BR-E-10 VAT-exempt entry has no exemption reason

What it means

The VAT breakdown has an entry with category E (exempt from VAT, BT-118). An exempt entry must state the legal reason, either as an exemption reason code (BT-121) or as text (BT-120). Neither is there.

Common causes

• The exemption (for example a small-business scheme or exempt medical services) is mentioned only in a free-text note.
• The VAT code for exempt sales in the software has no reason configured.
• Category E is used where another category would fit, such as O (not subject to VAT) or K (intra-EU supply).

How to fix it

Add the reason to the exempt entry of the VAT breakdown: a VATEX code from the official code list or a short text naming the legal basis. Check that E is the right category.

Who fixes it: The sender's invoicing software or its VAT code setup.

Invoice fields involved

BG-23 BT-118 BT-120 BT-121

Related rules

• BR-AE-10 Reverse-charge VAT entry has no exemption reason
• BR-Z-05 A zero-rated line has a VAT rate other than 0

This is our own plain-language explanation, not the official rule text. The official definition is in the first source below.