Allowance and charge

Also called BG-20, BG-21, discount, surcharge

An allowance is a deduction from the invoice, such as a discount, and a charge is an addition, such as freight or packaging. EN 16931 models both at document level and at line level, and each one requires a reason and its own VAT treatment.

Document level: BG-20 allowances, BG-21 charges
Reason: Required, as text or a code
VAT category: Required on a document level allowance or charge
Effect on totals: Changes the taxable amount and the VAT breakdown

They are not free text on the bottom of the page

A discount written into a note is invisible to structured processing. Modelled properly it is a BG-20 allowance with an amount, a reason and a VAT category, and it participates in the totals.

That last part is what catches people. An allowance changes the taxable amount, so it changes the VAT breakdown, so the arithmetic rules fire if you subtract it from one total and not the other.

Document level and line level are different things

A line level allowance reduces that line. A document level allowance applies to the invoice and needs its own VAT category, because the standard cannot infer which rate a discount across mixed rate lines belongs to.

Getting that wrong on a mixed rate invoice produces failures in the VAT category family rather than where the discount was entered, which makes it hard to trace back.

Why it matters

Discounts are common and the naive implementation puts them in a note, which means the structured invoice and the page disagree about what is owed.
The failure surfaces in the arithmetic and VAT rules rather than near the discount, so it is disproportionately hard to diagnose.

Check it on your own file

The arithmetic rules
Where a mishandled allowance usually shows up, with the cause and the fix.

Common questions