SteuerGo FAQs

(2022) What right of election do I have with the small business regulation?

The small business regulation for VAT can be chosen if your gross turnover in the previous year did not exceed 22,000 Euro and is not expected to exceed 50,000 Euro in the current year (§ 19 para. 1 UStG). The small business regulation means that you:

• may not separately show VAT on your outgoing invoices,
• do not have to pay VAT to the tax office,
• cannot claim the VAT on your incoming invoices as input tax at the tax office,
• may not state the VAT rate on invoices for small amounts up to 250 Euro.

Important note: Showing VAT or stating the VAT rate on invoices for small amounts would be considered an unauthorised display of VAT. This would mean that you would have to pay the VAT to the tax office, and the recipient of the invoice would not be able to deduct the tax as input tax.

The small business regulation is an option. You also have the option to opt for VAT and then take advantage of the input tax deduction. However, this option, i.e. the waiver of VAT exemption, is binding for five calendar years. If you voluntarily opt for VAT, enter your sales, the VAT received, the input tax paid, and the VAT paid to the tax office in the "Anlage EÜR 2022".

Waiving the VAT exemption is advantageous if you:

• have larger purchases - especially in the start-up year - or high material costs, as only then can you deduct the VAT included in incoming invoices, e.g. purchase of a photovoltaic system.
• provide services exclusively to companies, as the VAT charged is a pass-through item for them and does not increase costs.

Note: Even small business owners must include the tax number or VAT identification number and a consecutive invoice number on their invoices.

Reverse VAT liability according to § 13b UStG:

• For building contractors, subcontractors, and construction workers, a reverse charge mechanism applies: If you receive work supplies and other services related to the construction, repair, maintenance, modification, or demolition of buildings, you must not pay the VAT to the service provider but directly to the tax office. The service provider no longer has to pay VAT and therefore must not show it on their invoice to the client (§ 13b para. 1 no. 4 UStG).

For small business owners according to § 19 UStG, who do not charge or pay VAT, the following applies regarding the reverse charge mechanism:

• If you are a service recipient who also provides construction services on a regular basis (craftsman), the reverse charge mechanism also applies to you. You must therefore pay VAT on the supplies and services received, even if they are for your private residence (§ 13b para. 5 UStG). In this case, you must enter the VAT to be paid.
• If you are a service provider, the reverse charge mechanism does not apply to the service recipient. They do not have to pay VAT (§ 13b para. 2 sentence 4 UStG).