# BR-AE-05: Set the VAT rate of a reverse-charge line to 0

A line in VAT category `AE` must have a VAT rate of exactly 0, even though the buyer will account for VAT on the supply.

- Layer: EN 16931
- Severity: fatal (the document is invalid)
- Topics: VAT, Lines and prices
- Official definition: https://docs.peppol.eu/poacc/billing/3.0/rules/ubl-tc434/BR-AE-05/
- Explanation last updated: 2026-09-24

## The short answer

`BR-AE-05` fails on each line whose `cac:Item/cac:ClassifiedTaxCategory` has `cbc:ID` of `AE` and a `cbc:Percent` other than 0. Set `cbc:Percent` to `0` on reverse-charge lines. A rate such as the 20 in the recorded example describes VAT the buyer accounts for, and it has no place on the seller's line.

If the seller is supposed to charge VAT on the item, reverse charge is the wrong category, and the line needs `S` with its rate instead.

## What the rule checks

Every item tax category with `cbc:ID` of `AE` under the `VAT` scheme, in `cac:InvoiceLine` or `cac:CreditNoteLine`, is checked, and each failure is reported at that `cac:ClassifiedTaxCategory`.

The rate is compared with zero as a number: `0` and `0.00` pass and any other value fails. A missing `cbc:Percent` fails as well; when tried, removing it from the reverse-charge line reported this rule alone.

Document-level allowances and charges fall under separate rules. When tried, a reverse-charge document charge at 20 was reported as `BR-AE-07`, and a reverse-charge document allowance at 20 as `BR-AE-06`.

| Term | Meaning | UBL element |
|---|---|---|
| BT-151 | Invoiced item VAT category code | `cac:InvoiceLine/cac:Item/cac:ClassifiedTaxCategory/cbc:ID (cac:CreditNoteLine/cac:Item/cac:ClassifiedTaxCategory/cbc:ID in a credit note)` |
| BT-152 | Invoiced item VAT rate | `cac:InvoiceLine/cac:Item/cac:ClassifiedTaxCategory/cbc:Percent (cac:CreditNoteLine/cac:Item/cac:ClassifiedTaxCategory/cbc:Percent in a credit note)` |

## How an integration ends up here

Possible causes, from the shape of the rule rather than from measured usage:

- The line takes its rate from the item master, which holds the domestic Standard rate, while the category is switched to `AE` for this customer.
- A reverse-charge flag on the customer changes the category code but leaves the rate alone.
- The rate is kept on purpose, to show the buyer the rate to account at.
- An empty rate is serialised by leaving `cbc:Percent` out.

## How to fix it

1. Confirm from the tax determination that the line really is under reverse charge.
2. Set `cbc:Percent` in the line's `cac:ClassifiedTaxCategory` to `0`. The line amount and the reverse-charge breakdown stay as they are.
3. If the rate was there to inform the buyer, drop it from the line. The reverse-charge reason in the breakdown is where the document tells the buyer that it accounts for the VAT.
4. If the seller should charge VAT after all, change the category to `S` with the rate, move the amount to a Standard rated breakdown and calculate the tax. Remove the reverse-charge breakdown if no `AE` content is left.

## Before and after

These are fragments, not complete documents. The complete synthetic documents they come from are linked below.

Fragment of the failing invoice: a reverse-charge line with a rate of 20

```xml
<cac:InvoiceLine>
  <cbc:ID>1</cbc:ID>
  <cbc:InvoicedQuantity unitCode="C62">2</cbc:InvoicedQuantity>
  <cbc:LineExtensionAmount currencyID="GBP">25.00</cbc:LineExtensionAmount>
  <cac:Item>
    <cbc:Name>Example service</cbc:Name>
    <cac:ClassifiedTaxCategory>
      <cbc:ID>AE</cbc:ID>
      <cbc:Percent>20</cbc:Percent>
      <cac:TaxScheme>
        <cbc:ID>VAT</cbc:ID>
      </cac:TaxScheme>
    </cac:ClassifiedTaxCategory>
  </cac:Item>
  <!-- price omitted from this fragment -->
</cac:InvoiceLine>
```

Fragment of the corrected invoice: the reverse-charge line at 0

```xml
<cac:InvoiceLine>
  <cbc:ID>1</cbc:ID>
  <cbc:InvoicedQuantity unitCode="C62">2</cbc:InvoicedQuantity>
  <cbc:LineExtensionAmount currencyID="GBP">25.00</cbc:LineExtensionAmount>
  <cac:Item>
    <cbc:Name>Example service</cbc:Name>
    <cac:ClassifiedTaxCategory>
      <cbc:ID>AE</cbc:ID>
      <cbc:Percent>0</cbc:Percent>
      <cac:TaxScheme>
        <cbc:ID>VAT</cbc:ID>
      </cac:TaxScheme>
    </cac:ClassifiedTaxCategory>
  </cac:Item>
  <!-- price omitted from this fragment -->
</cac:InvoiceLine>
```

Only the `cbc:Percent` of the reverse-charge line differs: `20` in the failing invoice, `0` in the corrected one. The failing document reports only `BR-AE-05`. The reverse-charge breakdown of 25.00 still matches, because the reverse-charge taxable amount rule, `BR-AE-08`, adds up the lines in category `AE` without grouping them by rate.

### What the validator reported

- The failing invoice reports **BR-AE-05**. The corrected document passes every layer with no findings.
  - [Download the failing XML](https://ironfang.uk/finance/rule-examples/BR-AE-05-invalid.xml)
  - [Download the corrected XML](https://ironfang.uk/finance/rule-examples/reverse-charge-valid.xml)

Recorded on phive 12.1.0 / phive-rules-peppol 4.5.6 / Saxon-HE 12.10, the engine behind the free validator, using synthetic data. A recorded result is regression evidence for these documents; it is not a certification.

## Where it applies

- Applies to UBL `Invoice` and `CreditNote`. A reverse-charge `cac:CreditNoteLine` at 20 reported the same rule when tried.
- Reported by the EN 16931 layer as a fatal finding for each offending line.
- Zero rated lines have the same requirement under `BR-Z-05`, while Standard rated lines need a rate above zero under `BR-S-05`.
- The reverse-charge breakdown has its own rules: a tax amount of 0 under `BR-AE-09` and a reason under `BR-AE-10`.

## Related rules

- [BR-Z-05 requires the same rate of 0 on Zero rated lines](https://ironfang.uk/docs/finance/rules/BR-Z-05.md)
- [BR-AE-09 keeps the tax amount of the reverse-charge breakdown at zero](https://ironfang.uk/docs/finance/rules/BR-AE-09.md)
- [BR-AE-10 requires the reverse-charge reason that tells the buyer to account for the VAT](https://ironfang.uk/docs/finance/rules/BR-AE-10.md)
- [BR-S-05 is the Standard rated line rule, for items on which the seller charges VAT](https://ironfang.uk/docs/finance/rules/BR-S-05.md)

## Scope and source

Written for Peppol BIS Billing 3.0.21 (May 2026), EN 16931 1.3.16, as applied to UBL 2.1 Invoice and CreditNote documents. Other profiles, syntaxes and releases can define this identifier differently. Guidance version 2026-09-24.1: source checked 2026-09-24, explanation last updated 2026-09-24.

[The official definition of BR-AE-05](https://docs.peppol.eu/poacc/billing/3.0/rules/ubl-tc434/BR-AE-05/) carries the normative wording and test. This page is our explanation of it, not a copy.

Guidance does not change the engine verdict. Fixing this finding does not mean the document passes every layer, and validation does not certify legal or tax compliance or transmit a document over Peppol.

## Links

- [This rule as a web page](https://ironfang.uk/docs/finance/rules/BR-AE-05)
- [Free Peppol invoice validator](https://ironfang.uk/tools/peppol-validator)
- [Rule index](https://ironfang.uk/docs/finance/rules.md)
- [Ironfang Finance API docs](https://ironfang.uk/docs/finance)
- The same rule is available to MCP clients as the tool `finance.rule.get` on https://mcp.ironfang.uk/mcp