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`BR-E-01`:VAT exemption requires reason

When using VAT category E (exempt), an exemption reason must be provided.

We can fix this automatically

AUTO-FIX

1. Find all lines/allowances/charges with this VAT category. 2. Ensure exactly one TaxSubtotal with matching category exists. 3. Create if missing.

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Why This Error Matters

Invoice will be rejected. VAT exempt (category E) transactions must follow specific rules including zero rate and seller tax identification.

How to Fix It

Verify exemption

E is for VAT exempt supplies

Add reason code

Use VATEX-EU-* codes (e.g., VATEX-EU-132 for medical)

Document basis

Reference the legal exemption article

Code Example

<cac:TaxCategory>
  <cbc:ID>E</cbc:ID>
  <cbc:TaxExemptionReasonCode>VATEX-EU-132</cbc:TaxExemptionReasonCode>
  <cbc:TaxExemptionReason>Medical services exemption under Article 132</cbc:TaxExemptionReason>
  <cac:TaxScheme>
    <cbc:ID>VAT</cbc:ID>
  </cac:TaxScheme>
</cac:TaxCategory>

Technical Details

XPath: /Invoice/cac:TaxTotal/cac:TaxSubtotal/cac:TaxCategory[cbc:ID="E"]

Common Causes

Exempt VAT category used but breakdown missing
Lines/allowances/charges use code E but no E breakdown
VAT exempt items without corresponding BG-23 entry
Tax breakdown not generated for exempt category
Export template missing exempt VAT breakdown section

Commonly Seen In

All invoicing software

Frequently Asked Questions

When using VAT category E (exempt), an exemption reason must be provided.

Add TaxExemptionReasonCode for exempt supplies. You can also use Invoice Navigator's automatic Fixer tool to correct this instantly.

Yes, BR-E-01 is a critical error that will cause invoice rejection. It must be fixed before submission to ensure your invoice is accepted by the recipient's system.

Many instances of BR-E-01 can be automatically corrected using Invoice Navigator's Fixer tool. Upload your invoice and the tool will identify and fix common issues, including vat exemption requires reason.

BR-E-01 is commonly seen in exports from All invoicing software. These software packages sometimes generate invoices that need adjustment to meet full compliance standards.

Related Errors

BR-AE-01

Reverse charge requires reason

BR-Z-01

Zero VAT rate requires exemption reason

Last updated: 16 January 2026

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BR-E-01:VAT exemption requires reason