BR-E-10: Exempt from VAT, but no exemption reason. How to fix it

What the rule checks

The rule checks every group in the VAT breakdown (BG-23) with category E, exempt from VAT. Such a group must state a reason for the exemption: as text (BT-120) or as a code (BT-121). Either one is enough.

Why files fail it

• You invoice as a small business under § 19 UStG, the lines carry category E, but the exemption reason field is empty.
• The reference to the exemption appears only as an invoice note (BT-22) or in the PDF text. The rule reads only the fields in the tax group.
• The category was switched from Z to E after the fact. Z needs no exemption reason, E does, and the reason was never added.

How to fix it

1. 1In the tax group with category E, enter an exemption reason in "VAT exemption reason text" (BT-120): the reference to the provision the exemption rests on.
2. 2Instead of the text you can give a code from the VATEX code list in "VAT exemption reason code" (BT-121). If no code fits, the text is enough.
3. 3Do not switch to category Z to make the message go away. Z is the zero rate, not an exemption, and a group with Z must not carry an exemption reason at all (BR-Z-10). Which category and which wording are right for your supply is a question for your tax adviser.
4. 4In our form, ticking "I invoice as a small business (§ 19 UStG)" sets every line to the VAT type "Exempt (no VAT by law)". The exemption reason is written into BT-120 automatically: a reference to § 19 for a small business, and a general exemption reason for other exempt lines. So this error cannot occur there.