VAT Categories S, Z, K, E & AE in E-Invoices Explained

The XRechnung standard (and the underlying European norm EN 16931) requires every line item — and the invoice as a whole — to be assigned a VAT category. This category tells the recipient's system exactly how the tax treatment should be interpreted: whether standard VAT applies, whether the supply is tax-exempt, and if so, for what reason.

Getting the VAT category right is essential: an incorrect or missing category will cause the invoice to fail KoSIT validation or be rejected by the recipient.

Overview of VAT categories

Code	Name	Tax rate	Typical use case
S	Standard rate	e.g. 19 % or 7 %	Normal taxable supplies
Z	Zero rate	0 %	Supplies taxable at zero rate (e.g. certain exports outside the EU)
K	Intra-community supply	0 %	Supplies to a VAT-registered business in another EU member state
AE	Reverse charge	0 %	VAT liability shifts to the recipient (§ 13b UStG)
E	Exempt from VAT	0 %	Supplies legally exempt from VAT (e.g. small-business regulation, educational or medical services)

Standard rate (Category S)

Used for regular taxable supplies where VAT is charged at the applicable rate. For German invoices, the full standard rate is 19 %; the reduced rate for certain goods and services (e.g. food, books) is 7 %.

Zero rate (Category Z)

Used for supplies that are within the scope of VAT but taxed at 0 %. A typical example is certain exports to countries outside the EU. This differs from a VAT exemption (category E): the supply is still considered a taxable transaction — it simply carries a zero rate.

Intra-community supply (Category K)

Used when goods or services are supplied to a VAT-registered business in another EU/EEA member state and the supply is therefore VAT-exempt under the intra-community supply rules. In the e-invoice, a justification text must be provided stating at minimum intra-community supply.

For how to configure intra-community supply in your e-invoicing solution, see the documentation for Shopware 6, Shopware 5, or PrestaShop.

Reverse charge (Category AE)

When a service is supplied to a business in another EU or EEA country, the reverse charge procedure can be applied. The supplier issues the invoice without VAT, and the recipient is responsible for declaring and paying the VAT. In the e-invoice, a justification text must be provided stating at minimum reverse charge. Reverse charge can also apply beyond the EU/EEA, but only if the destination country provides for it. Always check the local tax laws!

For how to configure reverse charge in your e-invoicing solution, see the documentation for Shopware 5.

Exempt from VAT (Category E)

Used when the supply is legally exempt from VAT for reasons other than intra-community supply or reverse charge. Common examples:

• The seller qualifies as a small business under § 19 UStG (Kleinunternehmerregelung) and therefore does not charge VAT.
• Educational or medical services that are exempt from VAT by law.

A reason for the exemption must be stated in the e-invoice. An invoice with category E and no exemption reason will fail KoSIT validation.

Can multiple categories appear in one invoice?

Categories S, Z, and E can appear together in the same invoice — for example, an invoice that contains both standard-rated and VAT-exempt line items.

Category K (intra-community supply) cannot be combined with other categories: if an invoice represents an intra-community supply, every line item must be assigned category K. The entire invoice is tax-free for the same reason. The same applies to category AE (reverse charge): if reverse charge applies, the entire invoice falls under that category.

Which categories does each e-invoicing solution support?

Not all e-invoicing solutions support every category yet, we are working on broader support. Which categories are supported and how to configure them is described in the documentation of the respective product:

• E-Invoicing for Shopware 6
• E-Invoicing for Shopware 5
• E-Invoicing for PrestaShop

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This content is for general information only and is not legal or tax advice. We make no representations or warranties regarding its accuracy, completeness, or currency. Any reliance on this information is at your own risk.