Reference

BR-Z-10 Zero-rated VAT breakdown must not carry an exemption reason

A VAT breakdown (BG-23) with VAT category code (BT-118) "Zero rated" shall not have a VAT exemption reason code (BT-121) or VAT exemption reason text (BT-120).

This EN16931 rule keeps category Z supplies distinct from supplies where VAT is not charged for another legal reason, so an exemption reason must not appear on a Z breakdown. In practice, the error occurs when code Z is chosen for a supply that needs an exemption note, such as an export or an exempt service.

Solution

Remove cbc:TaxExemptionReasonCode (BT-121) and cbc:TaxExemptionReason (BT-120) from the zero-rated TaxCategory. If the supply is genuinely exempt, use category E instead of Z; for reverse charge, intra-community supplies, exports or supplies outside the scope of VAT, use AE, K, G or O.

Quick actions

Validate XML Convert invoice

Valid Examples

BG-23 with BT-118 = Z, BT-119 = 0 and no BT-120 or BT-121

Invalid Examples

BG-23 with BT-118 = Z but carrying BT-121 = "VATEX-EU-132"

Code Examples

Valid XML

<cac:TaxSubtotal>
  <cbc:TaxableAmount currencyID="EUR">100.00</cbc:TaxableAmount>
  <cbc:TaxAmount currencyID="EUR">0.00</cbc:TaxAmount>
  <cac:TaxCategory><cbc:ID>Z</cbc:ID><cbc:Percent>0</cbc:Percent><cac:TaxScheme><cbc:ID>VAT</cbc:ID></cac:TaxScheme></cac:TaxCategory>
</cac:TaxSubtotal>

Invalid XML

<cac:TaxSubtotal>
  <cbc:TaxableAmount currencyID="EUR">100.00</cbc:TaxableAmount>
  <cbc:TaxAmount currencyID="EUR">0.00</cbc:TaxAmount>
  <cac:TaxCategory>
    <cbc:ID>Z</cbc:ID><cbc:Percent>0</cbc:Percent>
    <cbc:TaxExemptionReasonCode>VATEX-EU-132</cbc:TaxExemptionReasonCode>
    <cac:TaxScheme><cbc:ID>VAT</cbc:ID></cac:TaxScheme>
  </cac:TaxCategory>
</cac:TaxSubtotal>