BT-121

What is the VAT exemption reason code BT-121 in e-invoice?

Short answer

BT-121 identifies the reason for VAT exemption or another special tax treatment. It is used where an invoice or line does not carry ordinary standard VAT, for example because of an exemption, reverse charge or another regime. Use a supported code, typically from VATEX, rather than arbitrary text, and ensure that it matches the selected VAT category.

BT-121

Reason code

A structured explanation of zero or special VAT.

VATEX

Dial

Codes are not chosen freely, but from a supported list.

BT-151

VAT category

The reason must match the VAT category of the line.

Tax assessment

Not only IT

The correct code requires an accounting and tax decision.

Detailed explanation

With a paper invoice, one often reads the text ‘reverse charge’ and understands the reason. With an e-invoice, the system needs to receive structured data so that it can automatically process the VAT regime. BT-121 therefore helps to explain why the rate is zero or why VAT is not applied in the standard way. However, the code must be selected correctly for both accounting and tax purposes; the validator can detect a formal error but may not assess the entire business case.

As set out in the law and technical rules

Section 74(1) of the VAT Act requires that the information specified by law be included on the invoice, including the reasons for special tax regimes. EN 16931 and Peppol BIS Billing specify how this reason is recorded in a structured manner using BT-121 and related fields.

Practical examples

In the case of reverse charge, the category and code corresponding to the transfer of tax liability shall be used.
For exempt transactions, the reason for the exemption must be stated in accordance with the relevant legal regime.
If the ERP sets a zero rate without specifying a reason, the invoice may fail the business rule.

Common misconceptions

“It is sufficient to state 0% VAT.” No. Under a special scheme, the reason must also be stated.
“The programmer will select the code based on the name.” No. It must be based on a tax assessment.
“Can I create my own VATEX code?” No. Only supported values from the code list may be used.

Conclusion

BT-121 links the tax reason to machine processing and must be consistent with the VAT category whenever zero or special VAT treatment is used.

Legal and technical basis

Act No. 222/2004 Coll. on VAT, Section 74(1)
EN 16931
Peppol BIS Billing 3.0, BT-121 and VATEX code list

Official cases from the Slovak Financial Administration’s FAQs

The following questions and answers are taken from the current July FAQ from the Financial Administration and have been assigned to this topic. Grouping the cases prevents the creation of duplicate pages, whilst retaining the full answer and the exact wording of the question.

Example 11: Mandatory field BT-120 (text explaining the reason for VAT exemption): What should be entered in fields that have been changed from optional to mandatory if no data is available or required? E.g. BT-120 (text explaining the reason for VAT exemption). I understand that this field requires text data. What text should we include if the sale is subject to the standard VAT rate (I understand that this field – as it is mandatory – will need to be completed in all cases)?

Fields that have been changed in the XLS file from optional to mandatory (e.g. BT-120 ‘Text of the reason for VAT exemption’) do not need to be filled in if the transaction is subject to the standard VAT rate. BT-120 is only required for transactions that are VAT-exempt or subject to a zero VAT rate. If TaxCategory = ‘S’ or ‘Z’, BT-120 must remain blank. Filling it in in other cases would render the XML invalid.

Primary source: Financial Administration of the Slovak Republic, FAQ 9/VAT/2025/IM k e-invoice, July 2026 update. Processed and checked on 13 July 2026.