Exchange Rate when receiving income in a foreign currency?

As I am slowly starting to prepare for this year’s tax season, I have started to do some research on how to calculate my total income for 2021 in TWD. Most of my income is derived from overseas, i.e. paid in a different currency (EUR in my case).

I have found the following information on the National Taxation Bureau of Taipei’s website:

Exchange Rate

If a foreigner stays in the Republic of China for more than 90 days during a taxable (calendar) year, the remuneration he/she receives from his/her employer(s) outside of the territory of ROC for services rendered within the territory of ROC shall be considered as Chinese-source income and he/she is required to file such income and pay tax thereon.
For convenience’s sake, we hereby provide the exchange rate for a foreign taxpayer to calculate his/her overseas income. If he/she files his/her annual income tax return of the previous year, please use the exchange rate of December on the taxable year; otherwise, please use the latest exchange rate. For example, if you’re going to leave in November, 2015, use the latest exchange rate. If you want to file your annual income tax return for 2015, just use the exchange rate of December, 2015 directly.

So it’s all the exchange rate for December that matters?

I mean obviously, for 2021 that would be great - but I am wondering if there are alternative ways of calculation which the tax bureau will accept, e.g.:

  1. Calculating an average exchange rate for the year based on the monthly exchange rate
  2. Treating each inflow separately and using the exchange rate of the month it occurred
  3. Using daily exchange rates from some other website

If there is some leeway on how to do the calculation, I would calculate with all possibilities and then use the one alternative which results in lowest taxes of course :whistle:

Any ideas on how the taxation bureaus look on that matter?
Maybe even some official guideline / law / …?

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Follow-up on that one: The table on the website already lists averages until the specific month, i.e. the exchange rate for March is the average exchange rate from Jan-01 to Mar-31. So that’s why one has to use December’s rate (because it’s the average rate from Jan-01 to Dec-31).

The only exception to this seems to be the calculation of AMT for basic income: Here, daily exchange rates should be used (while the tax bureau remarked that if these are “difficult to find”, using the average might also be acceptable on a case by case basis).

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Didn’t see this before, but yeah, you need to use the table of annual exchange rates from the MOF, irrespective of the month the money was received.

In case anyone is interested: The official rates for 2022 have been posted on the website today:

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There’s likely a perhaps more useful version of the table showing the annual average rates for the last few years (“perhaps more useful” because that’s what we need to use on our tax returns - I’m not sure what these monthly rates are used for). Will maybe see if I can find it later (edit: just checked - doesn’t seem to be published yet).

The December rate is the one to use when filing taxes regularly for the entire year. It is the average rate for the entire year. So it should match the rate in the other table you mentioned.

The other monthly rates should be used when leaving Taiwan during the year.

Oh, okay, I didn’t know that. I always used the tables listing the last ca. 8 years, which I thought were averages for the entire year rather than only December.

Are you saying that the values for April are the averages for the first 4 months, the values for October are averages for the first 10 months, and so on? That seems an odd way for them to do it…

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Yes, that’s how I under it. The rationale behind that table being that if you leave during the year, you know exactly which exchange rate applies.

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But…if you leave during the year and need to file early, the table hasn’t been published yet. :thinking:

I kind of assumed that there might be situations where one might need to use monthly averages, like for people/companies calculating taxes based on foreign income multiple times a year rather than just once the following May.

They publish that table every month with a new column being added :sweat_smile:

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