erroren16931

`BR-Z-01`:Zero VAT rate requires exemption reason

When using VAT category Z (zero rate), an exemption reason code or text 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.

No manual changes needed

Upload and Fix Now

Why This Error Matters

Invoice will be rejected. Zero rated VAT (category Z) requires seller VAT registration, 0% rate, and correct breakdown. Zero rate is different from exemption - it still requires tax compliance.

How to Fix It

Check category

Z is for zero-rated supplies

Add reason code

Use VATEX-EU-* codes for EU exemptions

Or add text reason

Explain why zero rate applies

Code Example

<cac:TaxCategory>
  <cbc:ID>Z</cbc:ID>
  <cbc:Percent>0</cbc:Percent>
  <cbc:TaxExemptionReasonCode>VATEX-EU-132</cbc:TaxExemptionReasonCode>
  <cac:TaxScheme>
    <cbc:ID>VAT</cbc:ID>
  </cac:TaxScheme>
</cac:TaxCategory>

Technical Details

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

Common Causes

Zero rated (Z) category used but no Z breakdown exists
Invoice lines use BT-151=Z but BG-23 missing Z entry
cac:TaxSubtotal for zero rate not generated
Tax breakdown section lacks mandatory Z category
Zero rated items require exactly one matching breakdown

Commonly Seen In

All invoicing software

Frequently Asked Questions

When using VAT category Z (zero rate), an exemption reason code or text must be provided.

Add TaxExemptionReasonCode or TaxExemptionReason for zero-rated items. You can also use Invoice Navigator's automatic Fixer tool to correct this instantly.

Yes, BR-Z-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-Z-01 can be automatically corrected using Invoice Navigator's Fixer tool. Upload your invoice and the tool will identify and fix common issues, including zero vat rate requires exemption reason.

BR-Z-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-E-01

VAT exemption requires reason

Last updated: 16 January 2026

Share this guide:

BR-Z-01:Zero VAT rate requires exemption reason