BR-AE-10: Reverse charge needs the reverse charge note

What it means

A VAT breakdown entry (BG-23) with category AE (reverse charge) must carry a VAT exemption reason code (BT-121) or a VAT exemption reason text (BT-120) saying reverse charge.

Why it matters

EU VAT law requires an invoice without VAT to say why. The buyer and the tax authority rely on that statement to know the buyer must account for the VAT. Without it the invoice is rejected.

How to fix it

In your invoicing software, open the VAT setting for this category and fill in the exemption reason. Use the code VATEX-EU-AE and the text "Reverse charge". Most programs then print it on every invoice that uses the category.

The rule as published

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).

Business terms: BG-23, BT-118, BT-120, BT-121

Where this rule applies