What it means
An entry in the VAT breakdown (BG-23) with the VAT category code IPSI (BT-118), code M in the file, the tax of Ceuta and Melilla, has a VAT exemption reason text (BT-120) or a VAT exemption reason code (BT-121). Neither may be present on an IPSI entry.
Why it matters
An exemption reason explains why VAT is not charged. That contradicts a taxed category such as IPSI, so the recipient cannot tell whether tax applies and the invoice is rejected.
How to fix it
Find the VAT breakdown row for IPSI in your invoicing software and clear the exemption reason text and code. If you added a reason because the goods or services are really exempt, change the category on those lines to an exempt one, such as exempt from VAT (code E), and keep the reason there.
The rule as published
A VAT Breakdown (BG-23) with VAT Category code (BT-118) "IPSI" shall not have a VAT exemption reason code (BT-121) or VAT exemption reason text (BT-120). Business terms: BG-23, BT-118, BT-120, BT-121
Where this rule applies
| Rule set | Version |
|---|---|
| Peppol BIS Billing 3.0 (invoice) | 2026.5 |
| Peppol BIS Billing 3.0 (credit note) | 2026.5 |
| Factur-X 1.09 BASIC WL | 1.0.9-2 |
| Factur-X 1.09 BASIC | 1.0.9-2 |
| Factur-X 1.09 EN 16931 | 1.0.9-2 |
| ZUGFeRD 2.5 BASIC WL | 2.5.2 |
| ZUGFeRD 2.5 BASIC | 2.5.2 |
| ZUGFeRD 2.5 EN 16931 | 2.5.2 |
| SI-UBL 2.0 / NLCIUS (invoice) | 2.0.3.13 |
| SI-UBL 2.0 / NLCIUS (credit note) | 2.0.3.13 |
| NLCIUS (CII) | 1.0.3.13 |
Check your file
Drop your e-invoice to see whether BR-AG-10 still fails, and which other rules do.
Related rules
- BR-AE-10 Reverse charge needs the reverse charge note
- BR-AF-10 An IGIC VAT breakdown must not have an exemption reason
- BR-E-10 Exempt VAT needs an exemption reason
- BR-FXEXT-AE-08B Reverse-charge taxable amount must add up from the lines
- BR-FXEXT-AE-08REV Reverse-charge amounts should match per exemption reason
- BR-FXEXT-AF-08B Canary Islands taxable amount must add up from the lines