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E-invoice error explained

BR-O: Not subject to VAT (category O) is inconsistent

Category O means supplies outside the scope of VAT.

What the rule checks

Category O means supplies outside the scope of VAT. Its rules are strict: an invoice with O must not contain any other category (BR-O-11 to BR-O-14), and it must not carry a VAT ID of the seller, the tax representative or the buyer (BR-O-02 to BR-O-04). The lines carry no VAT rate at all, not even 0 (BR-O-05 to BR-O-07). The tax amount is 0 and an exemption reason is mandatory (BR-O-09, BR-O-10).

Official rule text

BR-O-01: An Invoice that contains an Invoice line (BG-25), a Document level allowance (BG-20) or a Document level charge (BG-21) where the VAT category code (BT-151, BT-95 or BT-102) is "Not subject to VAT" shall contain exactly one VAT breakdown group (BG-23) with the VAT category code (BT-118) equal to "Not subject to VAT".
BR-O-02: An Invoice that contains an Invoice line (BG-25) where the Invoiced item VAT category code (BT-151) is "Not subject to VAT" shall not contain the Seller VAT identifier (BT-31), the Seller tax representative VAT identifier (BT-63) or the Buyer VAT identifier (BT-48).
BR-O-03: An Invoice that contains a Document level allowance (BG-20) where the Document level allowance VAT category code (BT-95) is "Not subject to VAT" shall not contain the Seller VAT identifier (BT-31), the Seller tax representative VAT identifier (BT-63) or the Buyer VAT identifier (BT-48).
BR-O-04: An Invoice that contains a Document level charge (BG-21) where the Document level charge VAT category code (BT-102) is "Not subject to VAT" shall not contain the Seller VAT identifier (BT-31), the Seller tax representative VAT identifier (BT-63) or the Buyer VAT identifier (BT-48).
BR-O-05: An Invoice line (BG-25) where the VAT category code (BT-151) is "Not subject to VAT" shall not contain an Invoiced item VAT rate (BT-152).
BR-O-06: A Document level allowance (BG-20) where VAT category code (BT-95) is "Not subject to VAT" shall not contain a Document level allowance VAT rate (BT-96).
BR-O-07: A Document level charge (BG-21) where the VAT category code (BT-102) is "Not subject to VAT" shall not contain a Document level charge VAT rate (BT-103).
BR-O-08: In a VAT breakdown (BG-23) where the VAT category code (BT-118) is " Not subject to VAT" the VAT category taxable amount (BT-116) shall equal the sum of Invoice line net amounts (BT-131) minus the sum of Document level allowance amounts (BT-92) plus the sum of Document level charge amounts (BT-99) where the VAT category codes (BT-151, BT-95, BT-102) are "Not subject to VAT".
BR-O-09: The VAT category tax amount (BT-117) in a VAT breakdown (BG-23) where the VAT category code (BT-118) is "Not subject to VAT" shall be 0 (zero).
BR-O-10: A VAT Breakdown (BG-23) with VAT Category code (BT-118) " Not subject to VAT" shall have a VAT exemption reason code (BT-121), meaning " Not subject to VAT" or a VAT exemption reason text (BT-120) " Not subject to VAT" (or the equivalent standard text in another language).
BR-O-11: An Invoice that contains a VAT breakdown group (BG-23) with a VAT category code (BT-118) "Not subject to VAT" shall not contain other VAT breakdown groups (BG-23).
BR-O-12: An Invoice that contains a VAT breakdown group (BG-23) with a VAT category code (BT-118) "Not subject to VAT" shall not contain an Invoice line (BG-25) where the Invoiced item VAT category code (BT-151) is not "Not subject to VAT".
BR-O-13: An Invoice that contains a VAT breakdown group (BG-23) with a VAT category code (BT-118) "Not subject to VAT" shall not contain Document level allowances (BG-20) where Document level allowance VAT category code (BT-95) is not "Not subject to VAT".
BR-O-14: An Invoice that contains a VAT breakdown group (BG-23) with a VAT category code (BT-118) "Not subject to VAT" shall not contain Document level charges (BG-21) where Document level charge VAT category code (BT-102) is not "Not subject to VAT".

Source: KoSIT configuration XRechnung 3.0.2 (31 Jan 2026).

Typical causes

  • The seller's VAT ID is in the master data, as on every invoice, and is written to the file (BR-O-02).
  • Rate 0 is written instead of leaving the element out (BR-O-05).
  • O is mixed with other categories on the same invoice, for example a 19 % line (BR-O-11, BR-O-12).
  • Small businesses under § 19 of the German VAT Act use O. The usual choice there is category E with an exemption reason.

How to fix it

Leave ram:RateApplicablePercent out entirely on O lines. Create exactly one breakdown row with category O, ram:CalculatedAmount 0.00 and an exemption reason, for example ram:ExemptionReasonCode VATEX-EU-O. Remove the VAT IDs (schemeID="VA") of seller and buyer. A tax number (schemeID="FC") is allowed. Put supplies with VAT on a separate invoice. Clarify with your tax adviser whether O is the right category.

Example

Wrong (CII)

<ram:ApplicableTradeTax>
  <ram:TypeCode>VAT</ram:TypeCode>
  <ram:CategoryCode>O</ram:CategoryCode>
  <ram:RateApplicablePercent>0</ram:RateApplicablePercent>
</ram:ApplicableTradeTax>

Right (CII)

<ram:ApplicableTradeTax>
  <ram:TypeCode>VAT</ram:TypeCode>
  <ram:CategoryCode>O</ram:CategoryCode>
</ram:ApplicableTradeTax>
<!-- VAT breakdown in the header: -->
<ram:ApplicableTradeTax>
  <ram:CalculatedAmount>0.00</ram:CalculatedAmount>
  <ram:TypeCode>VAT</ram:TypeCode>
  <ram:ExemptionReason>Nicht steuerbar</ram:ExemptionReason>
  <ram:BasisAmount>1000.00</ram:BasisAmount>
  <ram:CategoryCode>O</ram:CategoryCode>
  <ram:ExemptionReasonCode>VATEX-EU-O</ram:ExemptionReasonCode>
</ram:ApplicableTradeTax>

In Dynamics 365, Business Central and Finance

Sales / Project Operations: Sales and Project Operations have no e-invoice output out of the box. In the WBS Invoice Accelerator for Dynamics 365 the VAT rate record (Configuration > VAT Tax Rates) controls the category: VAT category (EN 16931), Percentage, Footer text and VAT exemption reason code. Each line uses its own rate (VAT Tax Rate (Line)), otherwise the invoice's VAT tax rate. For category O the rate needs Percentage 0 and a Footer text or code. The Accelerator writes rate 0 on lines with category O and the brand profile VAT ID on every invoice. An invoice with category O therefore fails BR-O-05, and BR-O-02 as well while the brand profile has a VAT ID. Talk to WBS before you issue invoices with category O.

Business Central: In the VAT Posting Setup the combination needs O in the Tax Category field and a VAT clause (VAT Clause Code) for the note.

Finance: Enter O for the sales tax code under Sales tax codes > External codes.

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