CII-DT-098: Put a VAT exemption reason only in the VAT breakdown

What it means

When VAT is not charged, for example because the supply is exempt from VAT or the reverse charge applies, the invoice gives the reason as text (BT-120) in the VAT breakdown (BG-23). In the file that is an ExemptionReason element inside ApplicableTradeTax. The rule looks at every VAT element in the file and warns when one other than ApplicableTradeTax, such as the one attached to a discount or charge, contains an ExemptionReason.

Why it matters

This is a warning, so the file is still accepted. EN 16931 has no place for an exemption reason on a discount or charge, so the text there has no defined meaning and the recipient's software may ignore it. The buyer relies on the reason in the VAT breakdown to book the invoice, and a tax authority uses it to see why no VAT was charged.

How to fix it

Open the VAT breakdown at the bottom of the invoice and check that the entry for the exempt or reverse charge category carries the reason. Then remove the reason from the discount or charge it was attached to. If your invoicing software puts the reason on every VAT element, check the VAT category setting of the discount or charge and the export profile, and tell your software supplier if it keeps happening. It is worth fixing when the reason matters, for example on exempt or reverse charge supplies, and otherwise it can wait.

The rule as published

ExemptionReason should not be present

Where this rule applies