Who counts as a small business
The small business rule (Kleinunternehmerregelung) is section 19 of the German VAT Act (UStG). Since 1 January 2025 it depends on two limits:
| Period | Limit | What counts |
|---|---|---|
| Previous year | at most €25,000 | total turnover, net |
| Current year | at most €100,000 | total turnover, net |
Both conditions must be met (section 19 (1) sentence 1 UStG). Total turnover under section 19 (2) UStG means your taxable sales without VAT, minus certain exempt sales. You no longer need a forecast at the start of the year.
In the year you start your business there is no previous year. According to the tax administration, you then start as a small business as long as your turnover in that year does not exceed €25,000. It is not extrapolated to a full year.
What changed in 2025
The limits used to be €22,000 and €50,000, and the current-year limit was an estimate. Today your sales as a small business are explicitly exempt. Three things follow:
- The €100,000 limit for the current year is hard. The sale that crosses it is already taxable, and so is every later sale that year. Sales before it stay exempt.
- Because your sales are exempt, you cannot deduct input tax (section 15 (2) sentence 1 no. 1 UStG). What you pay for an expense is your expense in full.
- If you show VAT on an invoice anyway, you owe it to the tax office (section 14c UStG), while your customer may not deduct it.
If your turnover already exceeded €25,000 last year, the rule does not apply for the whole year.
What your invoice must show
As a small business you may write simplified invoices. Section 34a UStDV lists the minimum:
- your name and address and your customer’s
- your tax number or VAT ID
- the date of issue
- the quantity and type of goods, or the scope and type of the service
- the amount and a note that the small business exemption applies to you
The wording of the note is not prescribed. A common sentence names section 19 UStG, such as „Gemäß § 19 UStG wird keine Umsatzsteuer berechnet.“ Section 34a UStDV does not require an invoice number, but one still helps you keep order and match payments.
What a regular invoice needs is in the guide to invoice requirements in Germany.
E-invoices for small businesses
Since 2025 every business in Germany must be able to receive e-invoices, small businesses included. An email inbox is enough for that. You do not have to write them: under section 34a UStDV you may send your invoices as an other invoice for good, on paper or, with your customer’s consent, as a PDF. The timeline for everyone else is in the guide to the e-invoicing mandate.
Waiving the rule or leaving it
You can waive the small business rule, for example because you invest a lot and want input tax back, or because nearly all your customers are businesses. A waiver binds you for at least five calendar years (section 19 (3) UStG). Whether it pays off depends on your numbers, so talk it through with your tax advisor.
Once you leave the rule, you write invoices with VAT from the day of the change, file VAT returns and deduct input tax from receipts dated after the change. There is no input tax afterwards for receipts from your time as a small business. For larger purchases you keep using after the change, an adjustment under section 15a UStG may apply.
This guide explains the rules in general and does not replace advice from a tax advisor.
