# BR-AE-10

> A VAT breakdown (BG-23) with VAT Category code (BT-118) "Reverse charge" shall have a VAT exemption reason code (BT-121), meaning "Reverse charge" or the VAT exemption reason text (BT-120) "Reverse charge" (or the equivalent standard text in another language).

Checked against Peppol BIS Billing 3.0 2026.5

Canonical: https://einvoicecheck.eu/rules/br-ae-10

## Official rule text

A VAT breakdown (BG-23) with VAT Category code (BT-118) "Reverse charge" shall have a VAT exemption reason code (BT-121), meaning "Reverse charge" or the VAT exemption reason text (BT-120) "Reverse charge" (or the equivalent standard text in another language).

## Why did my invoice fail BR-AE-10?

A VAT breakdown (BG-23) with category code (BT-118) "AE" (reverse charge) must justify the zero VAT by providing either a VAT exemption reason code (BT-121) meaning reverse charge or an exemption reason text (BT-120) stating "Reverse charge" (or its equivalent in another language). This gives the buyer and auditors the legal basis for the missing VAT.

## Common causes

- AE subtotal has neither an exemption reason code nor reason text populated.
- A generic or wrong exemption code was used instead of one denoting reverse charge (e.g. VATEX-EU-AE).
- Reason text present but does not convey "reverse charge" semantics.
- Placing the exemption reason on the wrong TaxCategory or at line level rather than the breakdown.

## How do I fix it?

```
Add a reverse-charge exemption reason to the AE TaxCategory: <cac:TaxCategory><cbc:ID>AE</cbc:ID><cbc:Percent>0</cbc:Percent><cbc:TaxExemptionReasonCode>VATEX-EU-AE</cbc:TaxExemptionReasonCode><cbc:TaxExemptionReason>Reverse charge</cbc:TaxExemptionReason>...</cac:TaxCategory>
```