What voting rights do I have with the small business regulation?

If you meet the conditions of the small business regulation under § 19 UStG, your turnover is generally exempt from VAT. You do not show VAT on your invoices and, in return, you cannot generally deduct input tax from your business expenses.

However, you can voluntarily opt out of the small business regulation and switch to regular VAT taxation.

What are the turnover limits for 2025?

The following limits apply for the small business regulation in 2025:

• Previous year: Total turnover must not have exceeded 25,000 Euro.
• Current year: Total turnover must not exceed 100,000 Euro.

To apply the small business regulation in 2025, your relevant total turnover in 2024 must not exceed 25,000 Euro.

Unlike the previous regulation, the limit for the current year no longer depends on a turnover forecast. The actual turnover achieved is decisive.

What happens if I achieve more than 100,000 Euro turnover in 2025?

The limit of 100,000 Euro is a fixed upper limit. Once you exceed this in the current year, the tax exemption ends.

Important: The turnover that exceeds the 100,000 Euro limit is fully subject to VAT. The turnover made earlier in the year remains tax-free.

Example: Your total turnover is currently 80,000 Euro. You then make a further turnover of 30,000 Euro and receive the payment. This turnover exceeds the limit. The entire 30,000 Euro is therefore subject to regular VAT taxation.

You should therefore regularly check your turnover during the year.

What applies to a business start-up in 2025?

If you start your business activity during the year 2025, a turnover limit of 25,000 Euro applies for the start-up year. There is no projection to an annual turnover.

The turnover that exceeds the 25,000 Euro limit is generally subject to regular VAT taxation.

What must be included on an invoice from a small business owner?

As a small business owner, you may not show VAT separately for your tax-exempt turnover under § 19 UStG.

Your invoice must include at least the following information:

• Your full name and address,
• Name and address of the recipient,
• Your tax number, VAT identification number or small business identification number,
• The date of issue,
• Type and scope of the service or quantity and type of goods supplied,
• The total amount and
• A note that the tax exemption for small businesses under § 19 UStG applies to the turnover.

A possible wording is:

“Tax exemption for small businesses according to § 19 UStG.”

A specific wording is not required. The note must clearly indicate that the small business tax exemption is applied.

Attention: If you, as a small business owner, still show VAT separately, the VAT shown may be owed to the tax office.

Do small business owners have to issue e-invoices?

Small business owners can continue to issue their invoices as so-called other invoices from 2025, for example as paper invoices or PDF files. They are not obliged to issue a structured e-invoice.

However, they must generally be able to receive e-invoices from other businesses.

Can I voluntarily opt out of the small business regulation?

Yes. If you meet the conditions of the small business regulation, you can voluntarily waive the tax exemption and tax your turnover regularly.

Then:

• You show VAT on your invoices,
• pay the VAT to the tax office, and
• can generally deduct the input tax from your business incoming invoices.

Waiving the regulation can be interesting, for example, if you make high investments resulting in significant input tax amounts or if you mainly provide services to businesses entitled to deduct input tax.

The waiver binds you for at least five calendar years. A waiver declared for 2025 can be declared to the tax office until the last day of February 2027 and will then apply retroactively from the beginning of 2025.

Do I have to submit a VAT return as a small business owner?

Small business owners are generally not required to submit VAT advance returns or an annual VAT return.

Exceptions apply, in particular, if the tax office explicitly requests a return or if you owe VAT due to special regulations.

If you exceed the relevant turnover limit during the year and the small business regulation ends as a result, the normal VAT declaration obligations generally apply from that point on.

Does the reverse charge procedure also apply to small business owners?

Yes. The small business regulation does not generally protect against owing VAT as a service recipient. In certain cases, the so-called reverse charge procedure under § 13b UStG may apply.

This can be the case, for example, with certain services provided by a foreign business or under special conditions for construction services.

For construction services, however, the tax liability does not automatically transfer to the recipient for every small business owner. This generally requires that the recipient is also a business and provides corresponding construction services on a sustainable basis.

If the reverse charge procedure is to be applied, you must pay the VAT as a service recipient to the tax office, even if you otherwise use the small business regulation. As a small business owner, input tax deduction is generally not possible.