# BR-AE-10 Reverse charge VAT breakdown needs the exemption reason "Reverse charge"

A VAT breakdown (BG-23) with VAT category code (BT-118) "Reverse charge" (AE) shall have a VAT exemption reason code (BT-121) meaning "Reverse charge" (VATEX-EU-AE) or the VAT exemption reason text (BT-120) "Reverse charge" (or the equivalent standard text in another language).

## Problem Description

> **ERROR**: EN 16931 VAT category rule

## Context and Significance

The VAT Directive (Article 226, point 11a) requires the mention "Reverse charge" when the buyer is liable for the VAT. Without it, the buyer cannot see from the structured data that they must account for the VAT themselves. In practice, the mention is often printed on the PDF but not written into BT-120 or BT-121.

## Solution

Add cbc:TaxExemptionReasonCode = VATEX-EU-AE and/or cbc:TaxExemptionReason = "Reverse charge" to the cac:TaxCategory of the AE breakdown (cac:TaxTotal/cac:TaxSubtotal). The validator only checks that a code or text is present; BR-CL-22 checks that the code exists in the VATEX list.

- [Validate XML](/en/xrechnung-validator?source=resource&rule=BR-AE-10)
- [Convert invoice](/en/pdf-to-xrechnung?source=resource&rule=BR-AE-10)

## Valid Examples

- AE breakdown with BT-121 = VATEX-EU-AE
- AE breakdown with BT-120 = "Reverse charge"

## Invalid Examples

- AE breakdown with neither BT-120 nor BT-121

## Code Examples

### Valid XML
```
<cac:TaxCategory>
  <cbc:ID>AE</cbc:ID>
  <cbc:Percent>0</cbc:Percent>
  <cbc:TaxExemptionReasonCode>VATEX-EU-AE</cbc:TaxExemptionReasonCode>
  <cac:TaxScheme><cbc:ID>VAT</cbc:ID></cac:TaxScheme>
</cac:TaxCategory>
```

### Invalid XML
```
<cac:TaxCategory>
  <cbc:ID>AE</cbc:ID>
  <cbc:Percent>0</cbc:Percent>
  <cac:TaxScheme><cbc:ID>VAT</cbc:ID></cac:TaxScheme>
</cac:TaxCategory>
```

## Affected Fields

- [BT-118 VAT category code](/resources/xrechnung/bt-118-vat-category-code)
- [BT-120 VAT exemption reason text](/resources/xrechnung/bt-120-vat-exemption-reason-text)
- [BT-121 VAT exemption reason code](/resources/xrechnung/bt-121-vat-exemption-reason-code)

## Related Rules

- [BR-AE-01](/resources/kosit-validator-errors/br-ae-01-reverse-charge-vat-breakdown-required)
- [BR-AE-09](/resources/kosit-validator-errors/br-ae-09-reverse-charge-tax-amount-zero)
- [BR-CL-22](/resources/kosit-validator-errors/br-cl-22-vatex-tax-exemption-reason)

## Validation Tools

- [Official KoSIT Validator](https://github.com/itplr-kosit/validator): Run the official KoSIT validator with the XRechnung configuration to check EN 16931 and XRechnung rules.
- [Convert PDF to XRechnung](/pdf-to-xrechnung): Find validation errors during conversion and review each correction.

## Related Resources

- [Official Specification](https://docs.peppol.eu/poacc/billing/3.0/rules/ubl-tc434/)
- [Test Suite](https://github.com/itplr-kosit/xrechnung-testsuite)
- [All validation errors](/resources/kosit-validator-errors): Overview of the EN 16931, XRechnung and Peppol validation rules explained here.