Resolved with modifications.
The EuVAT Extension by pillwax.software is incompatible with MageRewards as it does not apply VAT exceptions when calculating Taxes.
1. Copy app/code/ community/TBT/Rewards/Model/Sales/Quote.php to app/code/local/TBT/Rewards/Model/Sales/Quote.php so that you are not modifying core extension files.
2. Open app/code/ local/TBT/Rewards/Model/Sales/Quote.php, change line 45:
class TBT_Rewards_Model_Sales_Quote extends Mage_Sales_Model_Quote
class TBT_Rewards_Model_Sales_Quote extends Pisc_Euvat_Model_Sales_Quote
3. Open app/etc/modules/TBT_Rewards.xml and locate the following in lines 7-13:
<depends> <TBT_Common/> <Mage_Rule/> <Mage_Catalog/> <Mage_Sales/> <Mage_Customer/> </depends>
4. Add the following dependency to the node (see Resolving extension conflicts):
5. Upload new and modified files to your server.
6. Clear your cache.
Please keep in mind that implementing any modifications to your MageRewards core code does void your support agreement because you're adding dependency to the other module.