- Bank accounts
- Petty cash
- Cash & currency controls in country
- Encashment facilities
- Foreign exchange risk
- Per diems payments
- Cost of living
- Cost of foreign VAT
- Foreign tax/VAT rebate
- Cost of travel
See Section on Bookkeeping / Accounting, for foreign bank accounts and cashflows.
Dealing in foreign currencies can add significant complications to production accounting. It is important to agree up front an exchange rate to use for the accounting system and cost report. Where the actual costs are translated at a different rate, the difference in the value is recorded in the foreign exchange loss / gain account. This can be a difficult area to manage for the cost report and should be constantly monitored.
One way to actively manage this is to hedge any exposure to currency movement, in order to mitigate the risk of production incurring foreign exchange losses. Hedging involves arranging to buy foreign exchange at today’s rate, for actual delivery when required on a future date. This serves to fix the rate, and regardless of any actual movement in the exchange rate during this period, any such movements in the currency markets will not adversely affect agreed budgets / forecasts.
Per diem payments can be paid to cast and crew who are overnighting. However, as the cost of living differs from country to country, the HMRC website details allowable rates per country, the benchmark scale rate expenses payments: accommodation and subsistence payments for employees travelling outside the UK.
Currency controls are in place in some countries. This generally causes most problems when trying to remove currency out of the country. It may be difficult to return any unused funds to the UK, so care should be taken as to how much money is transferred into foreign bank accounts.
It is recommended that professional advice is sought on the implications of foreign VAT before any commitments are made. The structuring of contractual relationships can affect whether foreign VAT is charged, and /or whether foreign VAT is reclaimable. This will have a significant effect on the cashflow and the budget.
It is always worth checking for bank holidays with the bank holding the encashment facility. Some countries seem to have a large number of bank holidays. They are not all national holidays; some can be just local to the town or region.
In countries such as South Africa, local income tax is payable on UK artists fees to SARS (South African Revenue Service). The artists can then reclaim this tax on their UK tax return as double taxation relief. Best Practice is to communicate this liability to the artists at the point of contracting, and to arrange for the artist or agent to make the payment. Otherwise, the production company will be required to pay SARS directly, and it can then be difficult to reclaim the money back from the artist.