BR-E-10 Exemption reason missing

VAT-exempt invoices must say why there's no VAT (an exemption reason or code).

What the rule says

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

The rule's official wording (CEN / KoSIT). The German XRechnung rules are published in German.

Why it happens

The invoice uses the VAT category "exempt" (E) but doesn't say why: there's no exemption reason text (BT-120) or code (BT-121). Common on small-business (Kleinunternehmer) invoices.

How to fix it

Add the reason, for example "Gemäß § 19 UStG wird keine Umsatzsteuer berechnet." for German small businesses.

Applies to

Every EN 16931 e-invoice: XRechnung, ZUGFeRD / Factur-X, Peppol and others.

Check your invoice again Create an invoice that passes

More about BR-E-10

Category E means "exempt from VAT". An invoice without VAT must say why, because the buyer may otherwise assume a mistake, and the tax office expects the legal basis to be named (§ 14 (4) No. 8 UStG in Germany). The reason goes into the VAT breakdown as text, as a code from the VATEX list, or both.

Typical texts are "Gemäß § 19 UStG wird keine Umsatzsteuer berechnet." for German small businesses (Kleinunternehmer) or "Steuerfrei gemäß § 4 Nr. 14 UStG" for medical services. Small businesses under § 19 UStG don't have to send e-invoices, but when they do, this is the category and the note to use.

Category E is not the right choice for every invoice without VAT. Reverse charge is AE, goods to an EU business are K, exports outside the EU are G, and transactions outside the scope of VAT are O. Each has its own rules.

The fields involved

BT-120 VAT exemption reason text: CII ram:ApplicableTradeTax/ram:ExemptionReason; UBL cac:TaxSubtotal/cac:TaxCategory/cbc:TaxExemptionReason
BT-121 VAT exemption reason code: CII ram:ApplicableTradeTax/ram:ExemptionReasonCode; UBL cac:TaxSubtotal/cac:TaxCategory/cbc:TaxExemptionReasonCode
BT-118 VAT category code: CII ram:ApplicableTradeTax/ram:CategoryCode; UBL cac:TaxSubtotal/cac:TaxCategory/cbc:ID

Typical situations

The § 19 note is printed on the PDF, but not written into the XML breakdown.
The software sets category E automatically for 0 % VAT but has no field for the reason.
The reason was put in the invoice note (BT-22) instead of the breakdown.

Example

An exempt breakdown entry for a German small business (CII):

<ram:ApplicableTradeTax>
  <ram:CalculatedAmount>0.00</ram:CalculatedAmount>
  <ram:TypeCode>VAT</ram:TypeCode>
  <ram:ExemptionReason>Gemäß § 19 UStG wird keine Umsatzsteuer berechnet.</ram:ExemptionReason>
  <ram:BasisAmount>800.00</ram:BasisAmount>
  <ram:CategoryCode>E</ram:CategoryCode>
  <ram:RateApplicablePercent>0</ram:RateApplicablePercent>
</ram:ApplicableTradeTax>