of the receipt (document) date. The employee sees the conversion on the form, for example "US$100.00 converted at 1 USD = 0.894967 EUR on 27 Oct 2026", and can enter the amount by hand if needed. For how conversion, the exchange rate and bank fees work, see Expenses in another currency. Groups, mileage, per diems, card expenses, payroll and SEPA have their own currency rules: see FAQ 6 to 8.
Each legal entity has one operating currency. To set it:
- Go to Settings > Company details.
- Under the legal entity, click View legal entity.
- In Details, find Currency information ("Configure currency for this legal entity. Changes in currency don't include conversion.").
- Choose the currency and click Submit.
Changing a legal entity's currency doesn't convert anything already recorded. It only applies from then on.
Taxes
Overview
Tax types (for example VAT 21%) let employees record the tax on each expense, and let Factorial send it to the right ledger account. When an employee adds a receipt, Factorial reads its tax breakdown and fills in the tax lines for them to check. Tax types are the same for the whole company: Factorial includes the official tax types for your countries (marked System), and you can add your own (marked Custom). You need permission to manage your company's tax types.
To add a tax type:
- Go to Settings > Accounting > Taxes.
- Click Add tax type.
- In New tax type, fill in the Tax name, Country and Type.
- Enter the Value (%) and a Description. To add another rate, click Add value.
- Under Ledger account, choose the account for each legal entity, so taxes are posted to the right account.
- Click Add tax.
- To let employees enter taxes, turn on the tax fields in Settings > Expenses > Expense form. See How do I choose what the expense form asks for?
Tips and Best Practices
- Set the currency as soon as you create a legal entity, before people start submitting expenses.
- If you reimburse through payroll, keep the reimbursable currency the same as the currency of the employee's legal entity.
- If you reclaim VAT, make the tax fields mandatory on receipts too, and ask people to upload clear receipts: Factorial reads the VAT from them.
- Related: How do I set up expense categories and subcategories? · How do I choose what the expense form asks for? · How do I export expenses? · Expenses in another currency
Troubleshooting and FAQ
Troubleshooting
"We couldn't get an exchange rate to convert to …"
Factorial didn't find a rate for that currency and date. Enter the reimbursable amount by hand before saving.
"You can only reimburse expenses in the same currency as the employee's salary."
The expense's reimbursable currency is different from the currency of the employee's legal entity, which is the one payroll pays in. Pay it back another way, then use Set as paid on the expense.
An expense doesn't appear in the SEPA payment.
Only approved expenses in euros can be paid by SEPA, and the employee needs an IBAN in their profile.
"Tax differs from base × rate".
The tax amount doesn't match the base amount and rate. Check the receipt and correct it, or use Recalculate taxes.
FAQ
1. Which exchange rate does Factorial use?
The rate of the receipt (document) date.
2. Can I change a legal entity's currency later?
Yes, but nothing already recorded is converted. It only applies from then on.
3. Can an employee choose the currency they're paid back in?
Yes, if the Reimbursable currency field is shown in your expense form, except for expenses in a group, mileage and per diems.
4. Can I use the same tax type in several legal entities?
Yes. Tax types are company-wide; choose a ledger account for each legal entity.
5. What if I don't set up taxes?
Expenses won't carry a tax breakdown, so you can't reclaim VAT from Factorial's data or post it to a tax account.
6. Which currency do expense groups, mileage and per diems use?
Expenses in an expense group use the group's currency. Mileage and per diem expenses use the currency of their rate.
7. Is a Factorial card expense converted?
No. Card expenses use the amount the card was actually charged, and no extra conversion is applied.
8. Which currencies can be reimbursed through payroll or by SEPA?
Reimbursing through payroll only works when the reimbursable currency is the same as the currency of the employee's legal entity. Reimbursing by SEPA only works for expenses in euros.
9. What does an expense's tax section contain?
On an expense, the Taxes section has Tax type, Tax rate, Base amount and Tax amount. An expense can have several tax lines.