Reference

BR-CL-22 Tax exemption reason code must come from CEF VATEX

The VAT exemption reason code (BT-121) must belong to the CEF VATEX code list.

BT-121 gives the reason for a VAT exemption as a code, so that the buyer can post the invoice without reading free text. The rule fails when a legal reference such as "Art. 138 Directive 2006/112/EC" or an internal code such as "EXEMPT" is written in the code field, or when the value contains spaces. Upper and lower case do not matter for this check. Example: an intra-community supply of goods uses category K with BT-121 = VATEX-EU-IC and the legal basis as text in BT-120.

Solution

Set BT-121 to a VATEX code that matches the VAT category, e.g. VATEX-EU-AE (reverse charge, category AE), VATEX-EU-IC (intra-community supply, K), VATEX-EU-G (export outside the EU, G) or VATEX-EU-O (not subject to VAT, O). Put the legal reference as text in BT-120. In UBL, the code is cac:TaxCategory/cbc:TaxExemptionReasonCode; in CII, ram:ApplicableTradeTax/ram:ExemptionReasonCode.

Quick actions

Validate XML Convert invoice

Valid Examples

BT-121 = VATEX-EU-IC — intra-community supply (category K)
BT-121 = VATEX-EU-G — export outside the EU (category G)

Invalid Examples

BT-121 = Art. 138 Directive 2006/112/EC — legal reference; it belongs in BT-120
BT-121 = EXEMPT — internal code

Code Examples

Valid XML

<cac:TaxCategory>
  <cbc:ID>K</cbc:ID>
  <cbc:TaxExemptionReasonCode>VATEX-EU-IC</cbc:TaxExemptionReasonCode>
  <cac:TaxScheme><cbc:ID>VAT</cbc:ID></cac:TaxScheme>
</cac:TaxCategory>

Invalid XML

<cac:TaxCategory>
  <cbc:ID>K</cbc:ID>
  <cbc:TaxExemptionReasonCode>EXEMPT</cbc:TaxExemptionReasonCode>
  <cac:TaxScheme><cbc:ID>VAT</cbc:ID></cac:TaxScheme>
</cac:TaxCategory>