# BR-AE-06: Set the VAT rate of a reverse-charge document allowance to 0

A document-level allowance in VAT category `AE` must carry a rate of exactly 0; a discount on a reverse-charge supply cannot keep the seller's own rate.

- Layer: EN 16931
- Severity: fatal (the document is invalid)
- Topics: VAT, Allowances and charges
- Official definition: https://docs.peppol.eu/poacc/billing/3.0/rules/ubl-tc434/BR-AE-06/
- Explanation last updated: 2026-09-28

## The short answer

`BR-AE-06` fails when a `cac:AllowanceCharge` with `cbc:ChargeIndicator` of `false` has a `cac:TaxCategory` whose `cbc:ID` is `AE` and whose `cbc:Percent` is not 0. In the recorded example the framework agreement discount of 1.50 carries 20; set it to `0`, as the reverse-charge line and breakdown already are.

A discount follows the VAT treatment of the supply it reduces. The seller charges no VAT on a reverse-charge service, so there is no VAT to take off the discount either.

## What the rule checks

The rule selects each `cac:TaxCategory` inside an allowance, `cbc:ChargeIndicator` of `false`, whose `cbc:ID` is `AE` under the `VAT` scheme, and reports at that `cac:TaxCategory`. Reverse-charge charges are left to `BR-AE-07`.

The rate must equal zero as a number. When tried, `0.00` on the discount passed every layer, while leaving `cbc:Percent` out of the discount failed this rule on its own: an absent rate does not count as zero.

An empty `cbc:Percent` element never reaches this rule. When tried, the XSD layer rejected it and the business rules were skipped.

The discount still counts towards the reverse-charge taxable amount at the wrong rate. With 20 on it, the breakdown of 28.50 was accepted by `BR-AE-08`, which adds up `AE` allowances whatever rate they carry.

The selection is not limited to the document level. When tried, a line-level allowance with its own `cac:TaxCategory` of `AE` at 20 was reported under this rule too, beside the warning `UBL-CR-558`, which says line allowances should not carry a tax category at all.

| Term | Meaning | UBL element |
|---|---|---|
| BT-95 | Document level allowance VAT category code | `cac:AllowanceCharge[cbc:ChargeIndicator = false]/cac:TaxCategory/cbc:ID` |
| BT-96 | Document level allowance VAT rate | `cac:AllowanceCharge[cbc:ChargeIndicator = false]/cac:TaxCategory/cbc:Percent` |

## How an integration ends up here

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

- The discount is created from a default allowance tax code that holds the domestic Standard rate, and only its category is switched to `AE` for a reverse-charge customer.
- Allowances copy the category from the lines but take the rate from a separate discount setting.
- The rate is kept to show what the discount would be worth in VAT, which the document has no field for.
- An allowance built for a Standard rated invoice is reused on a reverse-charge one with only the category code changed.

## How to fix it

1. Confirm that the discount reduces a supply that is itself under reverse charge. If it does, keep category `AE` on the allowance.
2. Set `cbc:Percent` in the allowance's `cac:TaxCategory` to `0`, between `cbc:ID` and `cac:TaxScheme`. The allowance amount, the reverse-charge taxable amount and the totals stay as they are.
3. Give the reverse-charge allowance tax code a rate of 0 at source, so the next discount on a reverse-charge document is generated correctly.
4. If the discount belongs to Standard rated items on the same invoice, code it `S` with their rate instead. It then reduces the Standard rated taxable amount under `BR-S-08`, not the reverse-charge one.

## 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 discount with a rate of 20

```xml
<cac:AllowanceCharge>
  <cbc:ChargeIndicator>false</cbc:ChargeIndicator>
  <cbc:AllowanceChargeReasonCode>95</cbc:AllowanceChargeReasonCode>
  <cbc:AllowanceChargeReason>Framework agreement discount</cbc:AllowanceChargeReason>
  <cbc:Amount currencyID="GBP">1.50</cbc:Amount>
  <cac:TaxCategory>
    <cbc:ID>AE</cbc:ID>
    <cbc:Percent>20</cbc:Percent>
    <cac:TaxScheme>
      <cbc:ID>VAT</cbc:ID>
    </cac:TaxScheme>
  </cac:TaxCategory>
</cac:AllowanceCharge>
```

Fragment of the corrected invoice: the same discount at 0

```xml
<cac:AllowanceCharge>
  <cbc:ChargeIndicator>false</cbc:ChargeIndicator>
  <cbc:AllowanceChargeReasonCode>95</cbc:AllowanceChargeReasonCode>
  <cbc:AllowanceChargeReason>Framework agreement discount</cbc:AllowanceChargeReason>
  <cbc:Amount currencyID="GBP">1.50</cbc:Amount>
  <cac:TaxCategory>
    <cbc:ID>AE</cbc:ID>
    <cbc:Percent>0</cbc:Percent>
    <cac:TaxScheme>
      <cbc:ID>VAT</cbc:ID>
    </cac:TaxScheme>
  </cac:TaxCategory>
</cac:AllowanceCharge>
```

Only the rate of the framework agreement discount differs: `20` in the failing invoice, `0` in the corrected one. The failing document reports only `BR-AE-06`; the call-out charge beside the discount is already at 0, and the reverse-charge breakdown of 28.50 still adds up.

### What the validator reported

- The failing invoice reports **BR-AE-06**. The corrected document passes every layer with no findings.
  - [Download the failing XML](https://ironfang.com/finance/rule-examples/BR-AE-06-invalid.xml)
  - [Download the corrected XML](https://ironfang.com/finance/rule-examples/reverse-charge-adjustments-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`. The failing invoice converted to a credit note reported the same finding at the same allowance when tried.
- Reported by the EN 16931 layer as a fatal finding for each reverse-charge allowance whose rate is not zero.
- The other places a reverse-charge rate appears have their own rules: `BR-AE-05` for lines and `BR-AE-07` for document-level charges. An `AE` allowance also brings in the party identifier check `BR-AE-03`.

## Related rules

- [BR-AE-07 is the same zero-rate requirement for a reverse-charge document charge](https://ironfang.com/docs/finance/rules/BR-AE-07.md)
- [BR-AE-05 requires a rate of 0 on the reverse-charge lines the discount reduces](https://ironfang.com/docs/finance/rules/BR-AE-05.md)
- [BR-AE-08 subtracts this allowance when it checks the reverse-charge taxable amount](https://ironfang.com/docs/finance/rules/BR-AE-08.md)
- [BR-IC-06 asks the same of a discount on an intra-community supply](https://ironfang.com/docs/finance/rules/BR-IC-06.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 2026-09-28.1: source checked 2026-09-28, explanation last updated 2026-09-28.

[The official definition of BR-AE-06](https://docs.peppol.eu/poacc/billing/3.0/rules/ubl-tc434/BR-AE-06/) 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.com/docs/finance/rules/BR-AE-06)
- [Free Peppol invoice validator](https://ironfang.com/tools/peppol-validator)
- [Rule index](https://ironfang.com/docs/finance/rules.md)
- [Ironfang Finance API docs](https://ironfang.com/docs/finance)
- The same rule is available to MCP clients as the tool `finance.rule.get` on https://mcp.ironfang.com/mcp