# BT-120 VAT Exemption Reason Text

A textual explanation of why a VAT breakdown is exempt, zero-rated, outside scope, intra-community, or reverse charge.

> BT-120 (VAT exemption reason text) gives the plain-language reason a VAT breakdown carries no or reduced tax. Conditional under EN 16931: required (as text or coded reason) when the category is exempt, reverse charge, intra-community, export or out of scope; standard and zero-rated breakdowns must not carry one. Example: Reverse charge - VAT owed by the recipient.
>
> BT-120 · EN 16931 / XRechnung 3.x

## BT Reference Card

Canonical EN 16931 / XRechnung facts for this business term — citable from this anchor.

- **BT code**: BT-120
- **Name**: VAT Exemption Reason Text
- **Cardinality**: Conditional (C)
- **Business group**: BG-23 VAT BREAKDOWN
- **Data type**: Text
- **Example value**: Reverse charge - VAT owed by the recipient
- **Common error**: BR-E-10 / BR-AE-10 / BR-IC-10 / BR-G-10 / BR-O-10: when the VAT category is exempt, reverse charge, intra-community, export or out of scope, an exemption reason text (BT-120) or coded reason (BT-121) must be given; omitting both fails. Standard (S) and zero-rated (Z) breakdowns must NOT carry a reason (BR-S-10 / BR-Z-10).

## Quick answer

A textual explanation of why a VAT breakdown is exempt, zero-rated, outside scope, intra-community, or reverse charge.

> **Taxes and totals**: VAT treatment, tax breakdowns, and document totals that validators check closely.

- validate
- convert

## In plain language

A textual explanation of why a VAT breakdown is exempt, zero-rated, outside scope, intra-community, or reverse charge.

A textual explanation of why a VAT breakdown is exempt, zero-rated, outside scope, intra-community, or reverse charge.

Explains the VAT treatment to the buyer, accounting systems, and tax auditors when no VAT is charged.

## What you usually enter here

Free text reason aligned with the VAT category treatment

Typical valid values include: Reverse charge, Intra-community supply, VAT exempt service

Required by EN 16931 category rules when the selected VAT category needs an exemption or reverse-charge reason.

## What goes wrong often

Avoid values like: , Tax free

Relevant rule codes: BR-AE-10, BR-E-10, BR-G-10, BR-IC-10, BR-O-10, BR-S-10, BR-Z-10

## Examples in context

Explains the VAT treatment to the buyer, accounting systems, and tax auditors when no VAT is charged.

Required by EN 16931 category rules when the selected VAT category needs an exemption or reverse-charge reason.

## Valid Examples

- Reverse charge
- Intra-community supply
- VAT exempt service

## Invalid Examples

- Tax free

## Related Fields

Explains the VAT treatment to the buyer, accounting systems, and tax auditors when no VAT is charged.

- [BT-118 VAT Category Code](/resources/xrechnung/bt-118-vat-category-code)
- [BT-119 VAT Category Rate](/resources/xrechnung/bt-119-vat-category-rate)
- [BT-121 VAT Exemption Reason Code](/resources/xrechnung/bt-121-vat-exemption-reason-code)

## XML mapping and field facts

Open the technical reference if you need XML paths, validator rule codes, legal wording, or schema-specific mapping details.

### Field ID:
BT-120

### Data Type:
text

### Cardinality:
0..1

### Requirement:
Optional

### Since Version:
Conditional when the VAT category requires an exemption or reverse-charge reason

## XML Implementation

### UBL 2.1 Syntax
```
/Invoice/cac:TaxTotal/cac:TaxSubtotal/cac:TaxCategory/cbc:TaxExemptionReason
```

### CII (UN/CEFACT) Syntax
```
/CrossIndustryInvoice/SupplyChainTradeTransaction/ApplicableHeaderTradeSettlement/ram:ApplicableTradeTax/ram:ExemptionReason
```

## Validation Rules

### BR-AE-10
BR-AE-10

### BR-E-10
BR-E-10

### BR-G-10
BR-G-10

### BR-IC-10
BR-IC-10

### BR-O-10
BR-O-10

### BR-S-10
BR-S-10

### BR-Z-10
BR-Z-10

## Why the standard cares about this field

### Business Context
Explains the VAT treatment to the buyer, accounting systems, and tax auditors when no VAT is charged.

### Legal Requirement
Required by EN 16931 category rules when the selected VAT category needs an exemption or reverse-charge reason.

## Official sources and tools

- [KoSIT Validator](https://erechnungsvalidator.service-bw.de/)
- [Invoice Converter](/pdf-to-xrechnung)
- [XRechnung Standard](https://xeinkauf.de/xrechnung/)
- [Test Suite](https://github.com/itplr-kosit/xrechnung-testsuite)