# BR-E-10 Exempt VAT breakdown needs an exemption reason code or text

A VAT breakdown (BG-23) with VAT category code (BT-118) "Exempt from VAT" (E) shall have a VAT exemption reason code (BT-121) or a VAT exemption reason text (BT-120).

## Problem Description

A VAT breakdown (BG-23) with VAT category code (BT-118) "Exempt from VAT" (E) shall have a VAT exemption reason code (BT-121) or a VAT exemption reason text (BT-120).

> **ERROR**: XRechnung 3.0

## Context and Significance

VAT exemption (category E) must state its legal basis, so EN16931 requires either a coded or free-text exemption reason on the exempt breakdown; codes come from the VATEX list validated by BR-CL-22.

## Solution

Add a cac:TaxCategory/cbc:TaxExemptionReasonCode (BT-121) from the VATEX code list or a cbc:TaxExemptionReason free text (BT-120) to the exempt breakdown.

- validate
- convert

## Valid Examples

- Exempt breakdown with BT-121 = VATEX-EU-132 or BT-120 = "Exempt under Art. 132 VAT Directive"

## Invalid Examples

- Exempt breakdown (BT-118 = E) with neither BT-120 text nor BT-121 code

## Code Examples

### Valid XML
```
<cac:TaxSubtotal>
  <cbc:TaxableAmount currencyID="EUR">500.00</cbc:TaxableAmount>
  <cbc:TaxAmount currencyID="EUR">0.00</cbc:TaxAmount>
  <cac:TaxCategory>
    <cbc:ID>E</cbc:ID>
    <cbc:Percent>0</cbc:Percent>
    <cbc:TaxExemptionReasonCode>VATEX-EU-132</cbc:TaxExemptionReasonCode>
    <cbc:TaxExemptionReason>Exempt under Article 132 VAT Directive</cbc:TaxExemptionReason>
  </cac:TaxCategory>
</cac:TaxSubtotal>
```

### Invalid XML
```
<cac:TaxSubtotal>
  <cbc:TaxableAmount currencyID="EUR">500.00</cbc:TaxableAmount>
  <cbc:TaxAmount currencyID="EUR">0.00</cbc:TaxAmount>
  <cac:TaxCategory>
    <cbc:ID>E</cbc:ID>
    <cbc:Percent>0</cbc:Percent>
  </cac:TaxCategory>
</cac:TaxSubtotal>
```

## 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-E-08](/resources/kosit-validator-errors/br-e-08-exempt-taxable-amount-sum)
- [BR-E-09](/resources/kosit-validator-errors/br-e-09-exempt-tax-amount-zero)
- [BR-CL-22](/resources/kosit-validator-errors/br-cl-22-vatex-tax-exemption-reason)

## Validation Tools

- [Official KoSIT Validator](https://erechnungsvalidator.service-bw.de/): Validate your XRechnung files against all BR-DE rules.
- [Convert PDF to XRechnung](/pdf-to-xrechnung): Automatic validation error fixes when converting.

## Related Resources

- [Official Specification](https://xeinkauf.de/xrechnung/)
- [Test Suite](https://github.com/itplr-kosit/xrechnung-testsuite)
- [Complete Error List](/resources/kosit-validator-errors): Overview of all German XRechnung validation rules.