Dynamics Community Forum Thread Details

Error when using VAT Category Z for invoicing from D365

Hi all,

Question from Norway:

We are trying to set up a customer for invoicing with no tax and have mapped the tax code 7 with the tax category Z according to the table for use with PEPPOL BIS billing 3.0.

When we try to run the invoice we get an error - see under.

Does anyone know what Tax category we should use in Dynamics365 to be able to run the invoice?

Categories:

Dynamics 365 Finance

Hi GC-18030758-0,

1) Issue
- Error occurs when invoicing with VAT category Z in D365 Finance
- Invoice posting or electronic invoicing (PEPPOL BIS 3.0) fails during processing
- VAT code is mapped with tax category Z for 0 percent VAT
- Error appears specifically during electronic reporting or invoice generation
- Standard invoices with VAT category Z cannot be processed successfully

2) Reason
- The error is caused by the VAT category Z not being supported correctly in the electronic reporting configuration used for PEPPOL BIS 3.0
- A required mapping or binding for VAT category Z is missing in the Electronic Reporting (ER) format
- This leads to a failure when the system attempts to transform invoice data into the required XML structure
- VAT category Z represents "VAT exempt not included in VAT regulations" which is different from standard VAT exempt scenarios
- This can happen because D365 Electronic Invoicing formats are typically configured to support standard categories such as S (standard) and E (exempt) while Z requires explicit mapping and handling

3) Resolution
- Verify the Electronic Reporting (ER) format configuration used for PEPPOL BIS 3.0 and check VAT category mappings
- Ensure that VAT category Z is included and correctly mapped in the ER model and format for output XML
- If not available extend the ER configuration to support category Z according to Norwegian localization requirements
- Consider using VAT category E (VAT exempt) if it satisfies the business requirement and is supported by the format
- Review tax code setup and ensure that tax code 7 is correctly configured for zero VAT and reporting
- Validate that all mandatory fields required for Z category are populated such as exemption reason codes
- Test invoice generation with both categories (E and Z) to compare behavior
- Check Microsoft localization documentation for Norway regarding supported VAT categories in PEPPOL
- If standard configuration does not support Z implement a customization or updated ER configuration
- If the issue persists capture detailed ER execution logs and raise a Microsoft support ticket

For a more detailed answer, please provide more information.

Rg,

Alexander

*Due to the complex and different possibilities of deploying Dynamics 365 I highly recommend not to setup the application without some expert/partner or support. (For more information contact me under anassl@inno-solutions.info or visit www.inno-solutions.de)

*The Information comes directly from the manufacturer or provider and are validated (not guaranteed) up to date of creation of the posting.

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